a self-employed painter applied to one of my properties. He submitted business bank statements, and they have several deposits every month, but about half of them made by ATM and the other half by Zelle. Totals come to 6K-11K/mo.
What do you do to screen Self employed applicants?
1. Bank statements only tell you HALF the income story with a self employed person. They are grossly insufficient.
For example an UBER driver may show you deposits of $5k per month BUT that doesn't factor in the expenses like gas, maintenance etc. They might be spending $2000 on those items each month.
2. I require tax returns for self employed people. The tax returns show not only the income received but also expenses paid. Only after both of those are considered can you get the real gross income number that you want to use for screening purposes.
3. What if they don't claim all their income? A my mother would often say "tough toenails!" Trust what can be documented.
4. What if their income is inconsistent? Sometimes businesses and self employment have highs and lows. You may want multiple year of tax returns so that you can average out the income.
1. Bank statements only tell you HALF the income story with a self employed person. They are grossly insufficient.
For example an UBER driver may show you deposits of $5k per month BUT that doesn't factor in the expenses like gas, maintenance etc. They might be spending $2000 on those items each month.
2. I require tax returns for self employed people. The tax returns show not only the income received but also expenses paid. Only after both of those are considered can you get the real gross income number that you want to use for screening purposes.
3. What if they don't claim all their income? A my mother would often say "tough toenails!" Trust what can be documented.
4. What if their income is inconsistent? Sometimes businesses and self employment have highs and lows. You may want multiple year of tax returns so that you can average out the income.
@Kevin Sobilo - a bit curious here... wouldn't the tax return be a lagging indicator? Re: multiple years - collecting multiple years still not an indication of the prospect's ability to pay at todays $$. What's your process, especially when your point in #4 above is the case?
@Kevin Sobilo - a bit curious here... wouldn't the tax return be a lagging indicator? Re: multiple years - collecting multiple years still not an indication of the prospect's ability to pay at todays $$. What's your process, especially when your point in #4 above is the case?
Everything is a "lagging indicator". A paystub on a w2 only shows what they earned last pay period. Maybe they worked 40 hours last week but maybe they aren't actually fulltime and will only work 25 hours next week!
If someone works as a real estate agent they might earn 40k one year and 60k another year. There are no guarantees in life. The w2 employee might get laid off and the 1099 employee might have a down $40k year. Since there are no guarantees you work with likelihood and averages.
I try to think of this process just like how a lender qualifies people for a mortgage. I believe they would average their last couple years incomes and use that as a fair indication. Also keep in mind if their credit is decent even in down years they "made things work" and did what they need to do.
Property Manager · MA · Member since 2025 · 19 posts · 16 votes
8mo
Great question, we see this a lot in MA.
For self-employed applicants, we don’t rely on paystubs obviously, so we focus on consistency + ability to prove income is real. Bank statements are a good start, but ATM/Zelle deposits need a little extra vetting.
What we typically ask for:
Last 3–6 months bank statements (sometimes 12 if it’s borderline)
Last 2 years tax returns (or at least most recent) + Schedule C if applicable
Proof of active business (license/website/insurance/invoices)
Landlord references + rent payment history (this matters a ton)
Big thing for me is: do the deposits look steady and repeatable, and do they have enough cash reserves after bills to comfortably cover rent.
If the income is there and it’s consistent month to month, self-employed doesn’t scare me — you just want to verify it the right way.
Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes
8mo
Put heavy weight on verifying their current rent payment history and how that's reflected in their bank statements. Don't take their current landlord's word on it - if they aren't paying on time of course the current landlord will want to get rid of them and will likely praise them as great on-time payers.
Real Estate Agent · Memphis · Member since 2026 · 576 posts · 339 votes
7mo
Great question — self-employed applicants aren’t necessarily higher risk, but they do require a different kind of verification.
Bank deposits alone don’t tell the full story, especially when a large portion is ATM cash. What you’re really trying to determine is income stability and documentation consistency, not just gross deposits.
A few things many landlords look for:
Two years of tax returns (Schedule C if sole proprietor) to verify reported income
Year-to-date profit & loss statement
Consistency of deposits over time, not just one strong month
Business license (if applicable)
Length of time in business
With self-employed applicants, I usually focus more on:
Income trend (steady vs volatile)
Cash reserves
Rental history and payment consistency
If half the income is cash deposits, that’s not automatically disqualifying in trades like painting, but you’d want to see that it’s been consistent over a longer period and aligns with reported income.
The key isn’t to reject self-employed applicants — it’s to apply a structured, consistent standard for verifying stability. Inconsistent documentation is usually a bigger red flag than variable income itself.
Often the safest approach is requiring a slightly stronger income multiple or larger reserves when income is variable, while staying consistent with your written criteria.