Financial Guide to Renting

Financial Requirements
Landlords of rental buildings require that a tenant’s annual income meet certain minimums and have good credit. This minimum is normally 40x- 45x the monthly rent in NYC, and less in other cities. For example, a landlord may require a prospective tenant to have an annual income of $120,000 to $135,000 if the renter is seeking to rent an apartment with a monthly rent of $3,000. Annual income, as defined by a landlord, will exclude bonuses that are not guaranteed. 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 requirements, landlords will require the payment of security equal to one month’s rent plus the first month’s rent in cashiers checks payable at the execution of the lease.

Lease Guarantor or co-signer
In the event that the applicant does not meet the financial requirements or credit test, a landlord will require a lease guarantor or co-signer on the lease.

In NYC, a landlord may require the individual guarantor or co-signer to reside in the local metropolitan area, and have an annual income of 75x – 90x the monthly rent and have good credit. For example, a landlord may require the annual income of the lease guarantor/co-signer to approximate $240,000 to $270,000, if the tenant is seeking to rent an apartment with a monthly rent of $3,000.  Other cities have lower requirements for individual guarantors.

In addition, the landlord will 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. Landlords will normally not accept overseas parents as guarantors.

The Insurent® Lease Guaranty takes the place of the individual guarantor, and acts as the guarantor of the lease (“the institutional mommy and daddy”).

Additional security and/or 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 landlord’s financial requirements for a guarantor, the landlord will require significant additional security beyond the typical security deposit of one month’s rent and/or significant prepayment of the rent.

Non-U.S. citizens
Landlords require stricter requirements for non-U.S. citizens as they normally have no credit history and no rental history in the United States. In addition to the annual income requirement of 40x – 50x the monthly rent, landlords may require significant additional security and/or prepayment of rent that may range from 3 to 12 months. Landlords will also not accept individual lease guarantors from outside the U.S.

Self-employed renters
Landlords have strict requirements for self-employed persons because of the variable nature of the self-employed person’s annual income. Accordingly, in the addition to the annual income requirement of 40x-50x the monthly rent and good credit, landlords may require significant additional security and/or prepayment of rent ranging from 3 to 12 months.

Retired and other non-employed persons
Landlords have stricter requirements for retired and other non-employed persons as they are not employed. Landlords will require evidence of significant liquid assets (cash in bank accounts and marketable securities in brokerage accounts) to offset the lack of an annual salary. Most important, landlords will not normally qualify retired and non-employed persons on cash liquid assets and will normally require significant additional security and/or prepayment of rent.

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