Potential Tenant w/ Income from Business - Landlord Forum thread 317458

Potential Tenant w/ Income from Business by Anonymous on April 14, 2014 @11:36

I'm a new landlord with a house to rent. A potential tenant is a (part) owner of a business and they want to include the business profit as proof of ability to pay rent - the salary their business pays them is only double the rent, so they want to show the business profit as additional income. How would you all handle this situation ? Their business serves other businesses, not end consumers.

Thanks for advice.

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Re: Potential Tenant w/ Income from Business by Bill on April 14, 2014 @11:50	[ Reply ]

Self employed people often represent a poor choice for a tenant. When the business goes sour for a month or two they simply will not pay rent and never can get caught up. The businesses are so often seasonal too. If the business income is not sufficient to support the rent and their other income will not support the rent, what will you do when one gets laid off or the business fails to produce a surplus? These applicants are also unlikely to produce a 1099 or other evidence of other income. If these applicants were doing so well with their sources of income they would own a house. Do these applicants have a good credit rating and a clear criminal and civil history? Why are they moving? Have you contacted the previous landlord?

Re: Potential Tenant w/ Income from Business

Re: Potential Tenant w/ Income from Business by Anonymous on April 14, 2014 @15:56	[ Reply ]

Unless the business is being obligated under the lease (named on the lease as a financially responsible party), the business income has no bearing on the tenant's qualifications and cannot be sued for unpaid rent. You need to know how much and what type of income the indivdiual signing your lease has. If they are paid by the business a certain amount, that's the amount of income that factors into your consideration. If they can be paid more by the business, that's assumptive and not proven by their track record of income. I wouldn't rely on the business income to qualify tenants unless the business is a sole proprietorship, not an LLC or corporation.

Re: Potential Tenant w/ Income from Business

Re: Potential Tenant w/ Income from Business by Anonymous on April 15, 2014 @02:05	[ Reply ]

I would politely tell him his income is not three times the monthly rent, and thank him for considering the rental property. Run, do not walk away from this proposal. The answer would be a definite no. Advertise, and wait for a better candidate.