Perhaps many landlords and property managers already know the importance of tenant screening. This process ensures that your prospective tenants have the means to pay their monthly rent, and you avoid the trouble of having to deal with difficult tenants.
Besides the credit and background check, one part of tenant screening is verifying the employment or source of income of your would-be tenants. Here’s a guide to verifying that your prospective tenants can cover the monthly rent fully and timely.
There are two ways to know the employment status and income of a prospective tenant. You can either request the would-be tenant for some relevant documents or contact the company to check his/her employment status and income. Of course, you can try both of these ways.
Remember that employers don’t have an obligation to respond to your queries. It’s a matter of legality for them not to answer your questions to avoid a potential violation of employees’ privacy.
You can start verifying the employment and income of a prospective tenant after he/she fills out the rental application form and find that the self-reported income will cover the monthly rent.
Don’t start the background check unless you’re done with the employment verification. You might find red flags in the employment verification stage, and you can choose not to continue the background check to save time and money.
The would-be tenant can present an employer letter to show proof of salary. Remember that it should be written and signed by the employer because there are instances that an employer letter can be fake. The letter should also contain the contact details of the employer or the company.
Income statements can prove someone’s source of income and how much they earn. Self-employed folks can show 1099-NEC or 1099-Misc income statements as proof of their monthly and annual earnings. Individuals who work for employers can present a federal government form called W-2, which shows wage and tax information.
Checking the income tax return of a potential tenant can help you determine how much he/she earns. It doesn’t matter whether the prospect is self-employed or a salaried employee. An income tax return is an excellent proof of income.
If your prospective tenant is on a commission-based job, you can ask for bonus checks or incentive payment statements. It may seem like an unsteady source of income, but you can check how much your prospect receives periodically to see if it can cover the monthly rent.
Requesting for the bank statement of a prospective tenant may sound intrusive, but it is excellent proof of income for someone who’s a freelancer or self-employed. A bank statement will help you determine the monthly income deposits of your would-be tenant and whether he/she can cover the monthly fee for the rental unit.
If you need to speak to the employer of your potential tenant for employment verification, you should ensure that the prospect has given you the correct name and contact details of that person.
It varies by the company to who you can speak regarding the employment status of their employees. In a smaller company, you can speak directly to the supervisor concerning that matter. In a larger company, it’s typically the representative of the HR or payroll department who will talk to you. Some companies can have an assigned person who takes care of this stuff.
When the opportunity to speak to anyone from the company comes, make sure to introduce yourself and let them know your purpose in contacting them. Tell the person on the phone that you need to know the employment status, job title/role in the company, date of employment, and salary of your prospective tenant.
Take note of the important information in the conversation, and make sure to get the name and contact details of the person you’re talking to on the phone.
Some prospects might give you false information or a fake reference during employment verification. In this unfortunate case, you need to carefully check all the presented documents.
Falsified documents don’t look professional and typically have typos. Look closely at the numbers on the income statements if there’s anything suspicious. Plus, you should check the company where your prospective tenant works online to confirm if it’s legit.
You shouldn’t underestimate the importance of verifying the employment and income of your would-be tenants. This way, you can determine if your prospect has the means to pay the monthly rent in full and on time. Take note of this guide to do the employment verification the right way.