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Financial
Requirements |
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Landlords of rental buildings require that a tenant's annual income
meet certain minimums. This minimum is often 40 to 50 times the
monthly rent. For example, a landlord may require a prospective
tenant to have an annual income of $80,000 to $100,000 if the renter
is seeking to rent an apartment with a monthly rent of $2,000. Annual
income, as defined by a landlord, may exclude bonuses that are not
guaranteed. In addition, landlords may require a credit history
showing no delinquencies, defaults, judgments, or bankruptcies.
Finally, rental condos and co-ops may have stricter financial requirements
for prospective tenants. |
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| Typical
security and initial rent payment |
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Assuming the tenant meets the landlord's minimum financial requirements
and credit check, many landlords will require the payment of security
equal to one month's rent, plus the first month's rent. Landlords
may require that both payments be in the form of certified checks,
cashiers checks, or money orders, and that they be delivered at
the execution of the lease. |
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Guarantor
or co-signer |
In the event that the applicant does not meet the financial requirements
or credit test, a landlord may require a guarantor or co-signer
on the lease.
A landlord may require the guarantor or co-signer to reside in the
local metropolitan area, and have an annual income of 80 to 100
times the monthly rent. For example, a landlord may require the
annual income of the guarantor/co-signer to approximate $240,000
to $300,000, if the tenant is seeking to rent an apartment with
a monthly rent of $3,000.
In addition, the landlord may require the guarantor or co-signer
to submit extensive due-diligence documentation to the landlord,
such as two to three years of tax returns, net worth statements
from their accountants, bank and brokerage statements.
Finally, the landlord may require the guarantor/co-signer to have
a credit report showing no delinquencies, defaults, judgments or
bankruptcies. |
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Additional
security requested by the landlord |
In the event that the renter does not have a guarantor or co-signer
who can satisfy the landlord's financial requirements for a guarantor,
the landlord may require additional security beyond the typical
security deposit of one month's rent. |
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Prepayment
of rent requested by the landlord |
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the event that the renter does not have a guarantor or co-signer
who can satisfy the financial requirements, the landlord may require
prepayment of rent. |
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Non-U.S.
citizens |
Landlords
may have stricter requirements for non-U.S. citizens, who may have
no credit history and no rental history in the United States. Landlords
may require significant additional security and/or prepayment of
rent that may range from six to 12 months. A landlord may require
the renter's annual income to be a minimum of 40 to 50 times the
monthly rent. For example, a landlord may require an annual income
approximating $120,000 to $150,000 if the renter is seeking to rent
an apartment with a monthly rent of $3,000. |
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Self-employed
renters |
Landlords
may have strict requirements for self-employed persons because of
the variable nature of the self-employed person's annual income.
Accordingly, landlords may require significant additional security
and/or prepayment of rent ranging from four to 12 months. A landlord
may require the renter's annual income to be a minimum of 40 to
50 times the monthly rent, and for the renter's credit report to
be free of delinquencies, defaults, judgments or bankruptcies. For
example, a landlord may require an annual income approximating $120,000-$150,000
if the tenant is seeking to rent an apartment with a monthly rent
of $3,000. |
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Retired and other non-employed persons |
Landlords may have strict requirements
for retired and other non-employed persons. Landlords may require evidence of significant liquid
assets (cash in bank accounts and marketable securities in brokerage accounts) to offset the
lack of an annual salary. In addition, landlords may require significant additional security
and/or prepayment of rent. |
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