Can we require tax returns for someone who is self-employed and wants to rent a house from us?

Question

We are building an investment house and it is almost ready to rent. We have an interested applicant who is moving to our state and is self employed. Can we require him to provide proof of his income (via tax returns) for the past two years since he has no paystubs to verify that he makes enough?

Answer 1

I rented for 4 years with my husband and he is self employed as a painting contractor. We rented 2 different properties and neither one asked for tax returns. One did a credit check, the other did not. I think asking for past tax returns is a waste of time. First, anyone can create a new tax return. How would you know if that was the actual return that was submitted to the IRS? Second, a tax return does not tell you whether or not someone can pay rent. Maybe on his tax return he made $100,000 last year, that alone does not mean he is capable of paying $1,000 per month rent. He could drive a $50,000 car that he is making payments on and have $500,000 in credit card debt.

IMO just because people make a lot of money does not mean they pay their bills. I would just do a credit check see what other obligations he has and go from there.

Answer 2

Yes you can. But dont forget to also do a credit check and background check. Check his references. Self employed people are iffy because, depending on their skills, may be seasonal, or are competeing with big time contractors and does not get alot of work. So proof of income is needed.
Also, if he is from out of state, make sure you meet him in person, he looks at the rental, and he signs the lease, and gives you the funds in cash (write him a receipt). With all the scams going on, you sure dont want to be paid in bogus money orders, check, or cashiers checks.

Answer 3

You could also ask for his business financials, this will help you to see the whole picture.