Verifying the income of prospective tenants should be a top priority for landlords during the applicant screening process. These days, forging documents is easier than it should be. So, while pay stubs are still the best proof of income, landlords should look for multiple documents that can verify what a tenant would be bringing in each month to ensure they can afford the rent. On top of paystubs, there are multiple ways to verify income.
Landlords may ask applicants for their two most recent tax returns which can be sent by mail from the IRS, an accountant, or downloaded online. Since many people use tax preparation software, tax returns can be accessed rather quickly and easily.
Tax returns provide a wealth of useful information to landlords, such as past employers, the amount of total income, and previous addresses. All information can be used to verify what has been put on the rental application and prove whether the applicant can afford the space.
By asking for a prospective tenants past two bank statements, landlords are able to verify paystubs. Statements also allow landlords to look into a tenant’s month to month finances to determine if they are financially responsible and therefore a reliable tenant.
When analyzing bank statements, landlords should look for an applicant’s ability to save. A great applicant may have three to six months of cash reserves, as this demonstrates financial stability and responsibility.
Letter from Employer
Less intrusive than the previous verification methods, landlords may request a letter from a prospective tenant’s current employer. This, of course, should be requested along with pay stubs, as it is not enough to verify income. It can, however, confirm the information on the paystubs and serve as a letter of recommendation for the applicant.
Ask your prospective tenant to request a letter from their employer that outlines how much they earn and how often they’re paid. The letter should include dates of employment and the position the applicant holds. Just make sure the letter is on official company letterhead to ensure that it is not forged.
If you’re unsure of whether a document an applicant submits to you is forged or not, you have a few options to ensure the wool isn’t being pulled over your head. For example, a close analysis of pay stubs or bank statements can often illuminate inconsistencies. You can also perform an online search of an applicant and their employer. Social media profiles will often list current employment and many companies have employee pages that can confirm employment.
Protecting your investment and property is essential, so make sure you’re taking the right steps to ensure prospective tenants will be able to uphold their side of the deal.