Rule of thumb for evaluating tenant income?

Question

Does anyone have a good rule of thumb for evaluating tenant income when the primary rent payment source will be through liquid investments in retirement accounts?

Richard Sherman · Answer

Account Closed our rule of thumb is

INCOME > 3 X (Rent+RUBS/FEES)

I do not care where it comes from as long as it is stable income  :)

Charity Chavez · Answer

I had a gentleman that wanted his $120,000 liquid funds to count toward the income qualifier. He was near retirement age. My boss wanted to base the decision on credit. I asked for regular bank statements. I calculated his average monthly spending, which in the months previous to applying was $20,000. At the rate he spends, he would be wiped out halfway through the lease. Rejected based on income. As an aside, his checking account showed a $30-40 liquor store purchase "semi-daily". Found out later he was a dreadful alcoholic who lost his job, his car and sold his condo to live, thus the money he had invested. Saved my boss an ugly, drunken eviction by insisting on calculating spending to investment ratio.

Thomas S. · Answer

Aside from seeing a few years of income tax returns or bank statements there is really no way to confirm income. Ask the applicant for this info and if they refuse you pass on their application.

On the other hand if they have been in their present rental for a long time and the rent is about th esame you will need to confirm who their landlord is and contact them for confirmation.

Rule of thumb for evaluating tenant income?

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