Renting after retirement - how to meet income requirements?

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Bustoff
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Renting after retirement - how to meet income requirements?

Post by Bustoff » Wed Feb 11, 2015 11:57 am

We are retired and wish to relocate to another state. Also, prefer to rent before making a permanent commitment to a new area. Because we currently live off our assets and a small pension, we are having trouble meeting the income requirements set forth by the various apartment management companies.

I recently discussed our situation with one of the management companies for an apartment complex we liked, even offering to pay rent in advance, but were advised that prepayment of rent was not an option. Assets mean nothing to them.

In the past we have used VRBO for short periods, but vacation rentals are not very cost effective for longer periods.

I would be interested in hearing how others in the same position managed their relocation after retirement.
If you rented, how did you resolve the income requirements?

Thanks,
Bustoff

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Re: Renting after retirement - how to meet income requiremen

Post by ieee488 » Wed Feb 11, 2015 12:18 pm

Are you staying that if you sign an one-year lease, and pay the entire 12 months, they *still* won't go for it?
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Re: Renting after retirement - how to meet income requiremen

Post by White Coat Investor » Wed Feb 11, 2015 12:20 pm

Idiots. People and their policies can be so dumb sometimes.
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Re: Renting after retirement - how to meet income requiremen

Post by JDCarpenter » Wed Feb 11, 2015 12:28 pm

Second EmergDoc. Idiots.

Would it fit their procrustean bed if you presented cash flow statements from last year? Or, a tax return showing income of $X (if you had reportable income sufficient to meet the bill)?

As an aside--son's' apartment company for his last year of school waived all financial disclosures for his rental when we paid the year in advance. Not at all interested in letting them see my stuff... So there is some hope that a realistic management company may be out there. May have to just keep looking.
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Re: Renting after retirement - how to meet income requiremen

Post by epitomist » Wed Feb 11, 2015 12:28 pm

Best of luck to you. Throughout the process keep in mind that people don't always say the real reason why you aren't getting an apartment.

I could just as easily picture a landlord who had a bad experience with retired renters frivolously complaining about noise so he came up with a legal workaround to avoid that type of tenant in the future. I'm not saying that definitely happened in this case but turning down a tenant that is willing to prepay their rent for a year is colossally stupid so there's probably something else at work.

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Re: Renting after retirement - how to meet income requiremen

Post by Flobes » Wed Feb 11, 2015 12:50 pm

Violation of Fair Housing Act? Sounds like "restrictive standards for selecting tenants" and a "refuse to rent to members of certain groups." Plus some age discrimination. For starters.

Perhaps, you might call to Housing Department of whatever state you're intending to move to. And put some of those arrows into your quiver before your next conversation with the "idiot" management company.

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Re: Renting after retirement - how to meet income requiremen

Post by epitomist » Wed Feb 11, 2015 1:02 pm

Flobes wrote:Violation of Fair Housing Act? Sounds like "restrictive standards for selecting tenants" and a "refuse to rent to members of certain groups." Plus some age discrimination. For starters.

Perhaps, you might call to Housing Department of whatever state you're intending to move to. And put some of those arrows into your quiver before your next conversation with the "idiot" management company.

While I think it is very possible that the landlord is using workarounds to discriminate against certain groups, your understanding of the law is not complete.

From: http://www.nolo.com/legal-encyclopedia/ ... er5-2.html
Nolo wrote:The federal Fair Housing Acts apply to all aspects of the landlord-tenant relationship. A landlord may not:

* advertise or make any statement that indicates a limitation or preference based on race, religion, or any other protected category

* falsely deny that a rental unit is available

* set more restrictive standards for selecting tenants or refuse to rent to members of certain groups

* before or during the tenancy, set different terms, conditions, or privileges for rental of a dwelling unit, such as requiring larger deposits of some tenants or adopting an inconsistent policy of responding to late rent payments

terminate a tenancy for a discriminatory reason.


Your selective quoting from the statute makes a Fair Housing case sound plausible, but if you read the specific actions that are prohibited it doesn't sound at all like this property management company has violated the act. Which makes sense because a property management company that violates the Fair Housing Act isn't a property management company for very long.

