Income requirements for tenants in MA

4 Replies

Hi, I am closing on my first house (multi-family) in a week and I will be renting out one of the units. I have seen on BP and other websites that an income of 3-4x is a good rule of thumb while screening for tenants. My question is how do I enforce it? Can I tell potential tenants that I will only rent out to tenants that earn > 3x of the rent? Would that be considered discrimination? 

Thanks.

Originally posted by @Manikantan Nambi :

Hi, I am closing on my first house (multi-family) in a week and I will be renting out one of the units. I have seen on BP and other websites that an income of 3-4x is a good rule of thumb while screening for tenants. My question is how do I enforce it? Can I tell potential tenants that I will only rent out to tenants that earn > 3x of the rent? Would that be considered discrimination? 

Thanks.

 I'm not sure about other states but in CA you can ask for income documentation like pay stubs.  This will give you the information needed to make a decision income wise.  

@Manikantan Nambi it is not discriminating to qualify based on income. The bank looks at your income before loaning you money. The car dealership looks at income before selling you a car. The credit card companies look at income before opening up a new card. This is completely normal and legal.

You should consider reading a book on the basics of managing rental property. I recommend Brandon Turner's book here on BP or "Every Landlord's Legal Guide" from NOLO. These books will give you a good foundation and help you avoid a lot of common mistakes.

FYI If you are in a city/area with good public transportation I think you can stretch the 3X income and be pretty safe with good tenants. Cost of housing is SO exorbitant here that people often make tradeoffs with cars etc. for location. I'm not suggesting you go too much lower, just a thought.