Gig work exploded in the past five years. According to research conducted by MBO Partners, by 2023, 52% of the workforce will work in the gig economy in some capacity.
The gig economy expanded globally with the growth of tech companies making freelance work accessible through their platforms. For example, some of the most notable freelance and gig platforms are Airbnb, UrbanSitter, Amazon Flex, TaskRabbit, Uber, and DoorDash.
Gig work is neither positive nor negative, so what should a landlord do when reviewing a rental application? Here are some situations to consider.
Skilled gig workers
Skilled gig work such as writers, marketers, engineers, or professional photographers can provide a steady income—making them stable renters. Highly qualified professionals are common in the creative fields but can extend across industries. These positions are sometimes non-traditional forms of employment but are not always entry-level either. It takes time and dedication to succeed in the gig and freelance economy.
Gig work as an extra income
Gig work is definitely not a red flag on a standard rental application. Many people choose gig work as a second or even third job to help supplement their income and provide a financial safety net. 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 an unexpected finical event happens.
Gig work as a primary income
Again, gig work as a primary income can also be a good thing. Although, when it comes to verifying gig work as a primary income—it can also be a sign of an unstable income. It's essential to remember, gig work is typically at-will employment without a set number of hours. Depending on the area and economic conditions, a person could end up working 5 hours a week or 60. A gig worker could also end up earning $30/hr or $12/hr. That leaves a lot of questions for any landlord working to verify employment.
How to pinpoint which applicant has a stable income and which one does not?
Determining income from gig work
Start by recognizing that not all gig work is created equal. However, one element that gig work and traditional work have in common in the U.S. are paying taxes. Gig workers must report their earnings in their yearly tax filings, whether through a 1099 or otherwise. This annual tax document provides a solid benchmark regarding the potential tenant's income.
If a potential tenant has only worked in the gig economy for less than a year and has not filed taxes for their job, you can ask for hiring paperwork or a series of weekly paystubs to verify income. To keep your verification process fair, if you require three months of employment from a standard applicant, the same should apply to gig workers.
Gig work is not a disqualifier, but instead is a question mark on income. This requires some additional inquiry to verify whether or not this income stream is reliable as proof of payment on your rental property. Remember that there are various forms of gig work and that technology is continually increasing these opportunities.
Income verification is only one aspect of an in-depth tenant screening process. Look at the whole picture when creating your screening criteria when reviewing potential tenants.
How To Find Good Tenants For Your Property?
In a perfect world, you want the right tenants to fall into your lap, but learning how to find good tenants for your rental is often an underrated skill. Conducting a thorough tenant screening process helps protect your investment effectively as possible. Avoid rushing into renting to a tenant just to fill a void. Doing this is a costly mistake and is comparable to having your property remain vacant.
Understanding how to find good tenants can be stressful for agents and landlords. You don't want to inadvertently rent to someone who ends up getting into rent arrears. If this situation unfolds, you'll then have to spend time and effort rectifying the problem.
Here are the three most dependable ways to find and keep reliable tenants:
1) Detailed Rental Application
You've had a lot of interest in your listing—so what now? The next step is to have prospective tenants complete a rental application form. This process gathers all of the necessary information that enables you to decide who is the best tenant for your rental. Therefore, having clear standards established will help you determine what questions to ask on your application form.
Here are some examples of rental application requirements:
- Employment history - how often your prospective tenant changes jobs might give you an idea of whether they view your property as a long-term base.
- Rental history - if the tenant has lived in a rental property before, you need to check in with previous landlords and ask for more information about the tenant's rental habits.
- Personal references - seek out references that can give you an idea of the general reliability of the candidate. Give some examples on your form to prompt the applicant such as an employer, mentor, teacher, or previous landlord.
Ensure that your listing is clear on what your property offers and your requirements for tenants. For instance, outline in the listing if you're not comfortable renting to pet owners, smokers, or those with previous evictions. Being upfront helps foster an engaged pool of suitable applicants. Keep the Fair Housing Act in mind when you're constructing your ideal tenant. Under the Fair Housing Act, you can't discriminate based on race or color, ethnicity or origin, disability, sex, religion, or whether applicants have children. It is against federal law to question prospective renters on these topics.
2) Conduct Thorough Research
Next, come the background checks. Using a tenant screening service is a great way to get your renter's background details, particularly their credit score and history. You'll need to assess a full credit report and score, a criminal background check, and an eviction history report.
By researching the prospective tenant, you can eliminate the applicants that aren't a good fit. After this process of elimination, make a shortlist of candidates who meet your requirements and who have a financially responsible background. You want to feel secure that the potential tenant will pay rent on time.
Once you have all the reports, along with the application, you'll need to confirm this information. Start by calling the tenant's employer to double-check that they are an employee with the salary indicated. A common practice is for a renter to earn three times the rent each month or only 30% on their paycheck. This is a standard indicator that the applicant has a comfortable outlay and not cause excess financial pressure.
Taking a careful look at the credit report is a must. Red flags to note are high levels of debt, delinquency, and previous bankruptcies. Evidence of these things could mean that the tenant is a high risk.
Using a tenant screening service helps take the pressure off this research phase. Also, the process is less chaotic if you create a tenant screening checklist. If you choose Rentspree to screen your tenants, you proceed from application to screening by merely supplying the tenant's email address. This streamlined verification process makes the landlord's job less of a headache and ensures they get all the up-to-date information they need to make a decision.
3) Foster the Relationship
When you find the perfect tenant, work with them to maintain a great relationship so they want to stay in your property. Keeping a tenant is a best-case scenario as it's super cost-effective.
Treat your tenant well by anticipating their needs and keeping the lines of communication open. Let them know that feedback and concerns are welcome. A proactive approach will help mitigate any problems before they escalate.
Issues like slow response times can lead to discontent. Still, if you respond to questions and concerns quickly, then you're more likely to maintain an exceptional relationship with your tenant and keep them for the long haul.
If you have other properties, then let your tenants know. You never know, they made need to move to a bigger place or a different area, and you might have something perfect. After all, you won't need to worry about finding another good tenant for your rental house if you already have great long-term renters.
The Process Works
Finding good tenants for your property is difficult, but having the proper process can alleviate that frustration. You might not find the perfect match in the first, second, or even third applicant, but if you ask the right tenant screening questions and get to know your prospective tenants, you will find the right fit. It's worth putting in the time to find a great tenant, as settling for someone less than ideal can leave you spending even more time and money resolving problems later on.