In this case, all we've been told is that the property management company has income requirements for all prospective tenants. This is in itself doesn't run afoul of the Fair Housing Act. If on the other hand the property management company had different income requirements for different protected classes of tenants, then that would be illegal.

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Re: Renting after retirement - how to meet income requiremen

Post by Flobes » Wed Feb 11, 2015 1:14 pm

I do not wish to hijack the thread with a conversation about the Fair Housing Act.

I live in a community where everyone was subject to the same income guidelines and rules. But those regulations were found to effectively prohibit retirees. And there's now an alternative income/asset qualifier that's been added to our language.

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Re: Renting after retirement - how to meet income requiremen

Post by LeeMKE » Wed Feb 11, 2015 1:20 pm

We are in similar situation, semi-retired and a small business. However, we offered our previous year tax return (just the 1040, not all the rest) and that was acceptable to several property management firms. If you don't have enough cash flow to qualify, that may be a different problem. For example, someone with less than 2x the rent in cash flow would be stretching to afford the rent after paying for food, utilities and other expenses. The ratio that seemed to apply in our situation was about 3x the annual rent. Hope that helps.
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Re: Renting after retirement - how to meet income requiremen

Post by furwut » Wed Feb 11, 2015 1:22 pm

Have you tried renting an apartment managed by one of the more prominent national companies? I imagine that these companies also manage properties in areas popular with retired persons renting for the season. Maybe they have the policies in place to look at factors other than paycheck income?

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Re: Renting after retirement - how to meet income requiremen

Post by Hypersion » Wed Feb 11, 2015 1:33 pm

You might have to find a private landlord.

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Re: Renting after retirement - how to meet income requiremen

Post by Ron » Wed Feb 11, 2015 1:50 pm

It's kind of funny that those that are retired with substantial assets and wish to rent/buy (mortgage) are held to such high standards.

You could have a person who has little savings/investments but have a current paycheck that indicates they can cover the monthly rent/mortgage payment; OTOH, they could lose their job tomorrow.

Which person would you bet on?

- Ron

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Re: Renting after retirement - how to meet income requiremen

Post by nilecruiser » Wed Feb 11, 2015 5:18 pm

I can’t decide if this is helpful, but here goes. When we first retired, we were living off of several inherited annuities. We wanted to buy a better home while selling our current place, but our annuity income wasn’t sufficient to meet the income requirements for an additional mortgage. After some discussion, it was suggested that we setup an automatic withdrawal from Vanguard to our bank equal to the amount of additional monthly income necessary to satisfy the income requirements. We did this, and after the income showed up on a couple of checking account statements, the new loan went through. Needless to say we then cancelled the automatic withdrawals.

So I wonder if automatic monthly withdrawals from one of your investments to your checking account might make satisfy the income requirements?

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Re: Renting after retirement - how to meet income requiremen

Post by itstoomuch » Wed Feb 11, 2015 5:36 pm

^ Thanks. good idea.
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Re: Renting after retirement - how to meet income requiremen

Post by Gill » Wed Feb 11, 2015 5:39 pm

nilecruiser wrote:After some discussion, it was suggested that we setup an automatic withdrawal from Vanguard to our bank equal to the amount of additional monthly income necessary to satisfy the income requirements.

I went through the identical exercise a number of years ago with my 7-figure IRA in order to qualify for a mortgage. Cancelled the arrangement the day after closing.
Gill

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Re: Renting after retirement - how to meet income requiremen

Post by Quickfoot » Wed Feb 11, 2015 5:41 pm

Would they consider SPIA income as regular income? Since SPIA involves surrender of principal and provides lifetime payments I would imagine they would be likely to allow it to meet income requirements, it should count the same as pension or SS income.

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Bustoff
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Re: Renting after retirement - how to meet income requiremen

Post by Bustoff » Wed Feb 11, 2015 6:13 pm

This is the income requirement from one of the management companies.
Income/Employment Verification:
If your application is accepted or accepted with conditions, you will be required to verify your income by supplying a pay stub or other acceptable proof of income. If we are not able to verify your income or your income is contrary to that presented on your rental application, the acceptance of your lease application will be withdrawn . The total gross monthly income must be a minimum of 2.5 times the rent to qualify.

