2 incomes to qualify (by Roy [AL]) Feb 9, 2018 3:50 AM|
2 incomes to qualify (by LisaFL [FL]) Feb 9, 2018 4:26 AM
2 incomes to qualify (by Roy [AL]) Feb 9, 2018 4:39 AM
2 incomes to qualify (by Deanna [TX]) Feb 9, 2018 5:09 AM
2 incomes to qualify (by Sisco [MO]) Feb 9, 2018 5:13 AM
2 incomes to qualify (by Roy [AL]) Feb 9, 2018 5:18 AM
2 incomes to qualify (by J [FL]) Feb 9, 2018 5:32 AM
2 incomes to qualify (by S i d [MO]) Feb 9, 2018 5:52 AM
2 incomes to qualify (by LisaFL [FL]) Feb 9, 2018 6:05 AM
2 incomes to qualify (by WMH [NC]) Feb 9, 2018 6:13 AM
2 incomes to qualify (by Roy [AL]) Feb 9, 2018 6:25 AM
2 incomes to qualify (by RB [MI]) Feb 9, 2018 6:41 AM
2 incomes to qualify (by LisaFL [FL]) Feb 9, 2018 6:44 AM
2 incomes to qualify (by Nicole [PA]) Feb 9, 2018 7:02 AM
2 incomes to qualify (by Scott [IN]) Feb 9, 2018 8:33 AM
2 incomes to qualify (by Roy [AL]) Feb 9, 2018 8:49 AM
2 incomes to qualify (by Amy [MO]) Feb 9, 2018 8:58 AM
2 incomes to qualify (by LisaFL [FL]) Feb 9, 2018 9:04 AM
2 incomes to qualify (by Robert J [CA]) Feb 9, 2018 10:25 AM
2 incomes to qualify (by Ken [NY]) Feb 9, 2018 12:49 PM
2 incomes to qualify (by Robert,Ontario,Can [ON]) Feb 9, 2018 1:46 PM
2 incomes to qualify (by NC INVESTOR [NC]) Feb 9, 2018 2:48 PM
2 incomes to qualify (by Vee [OH]) Feb 9, 2018 3:34 PM
2 incomes to qualify (by Ray-N-Pa [PA]) Feb 10, 2018 7:23 PM
2 incomes to qualify (by Roy [AL]) Feb 11, 2018 5:24 AM
2 incomes to qualify (by LisaFL [FL]) Feb 11, 2018 7:41 AM
2 incomes to qualify (by Roy [AL]) Feb 11, 2018 4:24 PM
2 incomes to qualify (by Roy [AL]) Posted on: Feb 9, 2018 3:50 AM
You are reviewing an application from a husband/wife and they both have low paying jobs. Net income from both jobs added together does barely meet the 3X minimum, however, if one of them loses their job, then you have a situation where one income is only 1.5 X rent.
This situation can apply to married couples or room mates or any situation where 2 (or more) incomes are needed to pay rent with.
What min. standards do you set in deciding if two applicant's incomes can be safely added together? Does it make any difference to you if they are married or just living together? --68.63.xxx.xxx
2 incomes to qualify (by LisaFL [FL]) Posted on: Feb 9, 2018 4:26 AM
Once I raised my minimum to 3.5x minimum in come I rarely have any issues. I have so many applicants that I can usually find applicants who have 4x the monthly rent amount in income. The incidents of late payments from those are virtually zero. --173.170.xxx.xxx
2 incomes to qualify (by Roy [AL]) Posted on: Feb 9, 2018 4:39 AM
Must be nice to have your situation. I am finding that with Class C applicants in a town filled with low paying service type jobs,..multiple incomes are needed to make ends meet. Even though the min. wage at Walmart is $11.00/hour now, it still would require 2 of those jobs added together to pay my rents. --68.63.xxx.xxx
2 incomes to qualify (by Deanna [TX]) Posted on: Feb 9, 2018 5:09 AM
Is that because the $11/hr jobs only work them 32 hours per week, versus the 40-50 that was more common prior to the ACA mandate? Or is it because, over time, your rent has raised to a point that has outpaced the income-earning ability of a significant portion of your tenant pool? --96.46.xxx.xx
2 incomes to qualify (by Sisco [MO]) Posted on: Feb 9, 2018 5:13 AM
I use 4X take home : rent rate.
