Real Estate

Minimum net income when renting to tenants?

  • Last Updated:
  • Aug 14th, 2021 12:14 am
[OP]
Newbie
Sep 29, 2020
38 posts
8 upvotes

Minimum net income when renting to tenants?

What is the minimum net income you look for when renting to a tenant, as a function of the monthly rent? Do you ever take into account non-paystub income (e.g., investments, side jobs, etc.)?

Also, what are some thresholds you look for in terms of credit score, number of occupants, etc.?
17 replies
Sr. Member
Dec 3, 2019
510 posts
464 upvotes
Ontario
This really depends on the type of property, location, demand and demographic. There's no one size fits all solution.

First you should explain the type of property you have and what type of demographic rents it? Than are you going to set the price low to have tenants to pick from?
Deal Addict
Dec 26, 2008
1258 posts
145 upvotes
Applying an income threshold is actually not permitted under the RTA... if you posted this on Reddit you'd get decimated by the rental mob whining about how someone who makes $50k should be good to rent a $2500 apartment.

Maybe if you post what rent you're looking for we can give you some better opinions.

Personally, for me, I'm looking for the rent to be 33% or less of their income... but it depends on other factors (how many people, kids, do they have a car etc).
[OP]
Newbie
Sep 29, 2020
38 posts
8 upvotes
nick227 wrote: Applying an income threshold is actually not permitted under the RTA... if you posted this on Reddit you'd get decimated by the rental mob whining about how someone who makes $50k should be good to rent a $2500 apartment.

Maybe if you post what rent you're looking for we can give you some better opinions.

Personally, for me, I'm looking for the rent to be 33% or less of their income... but it depends on other factors (how many people, kids, do they have a car etc).
The rent would be ~$2600/month + utilities. When you say 33% or less of their income: is this 33% of their gross income or net income (after tax withholdings + benefits as from their paystubs)?
Deal Addict
Dec 26, 2008
1258 posts
145 upvotes
richyrich123 wrote: The rent would be ~$2600/month + utilities. When you say 33% or less of their income: is this 33% of their gross income or net income (after tax withholdings + benefits as from their paystubs)?
I just rented one of my units for $2400 + utilities - I was looking for at least $100k gross income.
[OP]
Newbie
Sep 29, 2020
38 posts
8 upvotes
Got it: so at least 3.4X gross income in this case.

Does it matter whether the gross income came from multiple sources e.g., multiple jobs?
Deal Addict
Dec 26, 2008
1258 posts
145 upvotes
richyrich123 wrote: Got it: so at least 3.4X gross income in this case.

Does it matter whether the gross income came from multiple sources e.g., multiple jobs?
I could have been pretty picky because my building was in a more niche/mature area - none of my applicants were under even like $120k - the eventual tenant was at $250k ++ annual income... but that was because of other factors rather than income.

I'd accept multiple jobs, just depends on how steady they are
Deal Addict
Jan 20, 2012
1081 posts
716 upvotes
Toronto
richyrich123 wrote: What is the minimum net income you look for when renting to a tenant, as a function of the monthly rent? Do you ever take into account non-paystub income (e.g., investments, side jobs, etc.)?

