How to work with potential tenants - low income and large savings

Question

Hi, i have prospective tenants who just moved back from Europe. One got prestigious but not well paid Postdoc in university, the other is still waiting for job offer. They show printscreen of their bank account with amount equal to many years of rent. How to work with them? What additional documents to ask? Is there a way to secure money for annual rent, that they can't use for anything else? I think there are many cases, when people have savings but not enough income. How to work with them?

Scott M. · Answer

Didn't say what state this home is in and this is a topic you want to be 100% careful on.  Strick rules in most states about the amount you can collect upfront.  For example in MI you can't collect a double deposit.  That gets you in trouble really fast.

Remember, no matter if people have savings or a good paying job it doesn't mean they are going to pay their rent.  You can't guarantee they will use their savings to pay rent anymore then you can guarantee they will use their monthly checks for the same.

Screening has a lot of moving parts and while income is an important one, how do they look otherwise?  Just be sure you don't get into trouble by asking for too much upfront.

Nathan Gesner · Answer

My rule is that they show "verifiable income" of approximately 3x the rent. If they don't have income, but they have significant savings, then I'll approve them with a double deposit and the first three months of rent paid in advance. That gives them 90 days to find employment. If everything else (credit, criminal, Landlord, etc) checks out, then it shouldn't be a problem.

Colleen F. · Answer

@Elena Pech  I would consider what % of the rent is covered by the post-doc?   How likely is the partner to get a job?  e.g. are they eligible to work in the US, have a paying profession ?    Do they have this money in a US bank account?   Your best bet may be to try to get as much prepaid rent as possible by law. Not sure if you can require the money be escrowed.  Any chance of a co-signer?

Elena Pech · Answer

@Scott M. Thanks Scott, you are right, I can't take double deposit or take upfront.  I wonder if I can ask them to put money to some escrow account, under condition that for the next year they can only use money from this account for rental payments?

Elena Pech · Answer

Thanks Nathan!

How to work with potential tenants - low income and large savings

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