Gig work has exploded and because it has there is no way that it should be considered a red flag on a standard rental application. What used to be a set of jobs shared by only a few, gig work has expanded across the country with the growth of food delivery apps such as UberEats, GrubHub, DoorDash and more. CNBC reports that the share of gig workers at U.S. businesses swelled 15% since 2010, meaning this trend has staying power beyond COVID.
But, with any new source of income, there also comes concern and criticism. Author and sociologist Alexandrea Ravenelle describes this concern by noting that while a small percentage of people are making lots of money via gig work or side hustles, these success stories tend to be from wealthier people who need the income the least. For many, especially those in lower-income brackets, gig work can be an unreliable source of income without benefits.
Gig work in and of itself is neither positive nor negative, so what should a landlord do?
Here are some situations to consider.
Skilled gig workers
Skilled gig work such as a high-level writer or professional photographer can provide a steady income and a stable renter. Highly skilled professionals are common in the creative fields but can extend across industry. Many actors and musicians could be consider gig workers, as could some event staff. A skilled worker need not be academic or artistic, but instead an experienced pro in their given field. These positions may not be traditional employment but are not-the-less not entry level either. It takes time and dedication to succeed in the gig and freelance economy, traits which can help provide insights into the type of tenant you would be renting to.
Gig work as an extra income
Gig work should definitely not be a red flag on a standard rental application by itself. Many people choose gig work as a second or even third job to help supplement their income and provide a financial backup or a pool of money for non-necessities. If gig work provides additional income, it likely means the tenant has enough "financial cushion" and varied income streams to afford your rent -- even if the unexpected happens.
Gig work as a primary income
Again, gig work as a primary income can also be a good thing. But when it comes to verifying gig work as a primary income -- it can also be a sign of an unstable income. One of the first things to remember about gig work is that it is typically at-will employment without a set number of hours. Depending on the area and economic conditions, this means a person could end up working 5 hours a week or 50, they could end up earning $30/hr or $12. That leaves a lot of questions for any landlord working to verify employment. So how do you figure out who is who?
Determining income from gig work
Start by remembering that not all gig work is created equal. One thing that is, however, equal in the United States is the requirement to pay taxes. Gig workers are supposed to report their earnings in their yearly tax filings whether through a 1099 or otherwise. This yearly tax document can provide a good benchmark of the potential tenants income. If the person has been working in the gig world for less than a year and has not yet filed taxes on this job, you can ask for hiring paperwork or a series of weekly paystubs to verify income. If you require 3 months of continued employment from a standard applicant, review 3 months of employment from the gig worker too.
Gig work should not be a red flag on a standard rental application, but instead sit as a question mark on income. Gig work requires some additional inquiry to verify whether or not this income stream is viable and reliable as a proof of income on your rental property. Remember that there are various different forms of gig work and that technology is continually increasing these opportunities. While full of new innovation, gig work itself is not new and has been around for many years.
Income verification is only one aspect of an in-depth tenant screening process.
Make sure you look at the whole picture when creating your screening criteria as well as reviewing potential tenants.