Management Mondays Blog

What Income Multiplier Signals a Good Applicant?

24 Hour Property Management - Monday, October 14, 2019

What Income Multiplier Signals a Good Applicant?

When vetting an applicant or group of applicants for your rental property, there are many factors to consider, such as credit, character, and rental history. But the most important consideration in our estimation is the tenants’ ability to pay, i.e., their income. Honestly, even parsing their income is a bit complicated if you truly examine the numbers, but as a rule of thumb, we recommend that the combined monthly gross income of the applicants is equal to or greater than three times the monthly rent. For example, if you expect monthly market rent to be $2000, you should expect the combined monthly gross income of the applicant(s) to equal or exceed $6000 ($72,000 annual).

A few caveats to consider if you want to take a deeper dive:

  • Source of income – does all the income come from a reliable source, i.e., verifiable employment with longevity, as opposed to student loans or irregular contract work.
  • Monthly obligations – if the applicants have little to know obligations (car payment, high credit card payment, student loans) then you may be OK accepting a 2.5 multiplier. Conversely, if the applicants have a large amount of obligations, you may need to increase the multiplier to 3.5.

Contact 24 Hour Property Management, Inc.

If you any questions about how we dig into applicant’s income, or any other question related to property management, please contact us so that we can answer your questions and advise you. You can reach us seven days a week at 949-409-8585 or you can check us out on the web at