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tenants. An applicant with a 35% Rent-to-Income ratio and a stellar record of on-time rent payments from a past landlord is certainly preferable to one with a 25% ratio who is habitually late with the rent or has a credit history filled with late payments. In the event that a renter’s Rent-to-Income ratio is higher than you would prefer, you have options for helping them to qualify for the property. These could include the following:
• Ask for an increased security deposit to help your renter keep additional funds in escrow in the event of non-payment.
• Charge the monthly pet rent as an up-front pet deposit, reducing the rent due month to month.
• Ask for a co-signer on the lease and use their income as additional consideration for the prospective renter’s Rent-to-Income ratio
Remember to make your decisions based on a well-defined screening process. If you would offer an alternative arrangement to one rental applicant, you will need to offer that same alternative to all applicants in order to ensure a fair application and screening process.
WHAT TYPES OF INCOME SHOULD YOU COUNT?
Payroll can be verified through bank statements reflecting direct deposits, paycheck stubs, W-2 statements, tax records, or a verification of employment letter from the employer which includes salary information. Beyond that, there are a variety of types of income to consider as you verify income for your rental applicant. When considering a tenant’s income, do not forget to look for the following:
• Social Security Benefits - These can be verified through an award letter from the Social Security Administration or by checking bank statements.
• Alimony and Child Support Payments - These funds can be verified through a court-ordered award letter.
• Annuity or investment income - You should be able to verify dividends and payments from investment accounts through a statement from the brokerage. Be sure and verify the expiration of payments to see if they will continue for the foreseeable future.
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CS-10 NOVEMBER 2021 - APARTMENT MANAGEMENT MAGAZINE