Proof of income for self-employed potential renter?

Question

If your potential renter is self-employed, how do you verify income? They have offered me tax returns from the previous year, but how do you ensure they will make that much when they are renting from you? Any help would be greatly appreciated!! Thanks

Scott Beal · Answer

@Heath Jones

In this case there are a lot of things that you can consider, Heath. Tax returns are a good start but you will want two to three years of their first page and their schedules (A, C, E if available). Then get as many angles as you can to consider the full picture of who this person is. Our list often includes things like this: 2 to 3 years of tax returns, credit report, bank statements so that you can actually see their cash flow, rent ledger from previous landlord or a letter if they are not sophisticated in record keeping, and a personal description of their business and financial habits.

Getting every single one of those is overkill but having a few of them is a must here. Go from there and if your tenant can put together a strong combination of documented info, and they make you feel confident that they will pay on time, then go ahead. Look at the big picture and let strong compensating factors average out weak performance in other areas.