Renting A NYC Apartment: You’ve Got The Income But Not The Cash!

By | October 20, 2016
looking for a NYC apartment

Photo: Your New York Agent

Yet Another Financial Hurdle In The Process Of Renting An Apartment In NYC!

Congratulations!

You found an apartment with a monthly rent you can afford and only had to make a few sacrifices to get there.

It’s not exactly in the right neighborhood, needs a little work, doesn’t offer all of the amenities on your wish list and you’ll be living with more roommates than desired. But at least you found a home, right?

Not so fast!

For most, if not all NYC landlords, there is going to be a minimum income requirement that you, plus your roommates, will have to meet in order to qualify for an apartment. And if you don’t qualify, if the landlord is amenable you will have to find guarantors who do.

After all the building owner does not want to find out halfway through the lease that you really couldn’t afford the apartment after all.

And the amount of income required will often be in the range of 40-45 times the monthly rent along with credit scores of 700+.

So if you don’t have the income or a guarantor that does, are you out of luck?

An Apartment Renters Minimum Income Workaround!

As with most things in life where alternatives exist, there may be an alternative method that will allow renters to make the grade.

Presenting, rental payment insurance!

From an article at Real Estate Legal Update…

(US) Guarantor Services can help you land the dream New York City apartment

Finding an apartment in New York City is a journey in stress management. You’ve done your internet research. You’ve climbed a thousand steps. Now, you’ve found the place of your dreams. Is it too good to be true?

It might. Why? Because the financial standing to qualify for that apartment is an entirely different matter.

Landlords in New York City typically demand that prospective tenants have an annual income of up to at least 40 times one month’s rent and a credit score of at least 700. In a market where increases in rent outpace increases in income, it is often difficult for prospective tenants to meet these high thresholds.

To help prospective tenants overcome qualification difficulties, companies like Insurent and TheGuarantors offer rental payment insurance on behalf of tenants that provides landlords with a guarantee that the landlord will be made whole in rental payments if the tenant defaults under the lease. Companies like Insurent and TheGuarantors have capitalized on strict landlord requirements by offering tenants less stringent financial standards than typical New York City landlords. TheGuarantors, for example, insures tenants with incomes as little as 27 times one month’s rent and who have credit scores as low as 630. The company also considers liquid assets and income earned outside of the country, a benefit for international tenants. The premiums for TheGuarantors’ policies range from 5 to 7% of the annual rent, depending on how risky the tenant profile.

Companies like Insurent and TheGuarantors fill an important niche by helping prospective tenants who would otherwise never qualify for many quality apartments while reducing landlord exposure to default risk and vacancies. Developers of new construction are also provided protection in high cost markets where the prospective applicant pool of qualified renters may be smaller, allowing for a larger number of applicants to qualify as tenants.

In markets with rising rents, Landlords now have a new guarantor option. It will be interesting to see if similar services make their way into the world of corporate real estate.

Michael Haltman is President of Hallmark Abstract Service in New York and a Director of Heroes To Heroes Foundation.

He can be reached at mhaltman@hallmarkabstractllc.com or at 516.741.4723.

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