Safe to Accept Gross Income of 2X the Rent for Tenant Applicants?

[Tricia O'Brien]

Hello BP Folks!

Has anyone accepted tenants for a SFH who have a gross income of only 2.2X the rent or 2.4X the rent, and did that work out well for you?

I hired a new property manager for my rental property in California (SFH, 3 bedrooms, 2 bathrooms, 2 car garage, fenced in yard), and told her my screening criteria were: Gross Income at least 3x the rent, credit score at least 600, good landlord references. Asking rent currently is: $2300/month. After 2 weeks, she presented me with an applicant with income 2.2X the rent and then a week later someone with income of 2.4X the rent. I declined them both. When I told the PM, "She makes 2.2X the rent," she said, "They're close to 3X the rent."

In looking at Zillow ads for another PM company, I noticed that this company is asking for a minimum gross income of 2.8X the rent.  

Is this the new normal?  What happened to the old standard of gross income of 3X the rent? 

It feels too risky to me to take someone that you know from the beginning is going to be paying almost 50% of their gross income on rent and utilities, plus they might have credit card debt too.

I told the PM to lower the rent to $2200/month, and she said it's still going to be hard to find someone that makes $6600/month.

What to do? What are your minimum income requirements?

Thanks in advance for your input! :) 

[Bill B.]

I know you too are in a state with no income tax but use your example. 

They make $5,000/m0 (2.2x $2300
minus $2,300 rent, minus $1,000 federal income taxes, minus $300 car insurance, $300 health insurance, $300 for utilities.  They have $800/mo for gas, dating, hobbies, food, entertainment, “life”, etc. Imagine if they paid $400 in state income taxes and they had to do that on $400/mo?   god forbid they have credit card or student loan debt  (it does seem like NET income or at lease gross minus debt and judgement payments would make a better gauge. If they owe $10k to a credit card, $800/mo for student loans and $500/mo in child support, that seems like it should come off gross. That’s basically not their money  

No thanks. I run in to enough tenants with 3X rent as gross income that can’t pay rent because of one car repair, out of state funeral, medical emergency, or missed work.