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How to Assess Tenants in the Gig Economy?

In today’s gig economy, almost 29 percent of U.S. workers are now taking “alternative work arrangements” as your initial jobs, i.e. self-employed workers and freelancers. If you refer to the long-existing principle of evaluating a tenant — by checking their job history and credit scores as the key indicators to determine whether a potential tenant is reliable or not, you could miss some of the excellent tenants who can’t stand out of your list based on this principle. 

Then here comes a key question — How to evaluate a future tenant who is self employed?

No matter you admit it or not, one-third of the U.S. workers are those who don’t have a W-2 form every January but still have a stable and viable income. To assess them whether they will make a perfect fit as a future tenant, here are some ways you can turn to without the proof materials of a steady job.

Bank statements

By looking at a potential tenant’s bank statements, landlords can have a basic knowledge of freelancers’ income just as a hard money lender wants to know that the borrower has adequate cash in their bank accounts before the closing date of a contract.

Tax income

Tax returns are a good indicator of one’s financial performance. A perfect contractor always have diverse income sources with a rising income salaries indicating that their “self-owned” business is booming and growing. 

Recommendations from previous landlords

Who can be the best testimony to prove the reliability of a tenant? Previous landlords for sure! If a tenant always pay the rent on time during his/her past leases, he/she is more likely to continue the manners during future rentals. Don’t hesitate to talk to prior landlords to learn about whether the chosen person will become a good tenant.

Debt-to-income ratio

It’s universally acknowledged that rent should not exceed 30 percent of one’s monthly income. If a potential renter’s income largely exceeds his/her expenses on a monthly basis, you are more confident that he can pay the rent on time. 

Credit score

Credit scores are somehow insightful in implying whether a tenant has good financial trustworthiness. However it shouldn’t be the only deciding factor. Remember that why he/she got the credit score is much more important, including on-time bill payments, appropriate credit card records and etc. 

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