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Not having a W2 income was one of the things that made me a little uneasy when planning for early retirement. Would renting an apartment or getting a mortgage for a place be a massive headache?
My concern stands that when you need to open a new line of credit or fill out a rental application, one of the expected questions for you to answer is “what’s your annual income?”
For the most part, we’re living off our portfolio income. As a reader of this blog and possibly other personal finance blogs, that probably doesn’t seem out of sorts to you.
But for many front-line folks dealing with renting an apartment to others, for example, they might not be as versed in understanding this. I’m sure many have a method to handle this scenario with traditional retirees, especially with solid income streams like pensions or social security… but a 47-year-old living off his investments?
The irony is that many businesses looking for applicants for whatever reason tend to rely on income rather than net worth. And in most cases, having a high income doesn’t necessarily represent someone who can handle their money well. Whereas, a higher net worth will likely be a result of better money management. Exceptions do apply to both sides, of course.
When we lived in Panama over the past few years, having self-employment income, W2 income from an employer, or contractor income wasn’t really necessary to rent a place. We just worked with the landlord, signed a lease, and that was it. Yeah, things are different in countries like Panama.
But now that we’re back in the U.S., I was curious how this would work. We decided that for now, we’ll be renting an apartment in northeast Ohio where most of our family and friends are living.
How difficult would it be to rent a place as an early retiree living almost completely off of investments?
Our current income status
I’ve always been open with our numbers and I update our net worth every month on my, affectionately named, Net Worth page. As of June 1, that number was $1,475,912.02.
As a side note, we track our net worth – including all our investments, credit cards, and bank accounts with Empower (formerly Personal Capital). It handles all the legwork so I’m not manually entering all my transactions and then just presents me with solid information I need to know. You can try it out for free here using my affiliate link at no extra cost to you.
Outside of that, I’m hoping to bring in about $7,500 from this blog for 2022. That comes from ads and from your support in clicking through and trying products and services that I use and feel would provide value to you as well (like Empower, credit cards, or other recommendations).
That’s not too bad and makes for some nice supplemental income, but also be aware that that’s the most I’ll have ever made in a year. After making next-to-nothing on it for a few years since 2015, it’s kind of satisfying to show a little something for all the time I put into it. I appreciate the support!!
But that’s really about it.
When all’s said and done, we stick to a budget of about $45-$50k per year. And $50k is the amount of money that we have dispersed to us each year through our bucket strategy (which will be adjusted for inflation over the years). That money goes into our online savings account in late December or early January and then 1/12 of it moves into our checking account each month to spend.
In other words, we have a steady $50k per year income. That’s $50k per year of essentially guaranteed income since it comes from 5-6 years of living expenses we keep in cash or short-term bond funds such as BulletShares fixed income ETFs. Whether we have a job or not, that money’s there for us.
But would that be enough to satisfy a property manager we’re looking at renting an apartment from?
A note on finding a place
Boy, we sure picked the wrong time to come back from Panama! Between the rising inflation and the insane housing prices with both houses and rentals, things are a little crazy here.
Nonetheless, it is what it is and we still need to find a place to live. And we decided that renting an apartment rather than renting or buying a house made more sense for us, at least for this upcoming year.
We looked at a ton of apartment complexes online. I would bet that more than half of them didn’t have any availability at all. And the ones that did have gone up quite a bit in price and are a lot more expensive than we anticipated.
But we still found a handful of places that would work. So we went and toured some of them. Of the ones we looked at, there were only two that fit the criteria we were looking for in renting an apartment. Those were the ones I needed to talk more to the property manager about and see if we could do more of an asset-based application rather than an income-based one.
Here’s how that went…
Renting an apartment… candidate #1
This apartment complex was not our favorite but, since it’s just for a year, we thought it was worth digging into a little more.
So after we were done touring the facility and a demo apartment with the property manager, I went back to her office to discuss it.
Me: So, I have a question… can we do an application looking at our bank accounts and investment portfolio rather than income?
Property Manager [Looking confused]: Um…
Me: We’re early retirees and we live almost solely off our portfolio. So I’m hoping you could look at our bank and investment statements instead of W2s or anything like that.
PM [Still looking confused]: You mean like a 401(k)?
Me: Yes… well, sort of. We’ve rolled our 401(k) plans into traditional IRAs but yes, investment accounts like these and others.
PM: I’m not sure… maybe. We had a guy recently submit a Fidelity [yes, she said “a Fidelity”] – is that the same thing?
Me: Um, well, yeah – possibly. That’s the company so it depends on whatever the account was, but yes, that’s probably along the lines of what I’m talking about.
PM: I’d have to ask my boss but maybe we can do that.
It was a little painful. But again, it is what it is. She was a little younger (maybe in her mid-twenties) and obviously doesn’t understand a lot of this. Most folks don’t though regardless of age so I can’t blame her.
I do know that this was probably not going to go as smoothly as I was hoping. If we decided to apply here, it would probably involve jumping through some hoops. And even then, who knows how that would go?
Renting an apartment… candidate #2
After touring a couple of other places, we found potential candidate #2. We liked this one much better than candidate #1 and decided this would be the one we’d go with… if we could.
This was a much bigger operation though so I was a little nervous about whether we’d be bending over backward to make it happen… fun. However, the property manager was extremely friendly and helpful and seemed to be on top of things.
When we were done looking at a couple of model apartments there, we went back to the car and talked about it. All of us were in agreement that renting an apartment here would be a winner.
So I went back to the office to talk to the property manager with expectations not much higher than the confusing discussion I had with the other place. Here’s how it went here though…
Me: So, I have a question that might be a little weird… we’re early retirees.
Property Manager [Interjecting]: That’s great! Congratulations!
Me: Thank you. Yeah, well, with that being the case, we’re living off our investments for the most part. Would it be possible to do an asset-based application instead of an income-based application?
PM [Not missing a beat]: Sure, that’s not a problem – you can submit your investment statements when you apply online. That’s not a problem at all. The only issue is that the new program we use might be a little finicky so if you have any issues, I can help you with it.
Me: Is there a place where we can add notes to explain things or anything like that?
PM: You shouldn’t need to – all the applications go through me anyway for review.
Me: So, that’s it? We’re good?
PM: Yep, not a problem at all!
Me: Awesome – thank you!
I walked away from that feeling good. Who says renting an apartment as an early retiree is difficult?!
And indeed, we got back to our temporary home in my in-laws’ basement and applied online for candidate #2 – our preferred choice anyway.
I was a little nervous after not hearing anything back for a while just because it’s some slim pickings out there as far as available apartments go! But, after a few days, I got a call from the PM letting me know that we were approved and she was working on figuring out an apartment for us based on upcoming vacancies.
Since then, we now know which apartment will be ours there. We’re set to move in after our road trip and once we pick up all the furniture we bought in North Carolina.
So, if you’re a retiree or on the path to becoming a retiree with a good net worth but no W2 income, take heart in knowing that there are some property managers that will rent to you!
Plan well, take action, and live your best life!
Thanks for reading!!