Landlords - what rent to income ratio do you use? (agreement, tenant)

[Vectoris]

Landlords, when you're screening applicants for rental, what do you look for in your tenants' income - and do you calculate it on their net or gross? And as for job history, do you prefer/insist that they've worked at least a year?

[momtothree]

I am not the LL but almost all the places I applied at asked for 3 times the net income. Net income is available income for them to use toward the rent, I wouldn't do gross.

[generalswife]

This is what my PMC uses. For tenants not meeting the "gold" standard they must pay an extra amount in the security deposit ...

Your monthly combined gross income must be at least as below. We use 50% of the verified cosigner income.You can have more than one cosigner if needed. If a cosigner is required to meet these criteria, we will require their social security # /ITIN # if one is available before a rental agreement can be signed.

PROPERTY TYPE INCOME/RENT RATIO

GOLD 2.75 x the monthly rent

SILVER 2.25 x the monthly rent

BRONZE 1.75 x the monthly rent

[Lacerta]

We say an absolute minimum of 2.5x the rent in net income. 3x is much better.

And the longer on the job, the better. Anything less than 1 year is definitely a negative.

[Vectoris]

Thanks for the information, very helpful.

One of my properties is in a poorer area and for that one, I'm getting enquiries from people on government benefits, who also get food stamps and heat/electricity paid for. I can estimate utilities but what about food? And what if they have 4 children as opposed to none?

Apparently Social Services offers to write up something called a Security Agreement, whereby the tenant doesn't give me a security deposit but after they leave, I can claim any damages from SS.

[generalswife]

For families receiving section 8 in my zip code, the max amount s8 will pay is $1901 for a 3/2. That cost includes utilities, so I figure the max rent I can charge is $1500-ish to leave room for utilities. I haven't rented to a s8 tenant yet, but when I called the county office, the clerk I spoke to said it could take up 45 days to get the tenant moved assuming all the cogs and wheels line up.

I would be leery about an agreement promising to pay once the tenant vacates. Would there be a maximum damage amount SS would cover? How long will it take to get your money from SS? I'm sure you will have to fill out forms in triplicate and then follow up and wait and wait and ...

[Icemodeled]

My husband and I are to relaxed on this, we usually do not require a large rent to income ratio, usually judge it by other factors also. This will change in time though, as we need to become more strict. Should do at least 2x rent, right now were taking below that. We do not take section 8 tenants either.

[oh come on!]

I've never had good success looking at a stiff ratio.

I look at bank statements, and ask applicant to cross out any account numbers and personal transactions.

I just need to know what the average monthly balance is. By comparing to paystubs, you can find out if they're good or lousy at money management.

If they don't want to show me a balance, too bad, their loss. Next.

[oregonwoodsmoke]

I require the tenant to take home three times the rent. The tenant has to have enough left after paying rent to keep the heat on, keep their car running, and feed their kids.

I'm not so sure I'd be happy to take a low income tenant with no deposit. Whoever is supposed to pay for damage after they move out, doesn't have a lot of motivation to pay.

[freemkt]

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