Also, what are some thresholds you look for in terms of credit score, number of occupants, etc.?
Really depending on situations. I have different tenants throughout years with wide range of financial background. I’d a government funded organization CEO with $180k salary renting for 3 years since he offered a job for 3 years and will move on to another city in next term. Then I got an oversea family came to accompany their child to school. No income, no credit score but paid me 2 years of rent up front and showed me $1M+ cash in the bank as living expense for the next 8 years in Canada. I also had a family which have 700+ credit score, working in healthcare and education sector with 6 figure family income, drives Mercedes and Audi, shop in Wholefood only. And never paid me on time. They still owed me 3 months of rent after trying to kick them out for 10+months.
Deal Addict
Mar 30, 2017
1186 posts
938 upvotes
GVA
Inclemental wrote: Really depending on situations. I have different tenants throughout years with wide range of financial background. I’d a government funded organization CEO with $180k salary renting for 3 years since he offered a job for 3 years and will move on to another city in next term. Then I got an oversea family came to accompany their child to school. No income, no credit score but paid me 2 years of rent up front and showed me $1M+ cash in the bank as living expense for the next 8 years in Canada. I also had a family which have 700+ credit score, working in healthcare and education sector with 6 figure family income, drives Mercedes and Audi, shop in Wholefood only. And never paid me on time. They still owed me 3 months of rent after trying to kick them out for 10+months.
ON is the worst. Never be a landlord in ON.
profit on 6/23/2021 = 117.61% since 11/10/2020 to be exact😎
Deal Expert
Feb 29, 2008
19103 posts
17443 upvotes
Tarrana & The Ri…
Case by case basis. Too many variables.
Deal Expert
Feb 29, 2008
19103 posts
17443 upvotes
Tarrana & The Ri…
seatiger wrote: ON is the worst. Never be a landlord in ON.
I don’t think there’s anywhere else that’s worse.
Sr. Member
Dec 3, 2019
510 posts
464 upvotes
Ontario
similar situation: Had people on social assistance always paid on time. Had people with 100k income had to evict them for nonpayment.
Once I got more experienced I put less value on income and credit scores.
Inclemental wrote: Really depending on situations. I have different tenants throughout years with wide range of financial background. I’d a government funded organization CEO with $180k salary renting for 3 years since he offered a job for 3 years and will move on to another city in next term. Then I got an oversea family came to accompany their child to school. No income, no credit score but paid me 2 years of rent up front and showed me $1M+ cash in the bank as living expense for the next 8 years in Canada. I also had a family which have 700+ credit score, working in healthcare and education sector with 6 figure family income, drives Mercedes and Audi, shop in Wholefood only. And never paid me on time. They still owed me 3 months of rent after trying to kick them out for 10+months.
Sr. Member
Jul 18, 2020
753 posts
1217 upvotes
buysellbuy wrote: similar situation: Had people on social assistance always paid on time. Had people with 100k income had to evict them for nonpayment.
Once I got more experienced I put less value on income and credit scores.
It is pretty obvious you are speaking in the perspective of a renter, lol. Less value on income and credit scores? People who are on social assistance always paid you on time, sounds like a pipe dream to me. I think a lot of people posting in the RE forum of RFD are actually renters themselves trying to pretend they are landlords and home owners giving out misguided information or fake experiences.
Sr. Member
Dec 3, 2019
510 posts
464 upvotes
Ontario
You got me! It took me two years and 100 posts just to trick the 5 people reading this into renting to me. You shouldn't waste your talents here and go work for NASA or something.
lechan wrote: It is pretty obvious you are speaking in the perspective of a renter, lol. Less value on income and credit scores? People who are on social assistance always paid you on time, sounds like a pipe dream to me. I think a lot of people posting in the RE forum of RFD are actually renters themselves trying to pretend they are landlords and home owners giving out misguided information or fake experiences.
[OP]
Newbie
Sep 29, 2020
38 posts
8 upvotes
buysellbuy wrote: similar situation: Had people on social assistance always paid on time. Had people with 100k income had to evict them for nonpayment.
Once I got more experienced I put less value on income and credit scores.
So if you put less value on income and credit scores... what do you put value on? Gut feeling? First impressions?
Sr. Member
Dec 3, 2019
510 posts
464 upvotes
Ontario
I'll give you an example:

One of the properties I own is in Rexdale. People with good jobs and credit scores don't exactly flock to live in Rexdale. I have bigger problems of tenants coming with serious criminal records like rape or assault.

The best tool I found is talking to prospective tenants for a good hour. You can lie about who you are for 5 minutes but in an hour the true character show through.

On the flip side:
My other rental property is nice condo in downtown Toronto. I get white collar professionals so I can get a good credit score tenant with a high income job.

richyrich123 wrote: So if you put less value on income and credit scores... what do you put value on? Gut feeling? First impressions?
Deal Addict
User avatar
Nov 2, 2020
1438 posts
2071 upvotes
buysellbuy wrote: I'll give you an example:

One of the properties I own is in Rexdale. People with good jobs and credit scores don't exactly flock to live in Rexdale. I have bigger problems of tenants coming with serious criminal records like rape or assault.

The best tool I found is talking to prospective tenants for a good hour. You can lie about who you are for 5 minutes but in an hour the true character show through.

On the flip side:
My other rental property is nice condo in downtown Toronto. I get white collar professionals so I can get a good credit score tenant with a high income job.
Thats interesting I guess I never considered how it would be to rent in an area where you may not attract people with the best jobs or greatest credit scores. It seems one has to adapt to their environment and different areas may require different screening techniques. Thank-you for sharing.

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