Re: Potential Tenant w/ Income from Business - Landlord Forum thread 317481

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

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.

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Re: Potential Tenant w/ Income from Business by Anonymous on April 15, 2014 @14:49	[ Reply ]

The business income isn't what's being considered here; just the distribution of profits to the owners. If the owners regularly take a draw, that's something to note. If, on the other hand, it's an annual distribution, that might be great, but it won't help pay the bills on a monthly basis unless the tenant is good about spreading his expenses out. The potential tenant has 2 sources of income: his salary from the business, and his share of the profits from the business. Salary is fairly easily identified. The trouble is determining what amount of the profits are predictable enough to serve as qualifying income.