Finding a Northern Colorado apartment for rent that you can afford is important for both your own finances and for the investment of the property owner. For this reason, there are requirements in place during a tenant screening process that allow property managers to find tenants that are financially stable and responsible.

 

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Why Is Income Checked for Prospective Tenants?

If you’re looking to rent a home of any size, you will have to undergo a tenant screening or application process. During this process, property managers look into various things to ensure that tenants will be responsible with their property. Tenant screening checks criminal backgrounds along with rental history and the financial situation of the applicant.

 

Looking into a prospective tenant’s financial situation is done to reassure the property owner that the applicant has the means to pay their rent each month and the likelihood that they will pay on time.

 

When a tenant does not pay their rent on time, the mortgage, utilities, and expenses of the property cannot be paid. Your monthly rent may also be an important source of income for the owner of your apartment and if you are not able to pay your rent, they could be put in a difficult financial situation as well.

 

The best way for property managers to ensure that the financial responsibility of the property is taken care of is to carefully screen tenant income and credit history.

 

How Do Property Managers Determine Financial Standing for Renting an Apartment?

In order to determine if you have the financial standing to rent an apartment, property managers start by checking your employment, verifying your income, and running a credit check. To do this, you may be required to provide proof of your employment or income such as the pay stubs for the last few months or a recent W-2. They may also contact your employer to verify that your employment is in good standing. The screening process also includes a credit check that provides them with a glimpse into your financial history and financial habits.

 

How Do Property Managers Verify That Applicants Have Sufficient Income?

Just as important as verifying source of income is verifying that the tenant has sufficient income to make the monthly rent. In order to qualify a tenant for their rental, some property owners require that tenants have a certain rent to income ratio.

 

The rent-to-income ratio is a key requirement for new tenants and allows property managers the flexibility to determine actual income requirements based on the price of the apartment.

 

Under one method, a property manager will prefer, or even require, that applicants have an income that is at least double the amount of the monthly rent. For example, if rent is set at $1200 a month, the tenant should have a monthly income of at least $2400. Preferably, an applicant will make at least three times more than their monthly rent.

 

Another method is to ensure that only 30{ec1d25302c0c3e829886c092caa623e779a888dbf9e1057900a08c9ab9a85bb1} of an applicant’s annual income goes toward rent payments. For example, if a person makes $50,000 annually, they shouldn’t rent a home with a rent cost of over $1250.

 

Are There Exceptions To The Rent-To-Income Ratio?

If an applicant has passed the financial screening process, yet the property manager has concerns about their rent-to-income ratio, they may still accept tenants who are willing to accept further terms.

 

A few ways that a tenant can attempt to work around a rent-to-income ratio include:

  • Being willing to set up automatic payments that are deducted directly from their bank account each month
  • Pay a greater security deposit
  • Pay a full years rent upfront
  • Provide detailed information about their financial situation offering  reassurance of your financial standing and ability to pay the rent on time
  • Have a co-signer on your lease

 

It’s important to know that there is no guarantee that offering or agreeing to any of the above will convince a property manager to look past the income requirement. However, it’s worth it to ask if you’re working on finding an apartment.

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All Property Services, Inc.