Not everyone is blessed with a salaried job that pays $80,000 a year. Yet in places like New York, Chicago, or Boston, for example, many landlords require that potential tenants earn somewhere between 40-50 times their monthly rent in annual salary. That means that if you earned $80,0000 per year (a hefty sum for someone just out of college), you couldn’t expect to rent any place that costs more than $2,000 a month.
On the face of it, that doesn’t seem like a huge problem – except that even if you’re splitting a 3-bedroom with two others for $2400 (your share is only $800), many landlords still require that one of you make in excess of 40 times the total rent. Yes, that’s right, even though each of your shares is far lower, one of you has to have a salary that’s 40 x $2,400 … or, in other words, $96,000! What!?
While this doesn’t seem to make sense, many landlords want the guarantee that the primary leaseholder is good for the total amount, no matter how much that might be. Begging “pretty please” won’t help – but here are some things that will.
Ask First. No sense in wasting your time falling in love with a place, when you know you can’t have it. This means that if you’re going through a broker, explain that you don’t meet strict income requirements. Likely the broker will be able to show you places that are a bit more lenient. Similarly, if you’re reaching out to a management companies on your own, ask them about their income requirements. Explain that you’re credit-worthy and reliable. If they stonewall you, or don’t seem flexible, then don’t bother looking at places with them.
Get a Guarantor. A guarantor is someone (usually a parent) who is willing to back your lease. Provided you pay your rent on time, the guarantor will not lose any money in the transaction. That said, if something were to go wrong, the guarantor would be on the hook for all money owed – which is a big responsibility. Additionally, the guarantor always has to have good credit and usually must earn 80-100 times the monthly rent (or have significant demonstrable assets). Using a guarantor is probably the most common way to get around the income requirement.
Look for Listings at Smaller Places. While it’s not always the case, smaller operations, such as a family renting out a portion of a brownstone, or a management company that only runs two buildings, are often more flexible and willing to deal with potential renters one-on-one. You may end up cutting a deal that you both find agreeable.
Look for Already-Occupied Shares. Yes, the primary leaseholder may need to meet the requirement. But if you’re moving into a place mid-lease, and taking over someone else’s spot, you’ll likely make a deal directly with the remaining residents in the apartment. They’ll want to make sure you’re good for your share, but they’ll likely be far less stringent than a typical landlord. And once you’re in, you’re in – you’ll usually be able to stay there with the group if they end up renewing the lease.
Network, Network, Network. Sometimes it’s who you know – and you don’t know who you know until you ask. Tell everyone what you’re looking for and you may find that a friend’s uncle is landlord, for example. If you have an in, you’re far more likely to get a place in spite of not quite meeting income requirements.
Pay Up Front. Some people do have significant savings … they just don’t have a fabulous job right now. Often companies will make exceptions if you can prove you have a ton of extra money lying around (think 80-100 times the monthly rent)… or if you offer to pay extra on your security deposit, or even prepay your entire annual rent. This is also a good solution if you have poor credit, or no credit … provided you have the cash.
Purchase Lease Guarantee Insurance. Basically, it works like this: you pay a company to serve as your guarantor. They’re acting as an insurance policy for your landlord, and you’re paying the premium. If you go through the company Insurent, for example, after passing a credit check you’re pre-approved for any place where your salary is 27.5 times the monthly rent, which is a significantly lower amount that what’s required by landlords. The downside is the cost: it’s a one-time fee that runs approximately 80-90% of the first month’s rent.
As should go without saying, good credit gives you many more opportunities – you’ll likely find a workable solution without too much difficulty. If you have bad credit, see our article on credit scores and what your options may be – it’s still doable, but harder. Either way, keep your head up. Persistence and patience are the name of the apartment-hunting game!