After reading some of your responses I called back and asked to speak with a supervisor. I asked how they manage to equally apply the same income requirements to all applicants when many retired individuals have sufficient assets but no regular income.
I was informed that the original information I had received was incorrect. They said the word income as in, income must be a minimum of 2.5 times the rent, was not to be taken literally. The supervisor advised that a savings account with a balance of 2.5 times the rent is sufficient to qualify.

Seems like information has to be double and triple confirmed for accuracy these days.

Thanks everyone!

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Bustoff
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Re: Renting after retirement - how to meet income requiremen

Post by Bustoff » Wed Feb 11, 2015 6:19 pm

Gill wrote:
nilecruiser wrote:After some discussion, it was suggested that we setup an automatic withdrawal from Vanguard to our bank equal to the amount of additional monthly income necessary to satisfy the income requirements.

I went through the identical exercise a number of years ago with my 7-figure IRA in order to qualify for a mortgage. Cancelled the arrangement the day after closing.
Gill

Thanks for sharing this option regarding mortgages.

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Re: Renting after retirement - how to meet income requiremen

Post by Carefreeap » Wed Feb 11, 2015 6:32 pm

As a private LL with a house in AZ I did turn down the offer from my first tenant to pre-pay all the rent up front. She was taking the house December 1 and I did not want the extra income. We did accept her as a tenant as she and her agent supplied copies of her brokerage statement which showed a balance of approximately $500k.

I will say that from a LL's point of view one has to be very careful about folks who do not have a regular income. You may have heard that in the Phoenix area there have been issues with drug dealers and "drop houses". Somehow management has to implement strategies that avoid those pitfalls without discriminating against folks who have legitimate assets.

Oh and I did have really weird potential tenant last year. His "income" was gifts from his dad. They supplied bank deposit slips showing the annual gifts. They were unwilling to supply any other info. They had other issues and were freaky weird. We turned them down because of the inability to supply sufficient documentation.

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Re: Renting after retirement - how to meet income requiremen

Post by DualIncomeNoDebt » Thu Feb 12, 2015 2:52 am

Carefreeap wrote:They were unwilling to supply any other info. . . . We turned them down because of the inability to supply sufficient documentation.


This is your right, of course, but there are citizens with significant assets who simply refuse to provide detailed financial records -- and I don't blame them. Many people are careless with paper records and electronic information. Once you turn over personal financial information, you never know what happens to the information, where it goes, nor can you control it once it leaves your hands. And security lapses are only getting worse. And really, think about it from the other side. Who the heck are you that these persons should turn over all manner of private financial information when they've demonstrated they can afford to pay -- which, under the terms of a rental business transaction, is really the only thing that matters.

I am that person who refuses to supply "any other info," on many occasions.

Currently I'm looking for a place to rent in another state, and can afford just about anything in the area with extreme ease; yearly rent won't even be a rounding error to me. Will I be turning over bank statements, tax returns, brokerage accounts? Hell no. I'll offer to pay a year's rent up front. Not good enough? I don't care, I'm walking. I'm not going to allow some property owner to paint a bullseye on my back. And that's because my privacy, security of my financial life, and safety is orders of magnitude more important than these vapid demands for all manner of private financial information when the person obviously can afford a measly twelve months of rent.

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Re: Renting after retirement - how to meet income requiremen

Post by ubermax » Thu Feb 12, 2015 7:41 am

Are we talking subsidized housing here ; I'm confused about "income requirements" ??

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Re: Renting after retirement - how to meet income requiremen

Post by Bustoff » Thu Feb 12, 2015 7:50 am

DualIncomeNoDebt wrote:Currently I'm looking for a place to rent in another state, and can afford just about anything in the area with extreme ease; yearly rent won't even be a rounding error to me. Will I be turning over bank statements, tax returns, brokerage accounts? Hell no. I'll offer to pay a year's rent up front. Not good enough? I don't care, I'm walking. I'm not going to allow some property owner to paint a bullseye on my back. And that's because my privacy, security of my financial life, and safety is orders of magnitude more important than these vapid demands for all manner of private financial information when the person obviously can afford a measly twelve months of rent.

