Monday, June 4, 2007

Renting a New York City Apartment: Financial Requirements

When first investigating my NYC move, one of the most intimidating things I ran into was the peculiar reality of renting an apartment here. Talking with others who had made the NYC leap, I became convinced I'd never pass the strict financial rigmarole that landlords demand. Icing on my NYC rental rejection cake was the fact that I was moving to the big city without a job. Landlords don't like that. But through careful preparation and extraordinary blessings from the apartment gods above, I landed a loft studio on the Upper West Side. Here is how I did it, what is usually recommended and what to avoid:

Finances: New York City's rental market is the most expensive in the country, with one bedrooms averaging $2,567 a month (and much higher in trendy, hipster neighborhoods). As a result, landlords want major guarantees that you aren't going to stiff them at the first of the month. Apartments in Manhattan are extremely coveted and since the market is so tight (current rental vacancy is at a measly 3.7 percent) they can-and do-get away with extensive financial documentation demands. The standard requirements are:

  • Salary must be 40 times the monthly rent (for example, make $102,680 for a $2,567 one bedroom rental).
  • If you don't make those kinds of bucks, a guarantor can co-sign the lease. They must make 80 times the rent (that would be $205,360 for that $2,567 rental). Often, landlords want the guarantor to live in the tri-state area.
  • A deposit will be required, usually first & last months' rent plus a security deposit equal to one month's rent (that would be $7,701 for a $2,567 rental). Sometimes additional money might be required for things like pet deposits, credit check, etc.
  • Deposits must be made in cold hard cash, via debit card, traveler's check, certified check, money order, wire transfer or dollar bills. That means no credit cards or personal checks.

Documentation: The thing that probably helped me the MOST to get rental approval was my tidy little packet of financial information and recommendation letters. These showed that I was financially solid, employable, reliable and a good tenant.

Required Documents:
  • Bank Statement: Provide copy of most recent bank statement, showing all assets.
  • Pay Stubs: Provide pay stubs for the last month.
  • Employment Letter: On company letterhead and signed by a superior, provide information on position, length of employment and salary (including bonuses). If accepting a new job in the city, you can show an acceptance letter from that company. Personally, I fudged it a little and signed a lease while still employed (in a job in a different city, but it worked).
  • Tax Returns: To be on the safe side, provide returns for the last 2 years, both federal and state. Many landlords only require last year's federal return.
  • Valid photo identification: Driver's license, passport or employment ID may be used.
  • Self-employed documents: Provide most recent tax return and a letter from your certified public accountant verifying annual income from the last tax year.
  • Guarantor documents: Must provide an employment letter, copy of federal tax return and/or a document from a certified public accountant verifying annual income.
Additional documentation might be required, including:
  • Landlord Letter of Recommendation: This document from your current landlord should attest to the fact that you are an awesome tenant, on time with payments, a courteous neighbor, etc.
  • Employer Letter of Recommendation: This letter should say that you are a reliable employee.
As I was moving without employment, I also added the following to my 'please approve me' rental packet.
  • Personal Letters of Recommendation: These letters attest to your character. It helps if one of these is from a New York City resident.
  • Financial Portfolio Documentation: This showed all my investments, 401K's and savings.
  • Credit Score: This Free Credit Report document showed that my credit was excellent.

Other tips: If all of this scares the financial beegeezes out of you (and it should) then consider other options.

  • Roommates: Fellow apartment dwellers (especially the independently wealthy kind) are an excellent option as it lends financial credibility and heft. New York City is known for cramming multiple roommies into petite one-bedrooms. Those that shack up with others aren't just post-college grads, but also professionals, actors, artists and those that need a pied-a-terre for business.
  • Live-in Love: Romantic partners are an easy and highly sought after NYC roommate situation, but you run the risk of staying together for the sake of the apartment. It is true that some marry for love, others for money, and in New York some say vows for a two bedroom loft in Tribeca.
  • Subletting: This form of NYC apartment-getting is an art unto itself. Often, the same financial requirements listed above are expected, but there may be more flexibility. Consider it if you are just trying to get your foot in the door. Summer sublets are highly coveted so best to search for them at other times of the year.
  • Crashing with Friends: Many do it. Many love it. Again, this alternative is embraced by professionals and artists alike. Usually, this is a temporary solution and the amount you pay for couch privileges depends on the generosity of your friends.
  • BEWARE BEWARE BEWARE! There are some scams floating about as well as some desperate and unsavory brokers, so unless you are super wealthy or really, really feel comfortable with it, do NOT pay months and months of rent upfront to get approval. This may be asked of you if you are trying to get into a co-op building, but it ain't worth it. Get seasoned NYC renters' opinions on any suspicious deal before signing papers or forking over any dough.

Check back to this blog for more tips on how tackle the unique demands of moving to New York City, including how to find an apartment, brokers, unusual aspects of NYC apartment design, etc.!

7 comments:

Rick said...

I rented my studio apt. on the west side in the mid'70s, 72nd between Columbus and the park, for $250 a mo., including utilities. My father came to visit and said Do you realize you can rent a two bedroom garden apt. in Buffalo for less than that. That was before he saw all the roaches.

The west side has changed. No more Blarney Stone and Cliffords on 72nd, no Uncle Hugos on Columbus, all dives. There was an after hours joint at 85th and Col. that didn{t get rolling until 5am. Come to think of it, I didnt see a lot back then. In fact I dont even remember much but I am told I had a ball. The West Side is at least as great as ever I bet.

divinelydi said...

I know this blog is from June and I'm obviously six months late in posting a comment, but I wanted to share this tool from the Real Estate Group's website: The Manhattan Rental Market Report, which compares average rent prices in all of the city's major neighborhoods. It's really useful!

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