Applicants as you have described would force me to ditch my current marketing efforts, screening processes, and application processes.
You canít make it work dealing with people who have income this low.
Quit doing what you are doing, or you will keep getting what you are getting. --72.172.xxx.xx
2 incomes to qualify (by Roy [AL]) Posted on: Feb 9, 2018 5:18 AM
Great questions Deanna!!! I hope by the end of this day to have some answers to your questions!
My average rents are $644.00/month. Can a person who nets out at 9.50/hour ($11.00/hr. minus deductions) afford my average rents? You tell me,...I'm all ears,...LOL. --68.63.xxx.xxx
2 incomes to qualify (by J [FL]) Posted on: Feb 9, 2018 5:32 AM
I've been using 3X gross income (combined) and so far I've never had a problem with someone not paying rent. I have considered changing it to 3.5X based on what I read here and will probably do it.
2 incomes to qualify (by S i d [MO]) Posted on: Feb 9, 2018 5:52 AM
I use combined household income from all sources that can be documented. 3x the rent MINIMUM. More required if they have a lot of monthly obligations, as observed on their credit report which lists minimum monthly payments on debts.
Roy, you and I cater to a similar market. It is what it is. The risk of one person losing a job remains the same regardless. If both applicants have 3x the rent (total of 6x) then my guess is they will be looking one step above the level of house you are offering.
You and I both know that the vast majority of people are not frugal. If they both make 3x the rent, they are not saving it for a rainy day in case someone loses a job. Person 2's income will be spent already on cars, furniture, and high speed unlimited data packages. In short, there is often no more "safety margin" in a higher income house vs. a lower one. They spend up to the level they earn. If your 6x income household loses one job, they will be just as likely to be evicted because they'll pay the rent-a-center and the buy-here-pay-here car dealer before they pay you.
I could be wrong, but it's what I see consistently in my applicants. More income = more debt load. --173.17.xx.xx
2 incomes to qualify (by LisaFL [FL]) Posted on: Feb 9, 2018 6:05 AM
You're right. I don't cater to minimum wage earners. I've found them to be too high maintenance.
I'd consider most of my properties B properties. I do have a couple of duplexes but I've even managed to attract higher quality applicants there. They rent for $675-$760 and all are occupied by single people, income of $3000 a month. All but one. The fourth don't work but has a family of three with $4000 a month in social security/VA disability income.
Heck I have had a professional man making 60k a year in my lowest quality 1966 mobile home that rents for $540 a month for 7 years. Keeps the place immaculate.
I'm spoiled. If I constantly had to chase rents I would find a new job or rather retire. --173.170.xxx.xxx
2 incomes to qualify (by WMH [NC]) Posted on: Feb 9, 2018 6:13 AM
It usually takes two incomes to qualify for our rents, which are close to double yours, Roy (of course, houses here cost a bazillion times more than your specials!)
Although having said that, I just realized that at least one-third of our units are occupied by singles. --50.82.xxx.xx
2 incomes to qualify (by Roy [AL]) Posted on: Feb 9, 2018 6:25 AM
I don't 'cater'(whatever that means) to minimum wage applicants either. One reason I keep my rents on the high side is in hopes the min. wager applicants don't contact me. But they do and sometimes I am over-run with low wage applicants.
In my town, if you are fortunate to have a Union job (Goodyear + Honda), you can easily start at $18.00/hour right out of H.S. These are people I would prefer to have as applicants. In reality though, most of my applicants have 'semi-skilled non-union jobs' and have a gross hourly wage of $10.00 -$15.00/hour. In this income range, it usually requires another source of income to afford my rents. That 2nd income source could be a W-2 job or some type of misc. income (usually it is disability, S.S.I, etc.). --68.63.xxx.xxx
2 incomes to qualify (by RB [MI]) Posted on: Feb 9, 2018 6:41 AM
Show me the money.
And let it run like a (broken) Faucet.
