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Income question on lease
Old 03-19-2011, 10:33 PM   #1
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Income question on lease

DH is retired drawing SS. I work part time. Our combined income from these is about $86,000 a year.

We are selling our house and are going to build but are renting a house in the meantime. We need to fill out a lease application that asks about income. Lease is $1500 a month. For DH I've filled in his SS but it asks if he has any other income to consider.

Basically the other income is withdrawals from his IRA. He only retired last summer and we've had some non-recurring expenses (related to the sale of our current house and building the new house) so he has just taken money from the IRA as needed. I'll probably be setting up a set monthly withdrawal (could do that now).

So what should I say on other income? Should I just pick a number I say IRA withdrawals - $4000 a month, for example. Or say it varies? Not sure how landlords look at that kind of thing.
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Old 03-19-2011, 10:39 PM   #2
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When we first moved to FL, both DH and I were unemployed. When we rented our apartment, a bank statement showing the value of one of our CD's (and a clear credit report) was sufficient for them to give us a year lease. They required an annual income 3X the cost of the lease. The CD more than covered it. They never asked any more questions when we re-signed for another year. I guess they figure we were good for it because we had paid on-time for a year.
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Old 03-19-2011, 11:17 PM   #3
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If I understand your post correctly between your PT work and DH SS your income is $86k annually and you are applying for a lease of $18k annually. Wouldn't think it should be a problem at all - just list your PT work and his SS.
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Old 03-20-2011, 12:49 AM   #4
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Well we may have to apply for a lease of up to, say, $24000 a year.


The landlord on the place we really want (less than 5 minutes away from where we are building) won't let us do a contingent lease. We are supposed to close on the house we are selling week after next (maybe as early as 10 days from now). The house in question has been vacant for 2 months and I want to lease contingent on the closing of our house. Our buyer is a cash buyer so it is extremely likely it will close. But the landlord won't budge.

So we either have to wait until we close and then hope the property is still available and the landlord accepts us or find somewhere else. There are several properties slightly farther away -- but still under a 10 minute drive -- that range from $18000 a year to $24000. So we may just go for one of those.
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Old 03-20-2011, 12:52 AM   #5
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You could always ask for a waiver for minimum income requirements if you can argue that you're better set financially than most people making that income anyway. I had to argue my position for not having any credit score for my first apartment, it worked out fine when they checked with the....whatever the head manager of a series of properties is called.
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Old 03-20-2011, 12:58 AM   #6
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Yeah I am just trying to figure out how to describe the retirement income from an IRA on the application. Just wondered if others had dealt with that.
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Old 03-20-2011, 07:49 AM   #7
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Just put down an average monthly withdrawal from the IRA and don't worry too much about it.
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Old 03-20-2011, 08:12 AM   #8
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You are trying to convince a landlord to rent you a place, not eport to the IRS or a bank under a highly technical definition of income and little reliance on other factors. The LL will only care that you can pay the bills. Put down your 86k number and if anyone gives you trouble show them the account balance from one of your accounts. I do not believe you will have any difficulties.
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Old 03-20-2011, 08:37 AM   #9
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You are trying to convince a landlord to rent you a place, not eport to the IRS or a bank under a highly technical definition of income and little reliance on other factors. The LL will only care that you can pay the bills. Put down your 86k number and if anyone gives you trouble show them the account balance from one of your accounts. I do not believe you will have any difficulties.
I agree, it sounds like you are prime tenants. If the landlord doesn't want to rent to you he is not a good landlord and you can count on problems in the future when you want something repaired.
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Old 03-20-2011, 08:42 AM   #10
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I'm surprised you are not talking with the other party to this lease contract. Everything is negotiable. You have info, knowledge and strengths. I don't see why you don't negotiate a lower rent and everything else you want including contingencies. Just because the other party says 'No' to begin with is not a reason to accept that answer.
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Old 03-20-2011, 08:47 AM   #11
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Yeah I am just trying to figure out how to describe the retirement income from an IRA on the application. Just wondered if others had dealt with that.
We just did ...

Our (disabled) son is moving to another apartment in May after seven years in his current apartment - shared with another.

His income (SSD & sheltered workshop income) is not enough to satisfy the new apartment's income standards (it's not a section 8 apartment, as he is in now).

I said that I would "guarantee" any income requirements on my own. Since I'm retired (pre-SS and no pension) and draw my income from my IRA, I was told that it would not meet the requirements since it was not "income" as far as the rental manager/owner's specifications, and could not be confirmed by W2's or pension documents (pension income is accepted).

I responded that I could have our lawyer submit a letter to them, attesting to my/our assets. The response was since these were "investments", they could lose value, be cashed in, or not available for future rental costs.

Luckily, DW is still wor*ing, so we used her W2 to confirm her income. After we got approval and the contract signed, with DW as a co-signer (I withheld my comments till then), I told them it was ridiculous to not consider retirement investments as "income" (e.g. acceptance of a 1099 as "proof of income" - e.g. withdrawals). BTW, their credit approval department did contact my DW's place of w*rk to confirm employment.

