When you are your own boss, there are a lot of benefits to enjoy. You can set your own schedule, select interesting projects, and follow your passion. There are several compromises with such a situation too, especially if you are running a small business. One of the most glaring downsides is the lack of regular paychecks. This makes it difficult to budget for your lifestyle. Also, it can get challenging when you have to prove an income to rent an apartment.
When you start filling out an apartment application, one of the required fields is proving that you have employment and make a consistent income. The usual form of proof is a pay stub or several of them. Some landlords or property management companies require all the supporting documentation for the approval process. Even if you have a great in-person interview with them, getting that apartment application approved will be a challenge without a stable income history. Learn how long an apartment application takes to be approved here.
The Issue with Self-Employment
Of course, the issue here is that self-employed people usually just get payments directly from their customers. As a self-employed individual, you won’t usually have pay stubs or even a predictable bank statement.
Can I Rent an Apartment Being Self-Employed?
So, is it possible to rent a decent apartment while you are self-employed? The short answer is yes; after all, we see many self–employed people running businesses right from their own rented apartments. Before you read that first-time apartment renter guide, though, here are some tips on making the accommodation search easier:
1. Look for Independent or Private Landlords
Most landlords simply want a credit report and a few pay stubs to make sure that they get timely rental payments. A property management company, on the other hand, will have very strict policies and are generally harder to budge. While they may not be completely averse to self-employed individuals, the process will probably be more difficult. With corporate leasing policies, you might be looking at:
- A huge security deposit
- A thorough and strict credit check
- Co-signing from a family member with regular pay stubs
- Higher monthly rent
- Proof of income with several bank statements and other documents
Needless to say, a self-employed prospective tenant is probably better off avoiding the large compass run by companies. Instead, they should go for a prospective landlord or family-owned property management who owns or manages a duplex, triplex, or individual units. These landlords are likely to have some flexibility in their rules. Finding rental properties like this might take some time, so start asking around right away. Who knows, you might even get a discount due to certain connections.
What to Say to the Landlord
When you are talking to any prospective landlord, keep in mind that you have to win them over. Talk about the exponential benefits of being self-employed, show any post rental history, etc. It is also a good idea to discuss any living history, current situation, and your specific reasons for wanting to rent their property. Keep in mind that the landlord is self-employed as well. They probably know the struggle of this when applying for loans, buying a car, and so on.
Compromise on Amenities
A large apartment complex in the ownership of a national company will have large pools, grilling spaces, recreation huts, and other fun amenities. However, these will drive up the rental rates as well. As a self-employed individual, you want to go for the smaller, more affordable spaces. Even if you are more qualified than other applicants with pay stubs, the large company-owned complexes will regard you as a secondary choice.
2. Consult an Experienced and Open-Minded Real Estate Agent
A good real estate agent will know about any updated laws pertaining to self–employed tenants, privately run rental properties, tax returns, etc. If you are in a new place and don’t know many people, your best bet is to consult a few real estate agents. Ask them about landlords who are likely to consider an apartment application from someone who is self-employed.
3. Organize Those Financial Records
No matter how understanding a landlord is, the struggle for self-employed folks is real. Make sure you know what apartment move-in fees to expect and budget for them accordingly. You also need to ensure that all your financial records are in order and accurate.
The hard truth is that a self-employed person can’t just print a few copies of their pay stubs. As an alternative, have the following documents ready:
- Bank statement for at least the past six months
- Tax returns from the previous year
- Copies of any contracts with long-term clients or major projects to prove a consistent income
- Proof of a healthy savings account that can assure three months’ rent at least
- Any references from past or current landlords
Of course, the numbers and money are a major factor when a landlord is deciding whether to approve you or not. Find out what credit score you need to rent an apartment and try to match those requirements. It also helps if you don’t have much debt in your name.
4. Ask for References
Before you think about what furniture you need for an apartment, start thinking about who can bear witness to your income and credibility. You may have a current or previous landlord who is satisfied with your payments as a result of being self-employed. You may also have a previous employer who can vouch for your honesty and dependability. People like these can give you references, which could be precious when applying for a new apartment.
A landlord will usually respect what other landlords have to say. If the apartment you were in before was under the arrangement of a property company, ask the manager to write you a reference. These documents can be the reason a landlord accepts your apartment application.
5. Look for a Cosigner
As long as you are making enough money and can prove it to a close relative or friend, you can ask them to co-sign your lease. Show them your bank statements, the number of orders you have, or whatever they need to see for reassurance. If they know you well enough, they know the struggles of self-employment; especially when renting an apartment.
If someone with a stable and consistent income can sign your lease alongside your name, your landlord will get that security. They will be more likely to approve your application, even with your non-traditional stream of income.
6. Prepare for an Interview
If you are contacting a private landlord for renting an apartment, you will probably get a call for an in-person interview.
If and when that happens, dress nicely as you would for a job interview. The first impression may not be the last, but it really helps if the landlord sees that you have a serious mind set and are eager to please.
When talking about your business, show them how professional you are. Even though there are more people starting their own business these days and working from home, many people are still stuck in a traditional mindset. Self-employment may not always come across as the most serious means of earning. Make sure to bring along as many documents and other proofs to show your income and expected income for the near future.
Mention Potential Perks of You Being a Tenant
If you don’t have pets or kids, it may help to mention this; most landlords are relieved at the thought of no rambunctious children or animals wrecking their property. On the other hand, having a family might help if the landlord is focused on having a family-friendly environment.
While Talking
When you are discussing something or answering questions, stay courteous and thoughtful. Make eye contact, don’t fidget, and speak as clearly as possible. Pay attention to their words and try to quote them back a couple of times. This will show your prospective landlord that you have been listening to them and acknowledge their concerns.
There is also such a thing as being too serious. Crack a smile every now and then; many private landlords will enjoy an interviewee with a sense of humor!
Show Organization and Efficiency
Finally, bring all the possible documents you can with you. If there are too many, bring the essentials in a proper file. It is best not to fumble with the paper; see that you know where everything is and can pick out a specific document if they request it. If you can manage the cash for two months’ rent or more, bring that along as well.
The Takeaway
These days, the number of self-employed individuals and home-run businesses is on the rise. With everyone having access to social media, it is pretty easy to market your wares and become self-employed. While this does cause some hurdles with the typical rental application process, it does not mean that rental properties are inaccessible. Make sure to choose your landlord wisely, be a model tenant, and get your credit report, plus bank statements, in order.
Before signing any apartment lease, take your landlord contact info and closely read everything in the contract (learn how to review an apartment lease here). You can also read up on what to ask when apartment hunting to make the search easier.
