From landlords to credit card companies, everyone asks for proof of income from consumers and applicants. But have you ever wondered why this piece of information is so important? Well, that’s because proof of income provides a clear understanding of renters’ finances and whether or not they can afford to pay the rent. So, whenever a renter comes looking for home rentals, it’s important for every landlord to ask a renter for proof of income.
Remember, no matter how much you believe a prospective renter is a perfect fit for your rental apartment, some of the first things you need to know about tenants are how much money they make and if the rent is affordable for them. In this blog, we have highlighted some of the best ways landlords can verify a renter’s proof of income. Keep reading till the end.
4 Ways Landlords can Verify a Renter’s Proof of Income
In addition to checking their eviction records, criminal histories, and credit scores, verifying income is also an important part of the tenant screening process. Some of the most useful ways for checking a prospective renter’s proof of income have been mentioned below.
- Ask for Pay Stubs
Tenants looking for homes for rent in Kelowna or elsewhere can obtain a pay stub document from their employer to show how much they have earned within a certain period of time. With the help of pay stubs, landlords can not only check the gross income earned by the prospective tenant but also find out the details such as the full name, contact information, and employer’s name.
- Get the Last Two Years of Tax Returns
Requesting tax returns for the previous few years shows all sources of income that a renter has earned over the tax year including interest income, contract work, and employment. Sometimes, the tax return also includes the W-2 tax forms that an employee receives at the end of the year. It shows his/her income from the previous tax year.
- Take a Look at the Bank Statements
Not all the renters who are searching for home rentals receive regular pay stubs if they are self-employed. In this case, landlords can ask for their bank statements to verify their proof of income. A bank statement will show every withdrawal, deposit, and transaction made by the renter.
However, if the renter gets paid on commission, their income may fluctuate every month. In this case, get copies of bank statements for the past two months to determine if their income is steady enough to fit your income requirements.
- Income Letter from the Prospective Renter’s Employer
If pay stubs are not available for some reason, you can also ask for a letter from the employer. An income letter or a letter of reference from the present employer verifies an employee’s income and also confirms that a renter has the means to pay for rent. It includes how long the renter has been working there, his/her role in the company, as well as how much he or she is earning.
The Bottom Line:
Apart from these, there are many other ways landlords can verify a renter’s proof of income. Some of these include contracts or invoices, 1099 tax forms, worker’s compensation details, profit and loss statements, annuities, interest, and dividends, among others. Should you be looking for a team that can help you post your rental listings and find the best tenants for your home rentals, reach out to us. At Home Finders, we not only offer the best platforms to advertise and manage your rental listings but also provide a pre-screened tenant database. Added to that, you can also create a free business dashboard with a business logo and contact information. To know more about our services, call 250-899-8133.