I further mentioned that this would certainly be the norm in the future when many folks would be drawing more and more from their retirement investments, rather than pensions (as many of the current retired rental folks were doing). As far as a j*b vs. investment income, you could lose one just as easily as the other; in fact, I would think loss of a j*b is more of a possibility these days.

I'm not saying all rental situations are the same as far as income verification, but this was our situation, two weeks ago...
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Old 03-20-2011, 09:10 AM   #12
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I agree with you - the important thing is whether the lessee has the financial wherewithal to pay the rent when it is due. Whether the money comes from income or principal isn't relevant, but the reality is that some landlords are neanderthals and couldn't begin to understand why it shouldn't matter.
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Old 03-20-2011, 09:56 AM   #13
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I agree with you - the important thing is whether the lessee has the financial wherewithal to pay the rent when it is due. Whether the money comes from income or principal isn't relevant, but the reality is that some landlords are neanderthals and couldn't begin to understand why it shouldn't matter.
"How would you like 6 months rent in advance, cash?"
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Old 03-20-2011, 10:01 AM   #14
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"How would you like 6 months rent in advance, cash?"
That was our solution when presented with the income question. We were going to just pay for the year lease and bypass the income question. However, DW did not like to put out that cash at one time (regardless of the low MM rate it is earning - for liquidity purposes).

The OP could certainly take that option, if they have the cash to do so.

As for us? If we didn't have the taxable funds to take that option, it would force us into tapping our TIRA's - where most of our retirement assets are. This would have possibly impacted us, tax wise - something that I found out when I purchased a car, for cash from my TIRA (next time, I'll finance it - assuming I pass the credit check!)

It still comes down to paying for things while retired, and having little verifiable income to pay for anything over time. Using the same credit rules of today, one should be prepared to go to cash for major expenses/purchases until the income rules are changed for the future. And that depends on what you are purchasing and that org's rules for acceptance of your ability to pay in the future.

It is easier IMHO at the current time to seek credit when you have a j*b - or at least a verifiable source of income rather than "just" your retirement portfolio.
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Old 03-20-2011, 11:49 AM   #15
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Or shop around for a lender that still bothers to underwrite based on reality, rather than on automated rules. This would likely be a small bank or credit union.
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Old 03-20-2011, 12:23 PM   #16
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I'm surprised you are not talking with the other party to this lease contract. Everything is negotiable. You have info, knowledge and strengths. I don't see why you don't negotiate a lower rent and everything else you want including contingencies. Just because the other party says 'No' to begin with is not a reason to accept that answer.
Oh, we certainly are talking. Well, we are talking to the landlord's real estate agent.

I think my income alone along with DH's SS income is sufficient.

The main sticking point that we are trying to negotiate is that we don't close on the sale of our house until sometimes the week of 3/28 (trying to do it early but could happen late that week). Even though we have a very solid contract and our buyers are cash buyers, you never know what could happen to cause a buyer not to close. So I'm not willing to commit to $18000 in lease payments without having some ability to terminate the lease agreement if the buyers don't close. The landlord doesn't want any contingency. I have offered to give her half a month's rent now that gives us the right to terminate if the buyers don't close but that if that happens the landlord can keep that amount. If we do close, it is applied against what we would owe.
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Old 03-20-2011, 02:38 PM   #17
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I just wouldn't return phone calls until April. I just don't see why any contingency is needed at all for a two week wait. Do you really think they will rent to someone else in that time?

The way I see it, why should the owner do a contingency at all? Either they rent to someone else in that 2 weeks or they rent to you after 2 weeks is up. Your idea to pay them 2 weeks extra in rent applied to what you would owe doesn't give them any extra money (the way I read your statement). You could simply offer them 2 weeks equivalent of rent for the option to rent after you close. That's free money to them. But I don't know why you would want to do that because it seems like throwing away your money to me.
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Old 03-20-2011, 03:22 PM   #18
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If it is worth it to you because it is so close and you like the place. Offer $200 (100/week) as an option to hold it for 2 weeks, with maybe half going going toward rent when you sign in 2 weeks.

If income is a problem. Offer 2 months rent on the first payment and continue paying every 30 days. Being +1 month current should be enough of a carrot and you will tie up less money.
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Old 03-20-2011, 03:46 PM   #19
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If it is worth it to you because it is so close and you like the place. Offer $200 (100/week) as an option to hold it for 2 weeks, with maybe half going going toward rent when you sign in 2 weeks.

If income is a problem. Offer 2 months rent on the first payment and continue paying every 30 days. Being +1 month current should be enough of a carrot and you will tie up less money.
I think for this house the income should be fine. Might come up if we went to a more expensive rental in which I think I would put an average for IRA withdrawals.

We've submitted a lease where the lease starts in about 2 weeks but we can terminate if we don't close and landlord gets to keep what equates to 2 weeks rent. If we close early we have the option to start the lease early.

We'll see what happens. DH really likes the location of this house but doesn't want to wait until we close on our house sale to find a rental. I really like the location as well but there are others that are within 5 minutes from it that I would be OK with as well if this one doesn't work out.
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