Did you know that 10.6 million Americans rely on income from their rental properties? Because many landlords need this source of cash, most prefer to screen any applicants.
This means looking at the income of any potential renters. But exactly how do these landlords check for proof of income. In this article, we’ll be going over some of the popular ways that people verify this information. Let’s get started!
Why Do Landlords Look For Proof of Income?
There’s a variety of reasons why landlords undergo these types of extensive screening processes. However, like a lot of things, at the end of the day, it comes down to dollars and cents. If a tenant isn’t able to pay their rent, due to a lack of income, then a landlord will be forced to evict them.
Besides the fact that this severely sours any relationship between the landlord and tenant, it also costs a lot of money. One study found that the court costs of eviction costs around $3,500 and takes three to four weeks. Since every landlord wants to avoid this situation if possible, they verify the individual’s income as a way of making sure that they’ll be able to pay rent.
What Are the Ways That Landlord Check Proof of Income?
The most common way that landlords will verify a tenant’s income is by looking at their pay stubs from the past two or three months. This will help the landlord see if the income of the individual fluctuates greatly from month to month. However, it’s not the only method that they can use.
Another good method, especially if you’re self-employed, is your bank statement. Since self-employed people don’t have pay stubs, you can typically request a similar type of statement from your bank. They can also take a look at the person’s W-2 tax form from last year. This form shows the amount of income that the person declared on their tax form.
If you’re a self-employed individual, then you don’t have a W-2 form from your employer. However, don’t panic. You can still use the 1099 form as proof of your wages. Speaking of taxes, tax returns are also a good form of proof of income. A 1040 form contains all the income that a person earns.
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We hope this article helped you learn why and how landlords check for proof of income. Whether you’re a landlord or a renter, it’s important to stay up to date on the latest industry news. But how can you find a reliable source of information?
Look no further than Landlordo. Here at Landlordo we believe that staying on top of the latest trends helps you make more responsible for renting decisions. As such, we provide everything from rental advice to lease agreement templates.