Can your tenant REALLY afford the rent?

How do you determine if a tenant will be able to afford to rent your home? Generally, the rule of thumb in the industry is that rent costs should not exceed 30% of the tenant’s take home pay. In theory, this gives them enough money to afford the other costs of living expenses (food, clothing, gas, creditors, electricity, etc).

 

However, a recent survey by the Rasmussen Reports for Country Financial found that more than half of all Americans spend more money than they make for several months out of the year. Also, only half of all people surveyed say they actually have a monthly budget in place.

 

This takes us back to our original question – can your tenant REALLY afford the rent?

 

 

Biggerpockets.com recently recommended that landlords screen their tenants financial records like a lender would at a bank. That means in addition to verifying income, perhaps landlords should also have tenant’s provide information such as:

·         Bank balances & other assets

·         Monthly expenses (living)

·         Liabilities – including monthly payments and time left to pay off (credit card debts, auto loans, alimony, student loans, judgments etc.)

 

By gathering all of this information, you will have a much clearer picture of your tenants financial responsibility, and be able to determine if in fact they have enough means to pay their rent on time. If you find their debt-to-income ratio is just too high (i.e. monthly debt payments exceed 36% of monthly income) then perhaps it might be a good idea to pass on the applicant at this time.

 

For this and more information about interpreting credit reports, and screening tenants please contact ATS Inc. today!

 

Since 1988, ATS Inc has been a leading provider of tenant screening services  for Landlords, Property Owners, Property Managers and Real Estate Professionals.

Keep Your Rental Property from Getting Damaged

We’ve all seen the frightening images of hoarders on reality TV, but it’s hard to imagine actually knowing someone who might suffer from the condition. Even worse, it’s hard to imagine that someone might be living like that IN YOUR RENTAL PROPERTY.

 

The first step to detecting a hoarder is to understand the condition. Hoarding syndrome is defined as: “Collecting excessive quantities of poorly useable items of little value, failing to discard items, and difficulty organizing tasks.”

 

A red flag might be if your tenant has a lot of “things” piled up that seemingly have no monetary value, yet they refuse to discard of it. For example, if there are piles of what appear to be trash in a yard, but it’s never brought to the curb for pickup. Also a home with a strong, foul odor could be the result of rotting food and garbage. Be wary of any tenant who constantly makes excuses to delay home inspections, or is never around to let you voluntarily enter the home.

 

 

 

 

People with this condition could be hoarding piles of “things” that matter to them, and live in such a way that all furniture, floors, and rooms are piled with junk. There arealso animal hoarders, who take in dozens or hundreds of dogs, cats or other pets. Either situation would be disastrous for you, the property owner.

 

Believe it or not, this “common” psychiatric condition affects an estimated 700k to 1.4 million Americans, and few are actually receiving treatment. Researchers say that hoarding in older adults can be quite dangerous to ones health, as it creates conditions suitable for fires, falls, unsanitary living, and inability to property care for oneself (eat, use the toilet, leave the home). It can also attract vermin or insects (if spoiled food is being hoarded), which is a detriment to sanitation and health.

 

If neighbors are complaining to you about excessive animals, trash or strange smells, take the claims very seriously. Evicting any tenant can be time consuming an expensive, but cleaning up after a hoarder can cost tens of thousands of dollars in waste removal alone.

 

To avoid renting to a hoarder, find out how to properly screen your tenants and what other red flags to look for by visiting our website today!

 

We’d love to hear your tenant nightmare story! Enter to win our Tenant Horror Story Contest today to become eligible to win $400 in FREE tenant screening services!