I have always used the 3 times rent rule Air Max Tavas Red Black
Bankruptcy and rent to income ratio
On chapter 13's about 90% of the time they never finish the plan. It gets dismissed sometime during the usual 3 to 5 year payment plan for non compliance. Very few finish the plan and get discharged. This is why you will see BK attorneys front load fees on the re payment schedule to get paid first. We will look at the debt and payment obligations to see if it is feasible the tenant could comfortably keep up on rent and utilities. Our main concern is the risk to us and what we can do to mitigate that risk. Higher security deposit? Asking for last month's rent in addition to first month and security?
Ratios are determined (as they were by HUD) based on a statistical basis with a national population pool over a large spectrum of incomes viewed in light of default experiences. Ratios are a guideline, not a hard and fast rule, especially as disposable income increases.
Many people give up other things to live in a certain area or a particular home, that may be more important to them than weekend travels, or other entertainment. Search the 3X the rent thread not far from this one.
Hmm. Your situation. 4.6x gross income and stable 10 year job (plus how many more years in same profession or line of work?), 2.5x after figuring in the payment plan he is on. Does it seem likely he could meet your requirement of paying rent and utilities? Seems possible to me. Bankruptcy doesn't scare me away from potentially good renters, though I wouldn't be loaning them money to buy a house. If they seem a good candidate otherwise, then just ask for the extra security you feel you need. We've seen some renters succeed at 2x rent. So it's all relative.
for income, but don't know whether the bring home pay should be used for this guy. Your comments are greatly appreciated.
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A tenant that applied just filed Chapter 13 Bankruptcy several months ago and has a 600 credit score. His gross income is 4.6 times rent, but he has some after tax deductions (including bankruptcy payments he just started to make) which brings down his net income to 2.5 x rent. His job seems stable (with the same company for more than 10 years).
Also, it depends on the property, the market, your rental Nike Air Max Tavas Neon Pink
There is no issue with the rents and net income mentioned here. As net income increases ratios become less of an issue as the real question is can the tenant live on the disposable income?
agreements and can exercise 3 day pay or quit, 10 day non conformance, or 20 day no cause notices to terminate the tenancy if we need to. Our evictions take about one month and cost $600 $800. We factor that into the risk. Also, a tenant who finds many doors closed to them, may stay longer in a place that is more accepting.
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Bankruptcy usually isn't an issue with rents unless you are evicting. They are some of the first expenses stayed by the court as they recognize living expenses. I can't imagine any cram down of rents for any ordinary rental, maybe in a luxury unit in unusual circumstances. :)
agreement and the landlord tenant laws applicable to your area. For us, we choose to use month to month rental Nike Thea Joli
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