I told the management company that I would be willing to supply one bank account statement on the condition that the account number would be deleted.
In the end does it really matter -- each month you normally pay rent by giving them a personal check that contains both the name of your bank and your account number on the check ... right???

One might also temporarily open a new bank account solely to document sufficient funding, then close the account once the lease was signed.
Last edited by Bustoff on Fri Feb 13, 2015 6:16 am, edited 1 time in total.

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Re: Renting after retirement - how to meet income requiremen

Post by Ron » Thu Feb 12, 2015 9:20 am

ubermax wrote:Are we talking subsidized housing here ; I'm confused about "income requirements" ??

No, the discussion is about renting without showing proof of income to meet the financial requirement of the apartment.

As an example, our (disabled) son gets by as a person who would be considered one of the "working poor". His income consists of Social Security Disability along with a few $$$ he gets by working in a sheltered workshop. We do not monetarily support him at this time and along with his tax credits (EIC, state income tax reimbursement, state rent reimbursement - paid for by the state lottery, and SNAP benefits along with Medicare Part B premium reimbursement and "extra help" on his Medicare Advantage plan) he's able to eke out a living. None of the credits are considered which in turn reduces the amount of income he actually needs to get by.

During his "housing evolution" (from a group home, then to a shared apartment, and now an apartment of his own) there were different levels of rent and also different requirements to get a lease. The group home and shared apartment situations were under Section 8 housing. His current apartment does not offer subsidized housing and of course the monthly rental reflects that fact.

In order to be able to move into his current apartment (some four years ago) we had to co-sign since his assets/income were below the minimums required by the apartment to ensure that they would be paid without undue risk and avoiding the hassles of having somebody evicted.

Since he has shown that he was responsible and made his monthly rent payments without delay for the the first two years, we did not have to co-sign his lease the last two.

- Ron

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Re: Renting after retirement - how to meet income requiremen

Post by Carefreeap » Thu Feb 12, 2015 9:30 am

DualIncomeNoDebt wrote:
Carefreeap wrote:They were unwilling to supply any other info. . . . We turned them down because of the inability to supply sufficient documentation.


This is your right, of course, but there are citizens with significant assets who simply refuse to provide detailed financial records -- and I don't blame them. Many people are careless with paper records and electronic information. Once you turn over personal financial information, you never know what happens to the information, where it goes, nor can you control it once it leaves your hands. And security lapses are only getting worse. And really, think about it from the other side. Who the heck are you that these persons should turn over all manner of private financial information when they've demonstrated they can afford to pay -- which, under the terms of a rental business transaction, is really the only thing that matters.

I am that person who refuses to supply "any other info," on many occasions.

Currently I'm looking for a place to rent in another state, and can afford just about anything in the area with extreme ease; yearly rent won't even be a rounding error to me. Will I be turning over bank statements, tax returns, brokerage accounts? Hell no. I'll offer to pay a year's rent up front. Not good enough? I don't care, I'm walking. I'm not going to allow some property owner to paint a bullseye on my back. And that's because my privacy, security of my financial life, and safety is orders of magnitude more important than these vapid demands for all manner of private financial information when the person obviously can afford a measly twelve months of rent.


And if you saw my house you would understand why I'm careful.

I don't need know someone's net worth but I do need sufficient documentation that someone can qualify. And I'm very careful with prospective tenant's information and promptly shred if I reject them.

There's a difference between being careful and paranoid. One of the worst tenants I've had was extremely paranoid, wanting me to prove ownership, yada yada. I did what I could to give him some comfort since we were living in Germany at the time so I could understand the concern. Guy was a total jerk, got into arguments with other residents et cetera. When he handed me back the unit it was a complete PIGSTY. My carpet cleaner couldn't believe anyone could live that way. I had to replace almost all the expensive wool carpeting throughout the unit. This was in a nice section of La Jolla not some dump. I will never rent to someone who is that paranoid or difficult to deal with again.

