Are you a new landlord who wants to rent your investment property? Here’s how you can verify an applicant’s proof of income by using five easy methods.
As a landlord, you want to make sure that your tenants have a reliable income so they can pay their rent in a timely manner.
One way to prevent any potential issues is to get proof of income from prospective tenants before they sign a lease. This helps protect you, as well as them, from future problems.
Read on for a list of five easy ways you can verify an applicant’s proof of income, so you’ll have peace of mind when it’s time to collect rent payments each month.
Pay Stubs
Perhaps the easiest way to verify proof of income is through an applicant’s pay stub. This paperwork provides you with the employer name and includes the person’s hourly rate or weekly amount of take-home pay.
If an applicant cannot get a pay stub from their employer, they can try to use an online pay stub template. This form will help categorize their wages, deductions, and should also show net take-home pay.
Telephone Verification as Proof of Income
One way you can be sure your future tenant is gainfully employed is to contact their employer directly. Include a spot on all rental applications that ask for the person’s employer name, phone number, and a specific person to contact.
When you call, simply ask if the applicant is employed there, and find out if they can tell you what their current wage is. The laws may vary depending on your location, so make sure you’re legally allowed to go this route before you make the call.
Bank Statements
A bank statement can be a very reliable method for proof of income. The statement should show you any direct deposits the applicant receives from their employer.
Not only will you see income on bank statements, but you can also see how much money the applicant currently has available. Make sure you scrutinize bank statements carefully and look for any unusual transfers or other transactions that could raise a red flag.
Offer Letters
If a prospective tenant is moving due to new employment, an offer letter may serve as temporary proof of income. These letters are usually given to those who are currently undergoing a job transfer.
You can verify the offer letter by contacting the company listed on the letterhead. If the letter doesn’t include the tenant’s salary, you can always ask the company for that information if they’re willing to provide it to you.
Tax Returns
An applicant’s tax return might be one of the most reliable forms of proof of income available. This is a good alternative if you have an applicant who doesn’t have, or wants to give, a copy of their pay stub.
Make sure the tax return is the most recent available and that they include all pages of the return. When possible, ask if they can provide you with several years of returns so you feel confident that they have a steady level of income.
Renting Smart
Getting proof of income will protect your interests as a landlord and help you feel comfortable when you make a decision about new tenants. Whether it’s a pay stub or tax returns, this information is invaluable for landlords who plan to rent their property.
