Landlord · Sioux Falls, SD · Member since 2016 · 100 posts · 58 votes
I have a married couple prospective tenants that look ideal; credit scores above 800, previous homeowners, etc. Rent is $2400/mo so I require $7200/mo income. Husband is currently unemployed (due to COVID) and wife makes $10k/mo gross but only $5800 after withholdings. So they meet the gross income = 3x rent but not the net income = 3x rent. Husband is currently collecting unemployment and plans to get a job but I don't generally consider unemployment in my income. Thoughts?
Rental Property Investor · Concord, NC · Member since 2016 · 1k+ posts · 3k+ votes
5y
They had me at 800 lol. Not really though. I keep my rents around $100 below market and look for good tenants that stay for several years. Turnover cost $ and interrupts important stuff like fishing and goofing off. I'd decline since my gut tells my they will buy and move in a couple years.
@Sarah Buchanan I personally don’t care about the credit score, because that means you love to borrow debt and pay it back. I actually look at the credit history because that shows late payments and how much they pay versus how much they make
Marcus,
Those are the things a credit score represents. Late payments and too much debt and you can be sure you won't have an 800+ score.
I have a married couple prospective tenants that look ideal; credit scores above 800, previous homeowners, etc. Rent is $2400/mo so I require $7200/mo income. Husband is currently unemployed (due to COVID) and wife makes $10k/mo gross but only $5800 after withholdings. So they meet the gross income = 3x rent but not the net income = 3x rent. Husband is currently collecting unemployment and plans to get a job but I don't generally consider unemployment in my income. Thoughts?
Sarah,
Not sure how many 6 figure a year wage earners with 800 credit scores you have in South Dakota, but these folks seem like a great find to me. With a savings account as well!
I would let them rent any of my homes (and I have a bunch).
In terms of net income the wife probably has higher tax withheld then is currently necessary due to her husband's previous earnings and the so-called marriage penalty. Likely a huge tax refund in the making.
Hard to turn down a renter who would likely qualify for a mortgage on an equivalent home to yours in about 10 minutes. IMHO.
Property Manager · Columbus Ohio · Member since 2015 · 11 posts · 8 votes
5y
We use 525 credit score, three times the rent in monthly gross income and no prior evictions, felonies or bankruptcies. If they can meet that works for us. We rent A-B properties.
Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
5y
Originally posted by :
I'm considering asking for first/last month's rent in addition to security deposit as an added precaution but am wondering if I'm being a bit too lenient.
You can not do this if the home is in Portland. The law is pretty clear. The only time you can charge more than 1x rent for deposit is if they have negatives such ad BK etc.
Rental Property Investor · Saddle River, NJ · Member since 2020 · 22 posts · 24 votes
5y
@Sarah Buchanan
My thoughts:
With a credit score over 800, they obviously care about their rating.
I’m sure if you factor in the husbands unemployment benefits you would meet your 3x requirement. If their references pan out, they have the required deposit and they ‘interviewed’ well, I would offer them the spot.
Landlord · Sioux Falls, SD · Member since 2016 · 100 posts · 58 votes
5y
@Mary M. Thank you for the links! I've looked into Oregon laws a lot during the past several years but it seems Portland has additional law that the state of Oregon doesn't (or the other sources I've been relying on have been inaccurate), which I hadn't realized, so I appreciate the links you shared!
Investor · Broward County, FL · Member since 2018 · 1k+ posts · 938 votes
5y
It is not because they have a low net salary that they can't afford your rent. A lot of your gross could be discretionary diverted to other purpose. If it is however due to a very high debt to income ratio, then I may look twice.
If you look at my gross vs net salary you would be scared... I'm diverting all my money to retirement accounts and my net is ridiculously low compared to my gross. If I need more money in my pocket, I can always choose to lower my voluntary contributions.
The fact that they have an excellent credit score is more important to me as it shows proper financial behavior. As long as they can reasonably afford the rent, I'm not to worried about the net salary to rent ratio.
Investor · Jersey City, NJ · Member since 2015 · 304 posts · 48 votes
5y
Credit Score 800 is a big big plus, generally you don't see that score by renters, otherwise they buy their own home with leverage, why pay rent right?
I am a real estate agent in Bayonne, NJ I prefer 3 times, but 2.5 times is also ok, so $5800 is ok.
also I am sure today or tomorrow husband will earn .
