Trying to figure out the math formula that most Landlords use to qualify

[CALGUY]

Originally Posted by readymade

Hey Calguy, I'm curious. My husband & I are thinking about looking for a new place. My credit score is 780 and his is 809. Mine was listed as a C (according to TransUnion), and sort of implied that wasn't very good (said that 51% of Americans have a better score). His was listed as B. I called on a rental, and he asked me about our credit. When I told him our scores, he seemed flabbergasted. I thought because they weren't that good, and he said no, they're "off the charts great."

I don't really know anything about credit. Is this true?

With scores like that, you won't have any problems renting.
Your scores tell me and other landlords that you handle your financial responsibilities very well.
Bob.

[CALGUY]

Originally Posted by readymade

So I just checked my FICO score. Mine is 706 and my husband's is 718.

How do landlords feel about that? Good? Bad? Iffy?

Thanks for your advice!

Those updated scores you posted are a little on the "iffy" side, but in most cases would not hold you back from getting a decent rental.
When I process an application to rent, the credit report is one of the most important tools I have at my disposal, and oftentimes if a score is not up to specs, there could be an underlying reason for a less than perfect score.
A recent divorce, laid off from employment, new job, change in income to name just a few.
I am flexible when it comes to reviewing a credit report.
If someone has been paying their financial obligations all along, and suddenly there is a noticeable change in the activity, I always like to ask what happened.
There could be any number of reasons the activity changed, and sometimes it is through no fault of the person who's credit report I have in front of me.
Bob.

[2O13]

Originally Posted by 2O13

landlords dont put that into the can you afford their rent formula. most are looking to see if your income is 1.5x the rent or more.

correction I meant to typ 2.5x NOT 1.5x - the is the average of what most landlords are looking for according to my friends search for a LA rent.

So if the rent is $1,000 that means you must make $2,500 min. a month, to qualify.

[MrRational]

Originally Posted by 2O13

So if the rent is $1,000...

...you should reliably and legally earn (gross) that much each week.
And it shouldn't require working two jobs or crazy hours to accomplish it.
One regular 40 hour job.

that means you must make $2,500 min. a month, to qualify.

Stop focusing on what one or another stupid or desperate LL might allow for a tenant to qualify.
Focus on setting up your personal finances to work for your whole life.

Real World Responsible LL:
Rent amount x3 = The MINIMUM number for "rule of thumb" on gross income.
If this first hurdle isn't met there's no point in going further.

Next hurdle is what OTHER monthly obligations exist.
Car loan? Student loan? Credit Card balances? Child Support?
If *any* of these exist then the ROT multiplier needs to be higher.

Then comes the source of that income you want to qualify on.
How long have you been earning at that level?
How long with the same company? Same type of job? Same industry?

Then comes the credit report. Not just the score number but how it gets that way...
and often even more importantly... the objective source of data about you that can be
used to learn how far you have "stretched the truth" in the rest of the application.

Have you ever stiffed anyone on a bill? Ever been taken to Court over money?
Are there any sort of repeating patterns to your credit problems?

Getting back to the original $1500 number... in LA you need someone renting out rooms.

[larrivee]

We are coming to LA with not so wonderful credit scores (been struggling with a very rough TV market where we are from) but will have a significant war chest behind us. My wife will have a job ~40-50k (minmum, based off of local pay, it appears LA equiv could be as high as 75-80) and I am coming straight on to a docu/reality show as PM (worst case $1500 a week with the companies I work with).

Our current monthly expenses including rent are about 4k , with rent being about $1200 of that. Adding the LA premium on rent will put us at 5K monthly expenses. Going to an APT or TH will drop our water from $200 to possibly nothing and our $200+ electric due to non-stop AC should drop as well.

Being a show business town, how do landlords factor in freelance people's income? Will they take start paperwork/deal memo to see you are coming to town with a show lined up? If not, will they base everything around my wife's income, and if so can they factor in the amount of savings we are coming with (since she may not show a positive DTI on her own)? We have an extensive positive rental history over the past decade as we have followed the work around.

Thanks for the info, looking forward to seeing the responses (especially from landlords).

[Dunbar42]

Originally Posted by larrivee

Thanks for the info, looking forward to seeing the responses (especially from landlords).

I think the low credit score will be more of a problem than demonstrating income. My brother is self-employed and was able to provide bank statements to show a steady stream of income. When I was signing the lease on my apartment the apt. management staff were discussing a prospective tenant who was self-employed. It was decided that they would allow this person to rent the apartment if they paid an extra deposit (which I believe my brother had to do as well.)

Now if your wife is moving out here without a job that could be a problem if you're looking to rent places more than 1/3 of the gross income of your new job offer. But like I said, the low credit score is probably going to be harder to work around.

[CALGUY]

Originally Posted by larrivee

We are coming to LA with not so wonderful credit scores (been struggling with a very rough TV market where we are from) but will have a significant war chest behind us. My wife will have a job ~40-50k (minmum, based off of local pay, it appears LA equiv could be as high as 75-80) and I am coming straight on to a docu/reality show as PM (worst case $1500 a week with the companies I work with).

Our current monthly expenses including rent are about 4k , with rent being about $1200 of that. Adding the LA premium on rent will put us at 5K monthly expenses. Going to an APT or TH will drop our water from $200 to possibly nothing and our $200+ electric due to non-stop AC should drop as well.

Being a show business town, how do landlords factor in freelance people's income? Will they take start paperwork/deal memo to see you are coming to town with a show lined up? If not, will they base everything around my wife's income, and if so can they factor in the amount of savings we are coming with (since she may not show a positive DTI on her own)? We have an extensive positive rental history over the past decade as we have followed the work around.

Thanks for the info, looking forward to seeing the responses (especially from landlords).

As a Los Angeles landlord, I have to say, your situation, as you have given it here, would be something I would have to think long and hard about before renting to you.
First off, why, if you were making that kind of money between the two of you, is your credit "not so wonderful" as you put it?
Verified employment is a must before being considered for any rental.
As for freelance people who hop from one job to another, that automatically throws up a red flag.
Landlords want to know that income is steady, and that rent will always be paid on time.
As for income verification for freelance people, I would require a federal tax statement showing your earnings.
One thing in particular puzzles me, and I am sure other landlords would also want to know.
How is it you have a "significant war chest behind us", and yet you have allowed your credit to slip into a "not so wonderful " position?
As a landlord this causes me some concern.
I, along with most landlords want to see how you handle financial obligations, and from what I read in your post, it is doubtful I could consider you as tenants.
Either you are living to close to the belt, or you ignore your financial obligations.
Either way, from what I see, it would cause me to make a determination that I just couldn't rent to you.
Other landlords may see your situation differently, but years in the rental market has taught me to make sure potential tenants are on solid financial ground.
Bob.

[larrivee]

Sent you a PM instead Bob. Felt like I was laying out too much personal info.

[mading6]

1/3
Usually you need to make three times your rent

[larrivee]

We'll be fine, thanks for the info gang.