Why You Have to Know Your Prospect Tenant
As much as I would like to believe that all tenants are capable of paying rent, it’s like dreaming of rainbows and butterflies during Algebra class. Not all people are as honest as you want them to be, and some of them can even tell virtually all lies in the book just to get landlords and property managers to admit them into a unit.
You can’t afford to go wrong with tenants and the only way to actually gauge their eligibility to occupy your property is if you know their actual income. Why so? Normally, a family can afford a house that is priced 40 percent of their salary every month. If your property’s price tag lies within this boundary, then it’s safe to take things to the next level. However, if it goes beyond 40 percent, the tendency is that they’ll eventually stop paying in the long run. Standards of living these days is not as cheap as they were, everything seems to be soaring high. Thus, if you’re not confident about a tenant and the income statistics he’s telling you, you can ask his employer’s phone number and you can call him instead for confirmation.
In addition, you can ask for previous rent payment stubs. Even if your tenant is expecting something positively major to happen to him financially, what matters is how he dealt with his finances before, because it’s what actually happened, and that his expectation isn’t happening yet, and it could be that it won’t happen ever. You have to ask him the three latest stubs he has. If he can’t provide any, you can ask him for a 3-month advance instead.
It’s good to put our trust in people. However, not all people are angels from heaven. If you rent out your property to an unreliable tenant, it will cost you money and months of vacancy, and your asset will turn into an obligation.