Cater Definition. (someone had to do it)
Provide what is Needed or Required. --47.35.xx.xx
2 incomes to qualify (by LisaFL [FL]) Posted on: Feb 9, 2018 6:44 AM
In my area if you have Class C rentals then all you attract is minimum to low wage workers.
It sounds like you'd like higher qualified applicants but you may require class B rentals to attract that level of tenant.
So you are catering to (which means providing a need) to lower wage earners and not the higher wage earners you'd like to attract. --173.170.xxx.xxx
2 incomes to qualify (by Nicole [PA]) Posted on: Feb 9, 2018 7:02 AM
I also have the "class c" type units described. when others say to raise the rent and qualifications to get a "next tier" type tenant, it just isn't going to happen.
My tenants have things like drop ceilings, no dishwashers, 80s style "butcher block" look counter tops. If I replace all that with plaster ceilings, dish washers and granite, I still am not getting a "better" tenant ... because that same unit is on the main street of town with all the noise and dirt, over a garage, or in an alley that runs off another alley.
Properties in middle class suburbs cost 3x - 4x what I pay for my places... rents are not 3x to 4x higher and expectations from tenants are much greater.
apples and oranges ... different type tenants and units.
Personally, I love what I've got and work with. --72.95.xx.xxx
2 incomes to qualify (by Scott [IN]) Posted on: Feb 9, 2018 8:33 AM
Sid, I have been seeing the same thing. Been having more trouble with 6xers than 3x and 4x. A 6x loses his job, and can only find a 3x job, but he still has the elevated financial obligations. He can't pay rent, so he has to go.
2 incomes to qualify (by Roy [AL]) Posted on: Feb 9, 2018 8:49 AM
Thank-you Nicole for that dose of Class C REALITY. Even though I may rehab my houses to Class B- standards, they are still located in Class C hoods,..which brings in Class C renters with all of their crappy paying jobs. However, if you add 2 crappy paying jobs together, then you get (hopefully) one decent amount of income to pay my rents with.
This post deals with how to add those two incomes together or how to make a silk purse from a sow's ear. You have to have Class C tenants to be able to grasp what I am talking about here. --68.63.xxx.xxx
2 incomes to qualify (by Amy [MO]) Posted on: Feb 9, 2018 8:58 AM
Roy, to answer your question. No guarantees, but we look at length of time on the job, time in between jobs(if any) and dependability with rent payments. Some renters may lose a job, but are smart enough to ask family for help to keep rent payment current while looking for work.
I'm not sure if you can make the diamond ring a factor in the case of couples. Maybe a little added security but with all the disposable marriages, not sure it's enough anyway, even if you could.
You could make the requirement( in cases that combined income is the qualifying factor) that each individual has to have at least 1.75 or 2x the rent in case of job loss by the other. That would put them up to 3.5 to 4x, and give an added cushion. --107.77.xx.xx
2 incomes to qualify (by LisaFL [FL]) Posted on: Feb 9, 2018 9:04 AM
Class C tenants are definitely more challenging. Maybe try to market to retirees whose combined social security income might meet the income requirements?
It may not be garnishabke but then again you're not likely going to get much out of a minimum wage worker either. They won't have extra costs of kids or health care (not as much anyway if they're on Medicare). Less likely to cause problems or get arrested or laid off. --173.170.xxx.xxx
2 incomes to qualify (by Robert J [CA]) Posted on: Feb 9, 2018 10:25 AM
This is why I love 1 Bedroom Apartments. Usually only one person with one income live in a 1 bedroom. But my two bedrooms and up units have several occupants with multiple incomes.
In prime West Hollywood I rented out a three bedroom unit to 4 roommates. Three of the 4 made enough income to pay for the unit by them self. It was two friends and a couple.
One month one person was "short" on funds to pay their share of the rent. None of the other occupants would cover the roommates shortage, so I received a partial rent payment. In West Hollywood they had no vacancy decontrol. The rent was 1/2 the market rate and still these 4 tenants could cough up a couple hundred bucks.
So I ended up evicting this group of people and then having a negative effect on all of their credit scores. After their eviction I was now able to raise the rent to market.