Same kind of vibe I got from the prospective AZ guy. NO THANKS!

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Re: Renting after retirement - how to meet income requiremen

Post by ubermax » Thu Feb 12, 2015 1:34 pm

Ron wrote:In order to be able to move into his current apartment (some four years ago) we had to co-sign since his assets/income were below the minimums required by the apartment to ensure that they would be paid without undue risk and avoiding the hassles of having somebody evicted.


thanks Ron, great explanation - wonder what the reason is for not considering assets along with income to determine if the risk to the landlord is prohibitive ? is income easier than assets to bring legal action against ?

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Re: Renting after retirement - how to meet income requiremen

Post by 2 bits » Thu Feb 12, 2015 10:31 pm

I first opened this link with a similar interest of making a similar move.
But am taken with the landlord tangent of the thread.
JDCarpenter wrote:Second EmergDoc. Idiots.

Would it fit their procrustean bed if you presented cash flow statements from last year? Or, a tax return showing income of $X (if you had reportable income sufficient to meet the bill)?

As an aside--son's' apartment company for his last year of school waived all financial disclosures for his rental when we paid the year in advance. Not at all interested in letting them see my stuff... So there is some hope that a realistic management company may be out there. May have to just keep looking.


Carefreeap wrote:
I will say that from a LL's point of view one has to be very careful about folks who do not have a regular income. You may have heard that in the Phoenix area there have been issues with drug dealers and "drop houses". Somehow management has to implement strategies that avoid those pitfalls without discriminating against folks who have legitimate assets.

Oh and I did have really weird potential tenant last year. His "income" was gifts from his dad. They supplied bank deposit slips showing the annual gifts. They were unwilling to supply any other info. They had other issues and were freaky weird. We turned them down because of the inability to supply sufficient documentation.
Ron wrote:It's kind of funny that those that are retired with substantial assets and wish to rent/buy (mortgage) are held to such high standards.

You could have a person who has little savings/investments but have a current paycheck that indicates they can cover the monthly rent/mortgage payment; OTOH, they could lose their job tomorrow.

Which person would you bet on?

- Ron

Consider a third case... On a couple occasions I as a private LL have denied people wanting to prepay 12 months. An applicant that has "just gotten a settlement" and has the cash but no other resources. No thanks, give me somebody with a job! We look for tenants that might stay several years. Sure a year of prepaid rent sounds nice but in my case it has not been offered by somebody that hadn't also thrown up a couple other red flags.
But, I realize this is not what the op had in mind. The op sounds like somebody that would meet my written criteria.
I have speculated on how this might work for me on the other side in the future... No, I don have a rental history or previous landlords you can talk to, but I have been a landlord myself for a couple decades. Would that help me get approved in the future?
I don't disagree with the other posters, especially the ones I quoted, just looking at another side of the coin.
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Re: Renting after retirement - how to meet income requiremen

Post by Carefreeap » Fri Feb 13, 2015 9:01 am

When we rented in Germany for three years I'm sure being a LL ourselves helped.

In Germany there is no such thing as FICO scores and as homeowners we hadn't rented in 20 years so no LL references available.

But the real driving factor was DH working for one of the largest employers in town. :wink: Oddly enough the fact that we were foreign and wouldn't stay too long also had appeal, LOL. Apparently Germans typically rent for 10 years therefore making it harder to raise rents or to get them out!

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Re: Renting after retirement - how to meet income requiremen

Post by VictoriaF » Fri Feb 13, 2015 9:25 am

Gill wrote:
nilecruiser wrote:After some discussion, it was suggested that we setup an automatic withdrawal from Vanguard to our bank equal to the amount of additional monthly income necessary to satisfy the income requirements.

I went through the identical exercise a number of years ago with my 7-figure IRA in order to qualify for a mortgage. Cancelled the arrangement the day after closing.
Gill


How did your automatic withdrawals work? Did you get a statement of income from your bank, from Vanguard, or both? How did you present it to the landlord?

