Income to rent ratio - Landlord Forum thread

Income to rent ratio by Anon (NV) on May 23, 2012 @23:45

Do any of you have a ratio you feel comfortable when renting to prospective clients? I have heard the tenant has to make atleast 3 times the rent per month? Thanks in advance

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Re: Income to rent ratio by anonymous on May 24, 2012 @07:57	[ Reply ]

in theory only, yes

Re: Income to rent ratio by Micah on May 24, 2012 @09:05	[ Reply ]

Honestly, I'm more concerned with what outstanding loans they have these days. Had someone apply last year who made 4X the rent but the majority of that money was already spoken for between credit cards, auto-loan, and child support. Once those were paid (if they were paid) he would not have enough to pay the rent! Also, whether or not utilities are included is a big deal! Up here in Maine renters got caught unaware a few years ago when the housing market crashed and tons of people put their SFHs on the rental market. Sure, you could get a 3 br house with a small yard for the same price as my 1 br apt, but then they had to come up with at least $300 a month to cover utilities! Since my place includes utilities I will allow 2.5X rent in income and I do month to month. I let my tenants know that if they cannot pay the rent they need to tell me ASAP and move. No repercussions, no bad references, no hard feelings. So far I haven't had that problem though.

Re: Income to rent ratio by Anonymous on May 24, 2012 @11:21	[ Reply ]

3x the monthly rent in monthly in income is what I use but as mentioned, DTI ratio is another important factor. That's something a credit score won't tell you. You'll need to parse the details of the prospect's credit report in order to figure it out.

Re: Income to rent ratio by OK-LL on May 24, 2012 @13:58	[ Reply ]

A general standard is NET income s/b 3x rent, with an eye on the monthly debt payments outside of rent & utilities. You can even find a USDA chart online that will estimate what it costs to feed a family of X number, taking into consideration males/females/ages, etc. Remember, if the tenant is living at the high end of his income, the first flat tire will cause him to stumble, no matter how large his income.

Re: Income to rent ratio by David (AL) on May 26, 2012 @23:13	[ Reply ]

If you don't find out if they paid their rent to the previous landlord it doesn't matter if they make 5x the rent.