Tenant Debt Analysis
Click here for Top Ten Discussions. CLICK HERE for Q & A Homepage
Receive Free Rental Owner Updates Email:  
MrLandlord Q & A
Tenant Debt Analysis (by Bonanza [NC]) Oct 3, 2022 10:01 AM
       Tenant Debt Analysis (by S i d [MO]) Oct 3, 2022 10:16 AM
       Tenant Debt Analysis (by Jim in O C [CA]) Oct 3, 2022 10:25 AM
       Tenant Debt Analysis (by Ray-N-Pa [PA]) Oct 3, 2022 11:03 AM
       Tenant Debt Analysis (by Sisco [MO]) Oct 3, 2022 12:23 PM
       Tenant Debt Analysis (by Moshe [CA]) Oct 3, 2022 1:06 PM
       Tenant Debt Analysis (by 6x6 [TN]) Oct 3, 2022 7:10 PM
       Tenant Debt Analysis (by LordZen [MA]) Oct 3, 2022 11:57 PM
       Tenant Debt Analysis (by BRAD 20,000 [IN]) Oct 4, 2022 12:48 AM
       Tenant Debt Analysis (by Ed [CA]) Oct 5, 2022 12:56 PM
       Tenant Debt Analysis (by Pmh [TX]) Oct 23, 2022 4:25 PM
       Tenant Debt Analysis (by WMH [NC]) Oct 23, 2022 5:01 PM
       Tenant Debt Analysis (by plenty [MO]) Oct 23, 2022 7:25 PM

Tenant Debt Analysis (by Bonanza [NC]) Posted on: Oct 3, 2022 10:01 AM

Does anyone analyze tenant debt from the credit report?

CR shows T1 owes 15,000 and T2 owes 11,000

they net 40,000 a year

debt ratio is 70%

How much or what percentage level would concern you?

Like many of you I am seeing marginal applicants and I am trying to decide if I should vote ya or nay.

Maybe some of you have a more straight forward analysis of tenant applications.

With all the debt, they certainly aren't going to leave and buy a house.


Tenant Debt Analysis (by S i d [MO]) Posted on: Oct 3, 2022 10:16 AM

That level would be a no-Go for me. They're living beyond their means and will continue to slide further into debt.

I don't have any credit cards, but even if I did there's no way I'd have 70% of my annual income racked up on revolving accounts. I don't know what the minimum payments are on those, but my guess is somewhere around $300 - $400 per month.

My rule for income is 3x the rent (minimum) and $500 per lessee after all expenses including rent. Example: $800 rent for a couple means they'd have to have $3400 income (3x rent = $2400 + 2 persons * $500). Income must be from a garnisheable, documented source. Job must be held at least 90 days. --184.4.xx.xx

Tenant Debt Analysis (by Jim in O C [CA]) Posted on: Oct 3, 2022 10:25 AM

My rule of thump is 25 % maximum debt to gross income.

So income $40,000, max debit $10,000. --99.23.xxx.x

Tenant Debt Analysis (by Ray-N-Pa [PA]) Posted on: Oct 3, 2022 11:03 AM

I view this on a monthly basis so it would depend on the type of debt they had.

I want them paying about 25% of there income to me for housing, but I am in a low cost area.

You are telling us what the family nets, so I would estimate the family gross income at about $48,000 which is $4,000/month. If I am expecting them to pay $1,000 monthly, the total debt load including housing shouldn't be any higher than 43% and that is with very strong credit. I prefer it to be 38%.

So if these two folks have car loans totaling $520 /month with alright credit or $720 with strong credit, I could accept them. The problem, two car payments are normally well over $520/month. Also there is those credit cards get tossed into the mix.

I do this math though, in front of these applicants so they can see where we are looking out for them with the end game being them getting qualified for a home purchase. This is important, if you show a qualified applicant two places....1) that is a class C that is $800 that they can buy or 2) a class B that is $1,000 that they will never own,......the responsibility lays with the customer.

If you do the correct selling, you can explain how homes are stepping stone. These customers tend to stay with me for many years. If you don't sell them on the right place, the people will be with you for a few years in a class B.

Both ways you win. It has been harder to have folks take the ownership jump though this past year or so thanks to the fed --24.101.xxx.xxx

Tenant Debt Analysis (by Sisco [MO]) Posted on: Oct 3, 2022 12:23 PM

In addition to previous comments, I am leery of anyone with less than $1500 per month unencumbered cash available. I take rent plus all other obligations, subtract from their total net income. --149.76.xxx.xxx

Tenant Debt Analysis (by Moshe [CA]) Posted on: Oct 3, 2022 1:06 PM

So much depends on the type of applicant.

Applicants with disposable income can exercise choice when it comes to management of their finances. You don't have to be worth a fortune in order to manage to have investments (stocks, cars, property...) and the standards for applicants with disposable income need to be different from those without.

I look at the problem in more generality than the simple rules-of-thumb.

I consider if they have enough money to support their housing choice, plus other matters along the way. To do this, I consider income, potential expenses, earning capacity including (and especially) education, long or at least medium-term financial history, and overall professionality. Interview plus credit report (and verification of application) are enough, I have found.

I have had tenants who can easily afford the rent, but "forget" to pay on time, and I have had tenants who have only very marginal income, but wouldn't dream of defaulting on rent. So the best guide is "character", hard to define until you get experienced, but once experienced, the best guide.


Tenant Debt Analysis (by 6x6 [TN]) Posted on: Oct 3, 2022 7:10 PM

Following --73.113.xxx.xxx

Tenant Debt Analysis (by LordZen [MA]) Posted on: Oct 3, 2022 11:57 PM

Interesting thread, following --98.216.xx.xxx

Tenant Debt Analysis (by BRAD 20,000 [IN]) Posted on: Oct 4, 2022 12:48 AM


I am looking for cash flow. Do they have enough income and stability to pay the rent? Have they been paying their rent?

That debt could be a small loan on a car, medical bills, divorce atty bills, student loan. This amount of debt is below the national average.

Student loans put MANY young people in this category.

I am only interested in the monthly payments they make.

We DO consider those.

BRAD --73.103.xxx.xxx

Tenant Debt Analysis (by Ed [CA]) Posted on: Oct 5, 2022 12:56 PM

Do they have any savings for a rainy day? Get 3 months of bank statements from them. That will help you make the decision. --108.201.xx.xx

Tenant Debt Analysis (by Pmh [TX]) Posted on: Oct 23, 2022 4:25 PM

exactly as Brad says --107.127.x.xx

Tenant Debt Analysis (by WMH [NC]) Posted on: Oct 23, 2022 5:01 PM

I'm with Brad. --50.82.xxx.xxx

Tenant Debt Analysis (by plenty [MO]) Posted on: Oct 23, 2022 7:25 PM

What Ed wrote. If the debt is medical bills or college I would accept. --172.56.xx.xx

Subject: RE: Tenant Debt Analysis
Your Name:
Your State:

Tenant Debt Analysis
Would you like to be notified via email when somebody replies to this thread?
If so, you must include your valid email address here. Do not add your address more than once per thread/subject. By entering your email address here, you agree to receive notification from Mrlandlord.com every time anyone replies to "this" thread. You will receive response notifications for up to one week following the original post. Your email address will not be visible to readers.
Email Address: