A sole proprietor I know recently leased an apartment in New York City. It was a harrowing experience for her, and not just because the New York City housing market is so competitive. She expected high rents and low availability. What she didn’t expect was an online application that could not be processed without an employer letter being uploaded.
In the end, she uploaded a completely different document and explained the situation to the leasing agent, who, fortunately, was understanding. But her experience sheds light on a problem within the multifamily and proptech industries: a lack of recognition that sole proprietors can be reliable, creditworthy tenants. This problem doesn’t only create extra obstacles for entrepreneurs; it’s also bad business.
Why bad business? Consider that sole proprietorships make up more than half of U.S. enterprises, according to the latest U.S. Census. A significant portion of those business owners are likely to rent their domiciles: In 2024, MFE published results from a Redfin report, which revealed that more than one-third of households in the United States are renter households. Taken together, these stats point to a pool of potential applicants that landlords and leasing agents should not overlook, especially in areas where supply and demand have created tenants’ markets (generally considered to be those where vacancy rates exceed 10%).
Landlord Perspectives
Some landlords don’t intentionally overlook this applicant pool, but their online rental platforms effectively create a barrier to entry. Online rental applications were originally designed for salaried employees, which can make it difficult for entrepreneurs, freelancers, and gig workers to demonstrate financial stability.
But in other instances, landlords are reluctant to rent to sole proprietors because they perceive their incomes to be less stable than those of applicants employed by others. Another source of reluctance is fear of applicant fraud.
Both perspectives are wrong-footed. First, entrepreneurship isn’t exactly a stable career path, but the same can be said of many traditional professions these days. In fact, according to recent job reports, security is a luxury few people with traditional employment have, and landlords who rent to them shouldn’t expect it. Smart landlords will evaluate applicants on a wide range of factors, such as additional sources of income, rental history, credit history, and background checks.
Landlords are right to fear fraud, the incidence of which has been rising rapidly and plaguing the multifamily industry. But restricting applicants to those with traditional jobs is a misguided approach (as well as unfair and short-sighted). Fraud mitigation requires a whole host of ID verification techniques and background checks, none of which hinge on an applicant’s employment status. Indeed, because of artificial intelligence and ever-expanding fraud networks, it’s become easy to create fake employment letters and W-2s.
In short, fraud is a big challenge, but it arises from bad actors—both those who say they’re employed and those who say they’re self-employed. It’s not limited to the latter.
A Fairer Vetting Process
The good news is that landlords, leasing teams, and online platforms are catching up to reality. Today, they are increasingly able to analyze a broader range of financial signals, from bank, verified income, and tax documentation to digital identity verification, allowing leasing teams to evaluate applicants more holistically. Instead of relying solely on employer documentation, property managers can use secure financial data integrations and automated verification tools to confirm income streams and payment history. Yes, property managers still need to confirm identity, creditworthiness, and risk, but modern screening tools allow them to do that while recognizing nontraditional income sources.
That sole proprietor in New York City is a case in point. Despite the problems she encountered with the online portal her landlord used, the leasing team eventually assessed her by conducting a background and credit check and by reviewing her tax returns, 1099s, bank statements, rental history, and references in lieu of an employer letter. Had the leasing team limited its leasing to applicants with W-2s and traditional 9-to-5 jobs, they would have missed out on a good, dependable tenant.
The Growth of Entrepreneurship
Landlords who continue to avoid leasing to sole proprietors may very well face a shrinking applicant pool. In an article published in Inc. in January, the co-founder of Calendar.com says “entrepreneurship is having a moment” and suggests that it could hit record levels in 2026.
Those landlords who embrace qualified self-employed renters can reduce vacancy time and expand their prospect pools—but they must ensure that their platforms match their policies. No platform should deter a self-employed prospect by requiring an uploaded employment letter. It should allow the prospect to upload different, alternative documents. Landlords and their leasing teams should make sure that their platforms are fair and inclusive in this manner.
The Proptech Perspective
In the example of the sole proprietor in New York City, the online platform proved to be a hindrance. But proptech actually plays a critical role in helping leasing teams move beyond outdated assumptions. Proptech tools pull comprehensive data from a variety of sources, allowing leasing teams to make decisions based on financial behavior and stability rather than employment format. These tools make the compilation process fast and accurate, and, although human oversight is always needed, they save leasing teams time and hassle.
The most effective tools reflect the realities of today’s entrepreneurial and gig-based economy, while ensuring that qualification standards remain rigorous. By adopting these tools, multifamily landlords can maximize their pool of prospects while vetting them effectively. This is especially critical today, when rents in the United States are decreasing and vacancies are rising, as reported by Realtor.
As long as proptech can align technology with trends—which it should—the results will be a healthier multifamily industry and a more equitable market for lessees.