I’ve been advised not to rent to people who say their self-employed because they tend to falsify their tax records to make it look like they earn more than they do, etc. What are people’s opinions here?
I will rent to anybody. What you have to do is appraise the risk that they bring to you and transfer that risk back to them. For example if the risk is that they won’t make regular on time rent payments then require them to pay the whole year in advance. If a person has a history of kicking holes in walls then take a deposit large enough to compensate for the expected damage (2 times 3 times or even 4 times the rent). That being said since there is an ample pool of renters that have good jobs and no history of damaging property then I would chose the better tenant and not worry about the applicants that don’t fit the mold unless I had no other choice.
my experience is that self-employed tend to under-report income.
I think the opposite is true.
Self -employed or not, We all try to make our tax returns say we make as little as {legally} possible.
I have to agree with the crowd, the self employed (present company excluded of course) tend to minimize their income to the IRS. I take a good look at the credit report to see if they pay their bills, and if they have no verifiable income, I ask to see bank statements showing regular deposits. I’ve got 1 middle aged tenant who was fired and started a new business and had NO income other that a $6k/month stipend from his parents (nice if you can get it) until the business takes off. He provided me bank records for over 24 months showing a $6K deposit like clockwork. He’s one of my best tenants.
Yes, I often do because I love dealing with people who have an entreprenurial spirit like myself. Their credit report is a factor as well as being able to come up with first/LMR, but if they can provide an amazing interview of their accomplishments and how they got from point A to B with some interesting tips of the trade, then they’re in. The ones that have accomplished a lot and are clear how they did it also know how to come up with rent every month. True, it’s hard to garnish their wages, but as long as you have first/last and their credit report shows they haven’t ripped anyone off, I would.
Yes, but within reason. I avoid the “lower income” self employed or commission people…like barbers, door to door salesman and waitresses. One bad month and they may have “nothing” to pay you rent with. E.G. I had a waitress (at a nice restaurant) want to rent from me, and she swore she made $3,000 a month, but only $1000 a month or so was documented. Haha. She may or may not be telling the truth, but there is no way in h*ll I would rent to her. On another occasion I rented to a person who made about $2500 a month selling door to door electricity (it was documented & verified through her employer), and she was a great tenant, until the seasons shifted and it stopped getting dark at 9pm…more like 6pm. She didn’t have enough money to pay her rent at that point since most of her sales were residential and in the evenings, so we wound up moving her crap to the curb. And of course she was a single mom with a baby, and put on a big show for the constable, me and my guys. LOL. Its amazing how retarded some people can be and will blame someone else for their problems!
So, I learned my lesson early on as a landlord and I have written those particular folks off, and so far so good!
The person in question was a young, single baby mill on disability who wanted to run a day care center out of the house.
I wouldn’t touch someone running a business like day care out of your house,I had someone bring that up and I told them it would be a condition of the lease not to run that type of business,if someone is a plumber and takes calls, or work from a home office fine,but not something that involves people coming and going in the house
Need to check your insurance policy too. It probably has something in there about businesses not being run out of the house. Even if it was allowed, no way would I want a daycare at one of our houses.
She’s “self-employed” as a day care provider and collecting disability? I would exclude her for committing disability fraud. The unit is also not zoned day care. I wouldn’t knowing let anybody in my places committing crimes. She’s disqualified the moment she tells me she’s committing fraud.
Entrepreneurs use projected incomes all the time in their businesses. There’s nothing illegal about it, but when it involves government assistance fraud, that’s a whole new ballgame.
Thanks for the replies. As it turns out, she vanished–never returned her completed application.
I had another self-employed person come right after her. He said he and his business partners (the others who would be living in the house, whom I never met) had just relocated from another city and were living in temporary housing. He wanted to show me an invoice from some subcontractor as his proof of income. He was a nice guy but there was something about the whole situation that didn’t feel right, so I said I wouldn’t be able to accept that as income.
I have been self-employed all my life. The first bill I pay is for the house i live in. Not to say there are not alot of scumbags out there. I will rent to anyone that has no evictions, and is not selling drugs.
Oh ya i always report the cash people pay me :anon
I’m self-employed and can tell you that when I started out and was seeking credit, my goal was to show the highest income possible. As I’ve become more established my goal has been to minimize my income and reduce my tax liability through deductions and credits.
[[[[…who wanted to run a day care center out of the house…]]]]]
Well then, she is not self-employed. She does not have the day care center yet. Planning to be self employed some time in the future doesn’t count as income. Even if she actually got licensed and started a day care center, it takes many months to build up a business.
Income must be verifiable. Most insurance companies will not permit the running of a business (where customers go to the residence) out of a residential rental.
Note: I believe that there is a law in California that you can not prevent a tenant from running a day care center lout of your house.
I’ve rented to a lot of self-employed people. Real self employed people with real businesses and real income. All of that is easy to verify.
We can’t generalized everybody, If they are self employed I would give them the benefit of chance to rent my property as long as they can pay the rent and not just applying fraudulent.
Yeah! What he said…