How long should a prospective tenant be working for current employer?

Question

Hello,

I am in the process of declining a prospective tenant for a few reasons.  Mainly, their income does not seem sufficient and they have only been with their employer for 4 months.

This brings me to the question, "how long should a prospective tenant be employed with his/her current employer?"

Thanks,

Chrstn

Steve Babiak · Answer

I have (successfully) rented to people who were just moving to an area and the brand new job was the reason for moving.  You can say that these people were stronger in other aspects of my rental criteria, and so their being less strong in this area was compensated by those other aspects.

Income is important, specifically monthly gross income of 3 times the rent being considered by most to be the minimum acceptable amount.  I would reject them for too low of an income; in fact, I won't even accept their application without them listing sufficient income - saves a rejection letter and other screening work.

And remember, in this economy lots of jobs were lost, and those unemployed people have to get a new job, and might have to adjust their living expenses down if the income gets lower.  These people will be looking for a less expensive rental somewhere.

Michael Lauther · Answer

Christine Gardner to answer your question specifically I would say that total work history needs to be examined. of course the longer they have been employed at their recent job is  a factor but the reason they have made a recent change and the history over the past 5 years is a better indicator than a picture that only looks at the most recent time frame.

Joe Bertolino · Answer

Depends on the rest of the profile and if their new job is in the same industry as the old one.  If the guy is a chef and has worked at several different reastaursnts I don't hold that against him.  If they bounce to different industries with employment gaps then I get concerned.

Bill Gulley · Answer

I have pretty much applied fannie mae loan rules to renter qualifications and then allowed more fluff in areas since it was, after all, renting and not buying.

That means two years in the same job or in that line of work. Just because someone takes a new job but is in the same industry doesn't mean there is more risk. There are also exceptions.

Military getting off active duty with a new job is an exception to my rule (just as with lending). Another is college grads who go to work for the first time, while I'd rather see the new job in thier degree major (as with lending) I'd allow it as it applies to any professional progression even if it is not in thie rmajor (most are not getting employed in thier field of study)

Retirees or those who have changed industries. I allow government income at the level actually paid. I also allow the minimum wage being paid, regardless of being paid more, for those who have had full time work history who have changed jobs. (very much as in lending).

COllege students get minimum wage as income with a work history as to how often they are working while going to school. If they receive grants, loans or assitance for or used for housing I count 80% of that depending on the probability of receiving such benefits in the future. That can be a gray area.

All my folks had to have 75% of the rents required from thier own sources. I will make up the other 30% with a co-signer if the co-signer qualifies with diposable income to cover it. My only exception here is with students:

I have leased to hundreds of students. No college student is going to qualify with me as to credit history, there will not be sufficient credit estabished by a 20 year old (I require 5 years, so they would have to start at 15, not likely.

I explain the credit issue and simply require mom. dad or both (or any responsible relative) to sign the lease as a guarantor and qualify them as to disposible income, which is different than thier income.

I want to see twice the rent as disposible income, after they pay all of thier expenses, so the guarantor needs a grand to play with to cover a $500 rent. This can be offset by actual income earned by the student, what may be allowed is entirely objective and considering the guarantor's assets and credit can be considered too. It's underwriting a preceived risk!

All security deposits must be paid in full before possession is given.

And, if I don't trust someone for any reason, I can guarantee they won't qualify. Untrustworthy soulds are not a protected class!

James H. · Answer

Concur with Uwe K. and Bienes  Raices. For myself, I like to see at least 6 months employement and like to see at least a year of work in the same/similar field. I weigh that in with rental history. It is an all inclusive analysis and although hard and fast rules are definitely easier to work with, rules for A and B properties don't all work for C and D properities.

Uwe K. · Answer

That's funny. Sometimes I wish I would have to worry about this.
For my clientele, you are already on top of the list if you actually have a current employer and your main income is not SSI, disability, and all the related, ehm, government handouts. :-)
Actually, when they are 35 years old, they already had at least 10 years disability income, that's quite stable, isn't it?

Steve Babiak · Answer

I think Bill Gulley gave some solid details there.  The part in the quote that I have copied above is something I want to expand a bit on, based on recent experience.

I had an applicant who had been a "contractor" (home improvements / handyman), but who had taken a job in a restaurant / deli (that had a growing business, so good outlook).  Income from that at just above minimum wage, and would have been OK for qualifying for the rent.  Rejected him for other reasons.  Later he calls me to explain he went back to contracting work and is still looking to move to a new place.

Now, you might give him credit for "minimum wage", but if he is an independent contractor who has worked for a wage and left that line of work where he earned a wage - well he might not get any work as a contractor, and doesn't seem to like working for somebody else.  I of course explained to him that I cannot consider his income from contracting until it has appeared on a tax return; there is no way to verify his numbers independently until there is a tax return.  Would have rejected him for the previous reason again anyway!

Chris Clothier · Answer

Christine Gardner - Really good job posting a good question on here.  (*sometimes I don't comment because the questions, IMO, don't come with good reasoning and background or seem redundant).  Ok, enough of that.

I voted for just about every response on here because I think they are all excellent and make good points.  On our side, we will rent between 60 and 80 homes a month on average in two cities.  I'm not sure that there are any hard and fast rules on employment, but as many have stated on here, you have to step back and look at the bigger picture.  Some negatives, but not always dis-qualifiers, might be starting a brand new job, working in a transient industry (fast food), working in a seasonal industry (landscaping) or working in an industry that may be suffering in your area (brick layer).  There are a lot of factors that regardless of length of time, can make you as a landlord or management company uncomfortable and you have to look elsewhere through their application for things that make it look better.

Bienes Raices · Answer

LOL. I have the same problem. Just finding someone with a stable renting history that isn't fabricated can be a challenge sometimes.

Christine Gardner · Answer

Thanks Tom

How long should a prospective tenant be working for current employer?

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