Victoria
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Re: Renting after retirement - how to meet income requiremen

Post by JDCarpenter » Fri Feb 13, 2015 9:30 am

2 bits wrote:I first opened this link with a similar interest of making a similar move.
But am taken with the landlord tangent of the thread.

...

Consider a third case... On a couple occasions I as a private LL have denied people wanting to prepay 12 months. An applicant that has "just gotten a settlement" and has the cash but no other resources. No thanks, give me somebody with a job! We look for tenants that might stay several years. Sure a year of prepaid rent sounds nice but in my case it has not been offered by somebody that hadn't also thrown up a couple other red flags.
But, I realize this is not what the op had in mind. The op sounds like somebody that would meet my written criteria.
I have speculated on how this might work for me on the other side in the future... No, I don have a rental history or previous landlords you can talk to, but I have been a landlord myself for a couple decades. Would that help me get approved in the future?
I don't disagree with the other posters, especially the ones I quoted, just looking at another side of the coin.


Speaking as one of the ones you quoted (omitted), you have good point. A landlord has to be comfortable with the tenant and his/her ability to pay and not trash the joint. But, from a business standpoint, I don't understand the one-size fits all approach (hence, my reference to procrustean bed). Luckily, with our son, there were a host of ancillary factors (for both he and us) that pointed to rent-worthy. (FICOs, prior landlords, selective grad program, etc.) Thus, the management company was able to assess and accept year rent in advance. Don't understand why that wouldn't be the case for OP.

Luckily, there is always another rental somewhere with different, or more flexible requirements. If the flexibility is properly applied, they win. If not, the rigid company was right in this instance. :-)

P.S.--Your signature line is great. So true for many/most of us, and so easy to forget....
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Re: Renting after retirement - how to meet income requiremen

Post by ResearchMed » Fri Feb 13, 2015 11:22 am

nilecruiser wrote:I can’t decide if this is helpful, but here goes. When we first retired, we were living off of several inherited annuities. We wanted to buy a better home while selling our current place, but our annuity income wasn’t sufficient to meet the income requirements for an additional mortgage. After some discussion, it was suggested that we setup an automatic withdrawal from Vanguard to our bank equal to the amount of additional monthly income necessary to satisfy the income requirements. We did this, and after the income showed up on a couple of checking account statements, the new loan went through. Needless to say we then cancelled the automatic withdrawals.

So I wonder if automatic monthly withdrawals from one of your investments to your checking account might make satisfy the income requirements?


We looked into "asset depletion" style mortgage qualifying, based upon substantial IRA as well as 403b assets.
(I'm making the distinction, because we had full access to any/all of the IRAs, but not to the 403b monies until after retirement.)

Looking at 1/360th (monthly payments if one considered depleting the entire amount over 30 years, "as if" a regular mortgage length) for a vacation property, it was more than enough with nothing else needed.

The "catch" was that we had to "prove" that we had already been collecting that monthly amount for at least two years.
The fact that we had previously had absolutely no need to touch any of that, and had, in fact, been adding to it, meant nothing.

We ended up qualifying without it, which we hadn't expected.

However, it was a sobering view into what we'd be facing once we did retire.
At that point, the RMD's should "qualify", but we'd need to make sure we waited at least 2 years, if we wanted to purchase with a mortgage (which is our preference).

No idea if that is still conventional for asset depletion mortgages, but we heard the same from several lenders, and lending has only tightened up since then.

RM
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Re: Renting after retirement - how to meet income requiremen

Post by FredL » Mon Feb 16, 2015 12:39 am

You can go to Senior Center where you may find more information and help. In my area, we have Silicone Valley Independent Living Center to assist in finding housing.

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Re: Renting after retirement - how to meet income requiremen

Post by Spac3d » Mon Feb 16, 2015 3:24 pm

Most larger property properties have financing on their properties. Often the loan docs will have restrictions on what leases can be entered into, i.e. :

No leases more than 2 years at a time
No leases for $1/month
No leases where all money is collected up front

The intent is to keep the cash flow as equally throughout the loan term as possible. So while many properties would gladly accept your annual payment up front, their financing prohibits it.

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