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Can Your Tenants Afford Rent? How to Calculate Your Tenant’s Rent-to-Income Ratio
By RentSpree
ousing affordability is a hot most difficult early days of the shutdown. Now, topic for policymakers at the new numbers from the National Equity Atlas, a municipal, state, and federal research partnership between PolicyLink, University levels. For investment property of Southern California, and the Right to the City owners, property managers, Alliance, show that 14% of all renter households and rental agents, ensuring were behind on rental payments as of late March that a rental applicant has the 2021. The shortfall amounts to approximately $20
income necessary to pay the rent is an important billion in late payments.
part of the vetting process. Learning how to calculate your tenant’s Rent-to-Income ratio is a first step in making sure that they can be relied on to pay their rental payments on time each month.
COVID-19 AND LATE RENTAL PAYMENTS
One of the ways that state governments attempted to help renters at the start of the COVID-19 pandemic was by putting a moratorium on evictions. This was a response, in part, to the projected rise in unemployment caused by pandemic- related company closures and an attempt to avoid widespread housing instability during the
While the circumstances leading to these late rental payments are unique, the problem of late rent is not. It is essential that properly screen potential tenants in order to determine how able they are to pay their rent consistently and in a timely manner. Part of this screening process involves calculating the Rent-to- Income ratio to determine how affordable your rental property is for the individual tenant.
WHY DOES A RENT-TO-INCOME RATIO MATTER?
When looking for a new home, potential tenants
APARTMENT MANAGEMENT MAGAZINE - NOVEMBER 2021 CS-7