The Purpose of Minimum Income Requirements When Renting an ApartmentMarch 11th, 2010 by Staff Writer
Most landlords impose minimum income requirements for renting their apartments, whether or not they say so. Some property managers and landlords will state any requirements on brochures and other marketing materials, or when you request a rental application. Others won’t say anything, and just deny your application or refuse to rent you an apartment, because you don’t have an adequate source of income to rent the apartment as far as they are concerned. Here’s the purpose of the those requirements:
Screen Out Bad Paying Tenants
A tenant who doesn’t pay rent is a “bad tenant” in the world of real estate, and landlords believe they can avoid one by imposing minimum income requirements. There are many reasons why a tenant fails to pay rent. One major reason is that they can’t afford to pay the rent, and they never could in the first place.
The landlord believes that they can determine how much the tenant can afford to rent, based on the ratio of the tenant’s income to the rent. If you divide the rent by the tenant’s income, and the percent is more than a certain percent (sometimes it’s 33 percent), then the landlord may view the tenant as a risk. Rather than take a risk, the landlord will screen them out and rent to someone else.
Find Good Paying Tenants
On the other hand, a landlord views a prospective tenant who far exceeds the minimum income requirement as a good paying tenant. The assumption is that they’ll always pay rent and pay it on time, because they make more than enough money. This is not always the case, as there is no correlation between how much money you make and whether you’ll fulfill your commitment to a lease agreement. Some tenants who exceed the minimum income requirements walk away from lease agreements without paying rent, and others who don’t meet certain minimum income requirements live in the same apartment for years, without paying rent late.
Maintain Tenants of a Particular Class
Some tenants want to rent in an apartment building with other tenants of a similar class or status. There are entire apartment communities that exclude tenants of a lower class, as they believe that it will cause existing tenants to move out or discourage applications from future tenants that “fit in.” There are federal and state laws that prohibit these practices outright, but some landlords use the minimum income requirements to achieve the same thing. For example, if you require a tenant’s income to be at least $5,000 a month to rent a two bedroom apartment, then you’re going to effectively exclude low income families. That’s not to say that all or even most landlords use minimum income requirements to discriminate, but it does have that effect in some cases.
A landlord will require a letter of employment stating the salary or hourly rate in order to verify that a tenant meets the minimum income requirements. Tenants who don’t care for these requirements should find other apartments to rent.