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Rental Guarantor & Cosign Company for Landlords
Rental Guarantor & Cosign Company for Landlords

Financial Guide

Sample Tenant Agreement FAQs  
 
 
 

Financial Requirements

 

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.

Typical security and initial rent payment

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.

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.

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.

Prepayment of rent requested by the landlord

In 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.

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.

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.

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.