After that I had the print in my lease in bolder type on the part about all tenants being responsible for 100% of the rent, not just their share. --47.156.xx.xx
2 incomes to qualify (by Ken [NY]) Posted on: Feb 9, 2018 12:49 PM
I have primarily class c units,i don't care if they are married or not,makes no difference at all,they get separated or divorced quickly anyway.I want to see a total of 3x the rent as income unless a single person getting an SSI check then I will accept almost nothing more than the check itself making the rent payment.What I have found is if I can detect an entitlement mentality I don't want them,they will be the ones to create drama and not pay rent and call the building inspector.If they have no entitlement mentality they will get another crappy job quickly if they loose the one they have or get me paid one way or another --72.231.xxx.xxx
2 incomes to qualify (by Robert,Ontario,Can [ON]) Posted on: Feb 9, 2018 1:46 PM
Most jurisdictions they have unemployment insurance so when someone loses job they go on unemployment. Here it is called UI. People with seasonal jobs go on UI then work when the winter is over. What is the unemployment rate in the area. Here the minimum wage is now $14 dollars per hour yet there are many places advertising for workers such as the fast food restaurants and donut shop along with WM which has very high turn over of workers. People with higher incomes generally buy houses instead of renting so there no easy answer. If the rental houses are very energy efficient then people can live on less as the utilities are not eating a lot income. Well insulated along energy efficient heating and cooling is a plus for rental units. Energy efficient in the ad attracts more tenants as there is more demand. --147.194.xxx.xxx
2 incomes to qualify (by NC INVESTOR [NC]) Posted on: Feb 9, 2018 2:48 PM
Rent cannot exceed 25% of GROSS income. Married couples are looked at jointly. Singles, well they are single. Roommates and unrelated couples each must qualify since they will be joint and several and lately I'm finding that not many of those relationships are lasting as long as the lease.
I have A and B and when they lose a job is it just as damaging to them as the C and D since they spend based on their higher incomes and have far greater commitments especially if they are just starting out. They don't understand the "rainy day" concept until it happens to them.
2 incomes to qualify (by Vee [OH]) Posted on: Feb 9, 2018 3:34 PM
Raise the rent 100bux and get better people. --76.188.xxx.xx
2 incomes to qualify (by Ray-N-Pa [PA]) Posted on: Feb 10, 2018 7:23 PM
I understand the concern, but if you have one person making money, they can also get laid off or have the number of hours reduced and get you the same result. --24.101.xxx.xxx
2 incomes to qualify (by Roy [AL]) Posted on: Feb 11, 2018 5:24 AM
I have re-read all of the responses to this post. Great answers came from many. Sid, Sisco, Deanna and many others.
I think I will follow Sisco's advice and raise my min. up to 4X. Instead of combining incomes together, each person in the household with a job has to qualify to pay rent in case the other one loses a job. No more combining incomes trying to make silk from a sow's ear. --68.63.xxx.xxx
2 incomes to qualify (by LisaFL [FL]) Posted on: Feb 11, 2018 7:41 AM
Maybe I misunderstood your issue. It sounded like you said you are only attracting class C tenants with minimum wage jobs and as such they need to combine their income to qualify.
If you require they to qualify individually but you're only attracting those who won't, how will you find a tenant?
I consider combined income when selecting a tenant and the combined total must be 4x the rent amount but the primary tenant must earn at least 3x the rent amount on their own.
So when they have a falling out the higher income one has an ability to stay and actually continue to afford the property. I've had this happen several times and not had a problem.
Sounds like your plan is a good one so long as your state doesn't disallow you from considering individual income and forces you to only look at combined income, which some do. --173.170.xxx.xxx
2 incomes to qualify (by Roy [AL]) Posted on: Feb 11, 2018 4:24 PM
Most of my Class C tenants can qualify (3X) with only 1 income. However, there are a few times when I am over-run with low wage applicants and if two of them are married or related in some way (employed adult children living at home), I will then add their respective low-wage incomes together to form what I think is doable. Sometimes it works out and sometimes it does not work out.
Last month, I rented out a $700.00 house to a Mother and 2 adult children all living under the same roof and sharing in the cost of the monthly bills, including rent. With 3 incomes here, they total 4X rent. I hope it will work out. Come March 1st, I will find out too.