IMPORTANCE OF A TENANT’S PROOF OF INCOME
When a new tenant moves into a new home, the Charlotte NC property management company in charge of the new home requests a lot of information from the tenant. Part of the information is proof of income, which is very easy to skip out on, especially if the tenant’s employment and credit check have been verified. Before entering a new lease with the tenant, the Charlotte property management handling the rental must verify their income and get a proof of the said income.
Checking and verifying proof of income saves you from potentially losing money and the tenant from getting evicted if it happens that they find it hard to pay their rent. Of course, it is understandable that tenants do not plan to default on their rent or plan to live in a rental property for free. However, effective property management in Charlotte, NC, requires that all tenants submit their proof of income.
Find out why below and what it entails;
To ascertain if they meet the three times income rule
Proof of rent does not only verify that the tenant has a stable source of income; it is also used to verify if the tenant meets the three times income rule. Generally, a tenant’s gross income should be at least three times their yearly rent. The only exception is if the tenant has good credit, a co-signer, or they have a steady work history that shows that they can at least afford the rent.
How to Verify Income for Renters without a Traditional Salary
Some renters do not earn normal salaries like the typical 9 – 5 workers. These renters may be self-employed, retirees, students, commission-based employees, cash-paid employees. For these types of renters, you will need to find out other ways to ensure that they can afford the rent without defaulting.
How do you Verify Proof of Income?
- Pay Stubs: Freelancers and salaried workers who have filed their W9s will have pay stubs for sure. You, however, may need further checks to dig deeper to know more about their income and how steady it is.
- Employer Verification: You can put a call through to the potential tenant’s employer to get answers to your questions about their income. This works mainly for tenants who get paid by cash only.
- 1099 or W2: A 1099 gives you information about what a freelance worker has earned over the previous year, but future earnings may vary. A W2 provides information about a salaried worker so you can see if their current job earnings meet your requirements.
- Offer Letter: If the tenant just resumed a new job, a copy of their offer letter would help so you can confirm what they earn.
- Tax Return: The tax return of a potential tenant can give you an idea of what they made in the last year.
- Pension or Social Security Statement: This is for retirees so that you can know where they stand financially.
If you have a rental home to rent out in Charlotte, NC, or you are a tenant looking for a rental, Grant Realty is an expert at Charlotte NC Property management. Contact us today to get started.
