I have a young married couple who I think would make good tenants for my 3/1 vacant house. I have interviewed them in person and on the phone fairly extensively. This couple have both worked for the same retail employer for the last 3 years. This morning I discovered something unusual on their respective applications.

This couple works a minimum of 5 days a week each, however, they are not paid by the hour though. At the end of each work week, their employer pulls cash out of the cash register and pays them $125.00 per day, based on the number of days they worked that week.

So, based on a 5 day work week, each rental applicant here brings home $625 per week without any deductions for taxes or SS. So, I have to assume they are 1099 employees. This all cash for the week arrangement has been going on for 3 years now.

Do you all see any red flags here?

Don't assume anything. Make them provide documentation

I agree with the others it sounds like they are working "under the table" and not paying employment taxes or FICA. I do not deal with tax cheats.

Ask for a copy of last year's tax return.

If it's not on tax returns it doesn't exist

I did ask the couple about their tax returns. They told me their employer, who pays them cash, pays their taxes for them on April 15th. I will be asking for tax returns soon to confirm all of this.

Ask for tax returns and 3 months of bank statements. In my experience, they will likely have excuses for why they show no income or little income on either set of documents and/or dont use a normal bank. If that the case, they're trying to play you for the fool.

They're next step would be for you to call their "employer" (who is likely a relative acting as their "employer".

Definitely red flags. Bright red.

Royal continues to have Trump Derangement Syndrome.

Ken

I deal with all kinds of applicants from all walks of life. Yesterday, at my 2nd open house, I interviewed another couple who never paid a penny into SS, but due her deceased husband's death, she is raking in over $3,500/month in SS 'death benefits". Plus, her new fiancée' is a disabled veteran and he seems perfectly healthy to me but he still rakes in over 2,000/month in disability payments. Total family income here close to $6,000/month. This is more typical of the type of people who answer my Zillow Ads. Most of my applicants are on the government dole in one form or another. It is what it is!

So what are you using to verify income? I don't count response to an interview as verifiable...

There is no written record they have received income. No record they even work there. No verifiable evidence at all. What would the employer even pay on April 15th since there are no written records of him paying anything? The story is full of holes.

You should rent them your house Roy.

Income Verification is highly overrated…..they said they get $125 per day in cash, so it must be true. Furthermore, the best most solid businesses are those who pay their employees daily with cash from the till and then pay all associated taxes. A business like this will be there for generations.

On Monday, I will be getting bank statements e-mailed to me instead of tax returns. They use the same bank I do and on Monday either the truth or B.S. will be revealed. I have not made any decisions on whether I will rent this house to them since I have other applicants to consider also. All of my applicants have red flags and it is a game of trying to separate the wheat from the straw.

in the late 1970's and early 1980's, there were a lot of "day" labors who got paid cash. I had a vacant 2 bedroom and many day labors wanted to band together and share a unit. So I adopted a policy for "cash" workers.

1) did they report and pay taxes on earned income?

2) did their spending habits confirm salary?

3) did they have credit with on time payments?

So one applicant, a women who worked 2 undocumented jobs, paid taxes, reported these jobs and was able to purchase a used car with loan. When I asked to see her savings account, security that she had a back up plan in case she got sick or lost a job -- she had $7,000 in a savings account, having her mom as a co-depositor and beneficiary.

Roy,

It isn't illegal for them to lie to you. I just turned down someone with over a 700 credit score because of three factors closely related to your post just this week.

No dog in this fight but the guy that I use for excavations, septic and well drilling used to pay his peeps in cash.

It was easier for him as his bookkeeper was his aunt and she died. At tax time each employee would bring in their 1040 and show what they owed. He paid that for them as an off the table bonus. Guess it helped them and since he didn't pay that much it was his way of making things work out.

He is third generation with this biz. His father gave it up due to health reasons. The kid worked for another company for a few years then started the family biz again.

Now he does everything the conventional way. He pays the employees, takes taxes and all that out and treats them all like a real W2. He even has a CPA now, which is for the best.

Zero,

My 80 year old handyman operates his life entirely on an "all cash" basis. I pay him for his services with a business check, however, he goes straight to my bank and cashes that check and then drives to whomever he owes money to (utilities, cell phone provider, power company, etc.) and pays them in cash. He told me once that if he can't pay cash for something, then he can't afford it. He does not use credit or debit cards either. And he files a tax return each year too.

Have you spoken to the personnel department at the retail store where they claim they work? Not called the name and number they gave you for their boss, the the number you find in the phone book for that retail business?

I can't think of any reason a retail business would be paying cash for salaries unless it is a marijuana dispensary and only if the dispensaries are still not allowed to use banks.

I suspect that if you do a proper screening, you will discover that a friend is pretending to be their boss and that they are getting their money from something illegal.