Lender · Grand Rapids, MI · Member since 2019 · 175 posts · 82 votes
5y
@Sarah Buchanan I would look at debt ration of all debts not rent compared to gross and look for 35 to 40 percent that is metrics lenders use and combined with score gives good performance indicator.
Typically unemployment that isn’t seasonal I wouldn’t consider, but if it is a blip in a long history and lasts for quite a while might give more flexibility. Really depends o. What kJ e of work etc.
Investor · Suwanee, GA · Member since 2020 · 182 posts · 151 votes
5y
If they have a 800 credit score that shows they are good about paying their debts. I would definitely rent to this couple. The greatest predictor of future behavior is past behavior. Their past behavior shows they will pay their rent.
Rental Property Investor · Saint Louis, MO · Member since 2012 · 115 posts · 42 votes
5y
@Sarah Buchanan
Absolutely accept unless there is other/missing info. Over 800 credit score, one makes 6 figures. My only concern is that they are overly qualified and will only be there a year before they buy their own place.
Is someone who makes $4,000 gross, $3,000 net a better applicant applying for a $1,000/MO property? Technically they have 3X NET, but only an extra $2,000/MO to cover all their other expenses...your scenario is better.
Good question! Short answer: Gross income IF THEY REMAIN ON THE SAME JOB FOR AT LEAST A YEAR! and I will explain...
First of all, if the individual is not employed and not able to guarantee his employment for at least 6 months, then is nothing to talk about on this post.... Have you consider renting short term? Can they come up or co-sign a lease putting down a larger deposit, and then rework the lease down the road?
If they remain for a year or more, then look at their Gross and run their credit report. You will see all debts and figure out if they are able to pay or not. 800 credit score is good, so depending on their profession demand, I would think that person will find a job soon. But I would not count on that -- no guarantees.
Real Estate Agent · RI · Member since 2018 · 10 posts · 4 votes
5y
If they meet your criteria then I say take them. I base the income criteria on gross. These applicants also have excellent credit, and if they’re backgrounds and landlord references look good then they should be good tenants.
There are some serious penalties for not handling screening in Portland correctly. While there is plenty of good, general advice for anyone to gain a baseline on this thread...it won't fly in Portland! Mary provided some great links that I would recommend brushing up on. It's also not a bad idea to talk with a LL/Tenant Attorney in advance: a half hour conversation now could save you $$$ down the line. Also, more and more we're seeing folks turning to professional property management as they're really the ones who are keeping up to date with the constantly changing laws and regulations. Happy to make intros to any of those as needed. If you do plan on doing it yourself (which is challenging, but doable) just make sure you do a google search once a month or so and make sure no new regulations have come out of PDX.
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
5y
@Sarah Buchanan
Well let me ask the crowd this. If the husband made $10k a month and the wife was a stay at home mom, would you suddenly be worried? Your criteria is your criteria. They make 4x the rent and have 800 credit scores. Oh, but the husband lost his job? So they would have possibly made 6-8 times rent?
If they meet your criteria, then you approve them. And it sure sounds like they meet your criteria.
@Sarah Buchanan Mortgage companies do gross. Honestly, if they have 800 credit scores and over 2x the rent, I would move forward. A mortgage company would allow them to move forward because they are safe risk. I probably would too.
Investor · Tampa, FL · Member since 2017 · 589 posts · 251 votes
5y
Its always wise to check their entire application package. A high credit score does mean they take care of their credit and pay bills on time. As a private landlord you set your own requirements, just be sure you hold every applicant to them and not bend or sway.
Real Estate Syndicator · Portland, OR · Member since 2014 · 453 posts · 312 votes
5y
@Sarah Buchanan
I would accept for sure. When you find people with above a 700 credit score, let alone an 800 credit score they are quality people and care about paying their bills and specifically paying them on time.
I’ve screened more than 2000 people, and not very often do we find people renting above an 800 score.
Flipper/Rehabber · Pittsburgh, PA · Member since 2020 · 13 posts · 5 votes
5y
Lots of great info here, Portland sounds as if it has some stringent standalone requirements. With that said I would accept these applicants and net income percentages vs rent based in my market. I know how hard it can be to build and retain an 800+ credit score coming from a 470 score 7 years ago. Their score would be a shoe in for me.