First Time Apartment Renter - How To Prove Income
By Jaden Miller , October 14 2020
You've found the apartment of your dreams. Are you a first-time apartment renter? It's close to work, has a trendy coffee shop downstairs, and overlooks the city park. But before you sign the lease, your landlady hurtles you back to earth. "Can I see your proof of income, please?" She asks. You panic. Not sure how to prove your income? Don't worry, we've got your back. Here's how to show proof of income to a landlord and exclusive tips for first-time apartment renters.
What Is A Proof Of Income And Why Is It Important?
Proof of income is a document that states how much you earn. With renters, proof of income shows your landlord that you can afford to pay the rent. Pay stubs are the most common way to prove income especially for a first-time renter, but there are other income verification documents you can use.
1. W-2 Income Statement
This proof of income for the apartment is what the government uses to verify income for tax. Landlords will take this as it's produced by an employer and 100% legit. However, not every renter or first-time apartment renter has this on hand. Also, it doesn't give the landlord an updated picture because it doesn't account for promotions or raises. If you have a W-2, submit it alongside a letter from your employer which brings us to our next point...
2. A Letter From Your Employer
Not sure how to show proof of income? Ask your employer to give you a reference regarding your salary and performance at work. The advantage is that your employer can provide qualitative feedback about you but it can be forged. It's easy for the tenant to open a Google document and add the company's logo. To avoid this, the landlord can call and thank the employer to verify they wrote the letter.
Remember the letter is most effective alongside pay stubs or a W-2 income statement. The letter should outline how much the potential tenant earns and how often they get paid. It must be written on a company letterhead that includes the company's name, address, number, and contact person.
3. Social Security Statement
A Social Security statement is verifiable income proof as it shows the applicant's earning records from Social Security or disability. This is a popular option for retirees as it shows their pension or benefits and works best alongside the applicant's tax returns or bank statements. Since Social Security or disability income may be low, look at the bank statements to verify the tenant's cash position.
To get your Social Security documents, go online, and log into your Social Security account to request a statement. You can also call a regional office to request one.
3. Pay Stubs
Tenants get this every pay period so it's the easiest income proof to find. Pay stubs show your name, contact information, and how much gross income you get. For example, they are used to verify your income, year-to-date alongside your per-paycheck earnings, such as overtime or bonuses. Self-employed applicants or independent contractors must show their tax returns and bank statements as verification.
If you don't feel comfortable handing over your pay stubs, let the landlord take a photo, make a copy, or request a PDF copy of a pay stub via email. Landlords often request your two most recent pay stubs to ensure your income aligns with the rent you owe.
4. Bank Statements
An advantage of bank statements is how it's current and tax-adjusted. Landlords will ask for your two most recent monthly bank statements alongside pay stubs to verify your income. Bank statements are useful if you have a part-time job or additional income that isn't reflected in pay stubs. For example, handymen services or babysitting wouldn't be shown on pay stubs.
The easiest way to give them to your landlord is to ask the applicant to email them a PDF of their most recent statement. This will include itemized transaction history including deposits and withdrawals.
5. Profit-And-Loss Statements
A profit-and-loss statement is a document for small business owners. It shows a self-employed tenant's proof of income as it shows their business earnings and expenses. This document shouldn't be accepted alone but as a supporting document with bank statements or tax returns. As a tenant or first time apartment renter, you can access this document by asking your accountant, or pull it from the records yourself.
Or you can create a new profit-and-loss statement to show proof of income for the property you're hoping to rent. A profit-and-loss statement is useful for landlords because it's difficult to forge while giving them a good overview of your business finances. It also shows trends in business growth so the landlord can determine whether you'd be able to pay rent in the long-run.
6. Annuity Statement
This is a contract between a person and an insurance company where, in exchange for a sum of cash, you're promised a steady stream of cash-flow. An annuity is a viable proof of income as it's consistent. But remember the money often has an end date, so read the annuity's statement date of expiration before handing it to your landlord.
And That's All Folks!
Now you've got the tips for first-time apartment renters and you won't be stumped when landlords ask you to prove your income flow. Pay stubs are the easiest to hand over alongside a recent bank statement so the landlord rests assured that you can pay rent on time. If you're a small business owner, give out a profit-and-loss statement to discern your salary and know whether you'd be able to pay long-term. Freelancers as well must provide evidence of tax return instead of pay stubs especially if they are first-time apartment renters.
Have you found the perfect apartment? Do you need to pay stubs ASAP? Don't waste another second! Chose a template of your choice and begin filling it out so you can fill that apartment with happy memories!