Landlord Question and Answer Forum

If someone is upfront and says they have damaged credit due to almost loosing their home. They were able to sell for asking price, but missed some payments hence the bad credit. My rent is only $250 - $300 less than the mortage. I will get proof of income and will review credit report. What should income to debt be? And does this sound risk since she could not make mortgage payment? She also went through divorce last year.

People unfortunately suffer financial hardship. This seems like more lately than ever. I would check income and have her give you proof of the income like paystubs. Verify what she has told you against the credit report. In my experience, I have found that when there are utility bills, like electric; phone or cable showing up in collection on a credit report, this can be a red flag. Obviously if they have ever been evicted, I stay away fro that as well. I believe mortgage companies use 35% for Income vs debt. That usually means that the payments towards debt should not comprise more than 35% of income. I like my tenants to be able to apy for the rent with about 1.5 weeks salary. That is a safe bet.

Posted by Denise S, PA on Monday, August 18, 2008