nyc rental guide
resources for prospective tenants to find the right property & to make it their home
Yes, million dollar sales listings are sexy. And luxury listings at $10MM+ are even more so with their combination of a tony neighborhood and an amenity filled building, with top-of-the-line finishes, high design and jaw dropping views. While these rightly serve to inspire many of us, and garner the lion-share of media attention, the reality is that very few properties are actually affordable to the vast majority of NYCers. More half of NYC households earn $55K or less on an annual basis, which has meant that only about 8-9% of all properties that have transacted in recent years were affordable to these households. And this during a period of enhanced affordability given historic, low mortgage rates barely above the inflation rate.
Affordability is but one driver of this situation, as the City & State Governments regulation of as much as 70% of rental units in NYC creates little incentive for tenants of these units to ever move, as they enjoy below market rental rates, regulated increases, required renewals and other privileges typical of real estate owners. Combining these factors, and others, means that home ownership rates are less than half the national figure, with just 31% of NYC residents who live in a home they own vs. 63% nationwide.
NYC | A CITY OF RENTERS
So, the real estate reality for the vast majority of NYC residents is to rent that place to call home. And while affordable is not a descriptor of this market either, the current environment is creating some better value opportunities available to savvy Agents to share with clients, or negotiate for them. But, in the City that Never Sleeps, these opportunities are often fleeting, and the typical application process quite detailed and specific, So being prepared is critical and our below guide will help you prepare to work with our team to find your new home efficiently & effective!
70%
of NYC Residents Rent vs. Own
#beautifulNYC
RENTAL RESOURCES FOR PROSPECTIVE TENANTS
Between our own exclusive listings, relationships with many landlords and access to every publicly listed unit on the market at any given time, we efficiently work with our clients to find their own #beautifulNYC rental property aligned with their needs and budget. We then negotiate the best deal and help to navigate the often complicated application process. All this, paired with a network of resources to help with all aspects of moving and settling into a new home, gets our clients through the process of finding, getting and making a property into their new home more effectively.
Photos: An exclusive 1 bedroom rental listing in West Chelsea
PROSPECTIVE TENANT TYPICAL RENTAL REQUIREMENTS
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INCOME REQUIREMENT FOR RENTAL: 40X monthly rent in annual compensation
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CREDIT SCORE REQUIREMENT: FICO score of 700 or higher, typically, required.
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Lower scores or lack of credit (i.e. international students) maybe considered but subject to: (1) full or partial pre-payment of rent, (2) additional security deposit, or (3) by providing a guarantor for the lease, which can be an individual or a service.
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GUARANTORS: An individual who must make a minimum of 80X the monthly rent in annual income and who has a solid credit profile. Landlords tend to prefer this arrangement to others, but at a minimum require that the individual be a permanent resident or US Citizen. Many landlords only accept Tri-State area landlords.
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GUARANTOR SERVICES: These firms provide the landlord with insurance that the tenant will adhere to the financial terms of a lease. The tenant pays a fee for this service of between 25-100% of a month's rent.
BROKERS FEES
In NYC, the TENANT is responsible for paying any fees to the Brokers and Agents involved in a transaction, unless otherwise advertised. The standard fee is 15% of the annual rent, and this is split between the agent listing the property and the agent helping the tenant to find the right home. The fee may be reduced if the landlord is providing compensation to agents directly.
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&
40X
700+
REQUIRED DOCUMENTATION IN SUPPORT OF A RENTAL APPLICATION
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So you believe that you have the income and credit score needed to rent a home in New York City. Congratulations, but now PROVE IT. To do this, you need to immediately pull together documents that give a landlord your financial profile, i.e. prove your income, demonstrate its trajectory/consistency, and show what you have in savings/investments.
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Note:The below is a list of typical documents required by landlords. Please prepare these documents immediately, don't wait. Some items may take a few days to get, and that dream apartment could be gone while you wait. So do it right away to prevent future grief.​
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Application to Rent Apartment + Application Fees: You must complete and sign the application specific for the building in which the property you seek to rent is located. This must be turned in as quickly as possible along with the Application Fee. Application fees are typically cash payments.
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Tax Returns: It is most common that you will be required to submit your most recent tax return on IRS Form 1040. IMPORTANT: You must print a hard copy of the first two pages of Form 1040 AND be sure to sign/date towards the bottom of page 2. Often times, landlords will ask for 2 years of these documents, so have ready access to the prior years returns should the landlord require.
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Bank Statements: Most common will be a request for the 2 most recent statements with your name and account number, for all types of asset accounts that are relevant for the application, i.e. savings, checking, brokerage, etc.
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Landlord Reference Letter: Obtain a letter of reference from your current landlord referencing the current rent you pay, the start and end dates of your lease/renewal, as well as comments that you are a tenant in good standing, i.e. made on-time rent payments. The letter should include contact name, phone number and address. (Please have this available from onset of search process)
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Income Verification Documents:
If employed in one or more jobs for which you receive tax information on a W-2, then provide the following with your application:
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Letter of Employment: This letter should be on company letterhead with a current date. The letter should state job title, length of employment and income. It must be signed by a supervisor or person authorized to verify the information (please note offer and acceptance letters are usually not sufficient).
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Proof of Payments: Your 2 most recent pay stubs
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If your are self-employed, or own your own business and work for that business, then provide the following with your applicatrion:
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Accountant's Letter: a letter from a Certified Public Accountant on letterhead with all contact details identifying him or her as your CPA, the duration of that relationship and scope (taxes, bookkeeping, etc). The letter should identify the nature of your business, your title and also verify income amounts of tax documents and the income amounts included in the application you are submitting. This should be done with simple statements of business revenue and/or profit in the last 1-2 years (if available), and with specific projections for current year income by comparing actual current year business sales to past years, or based on identified pipeline of deals, etc.
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Proof of Payments: Provide invoices, 1099 forms and other proof that supports the projections for current year income.
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Additional sources of income: Documentation of any additional income sources, i.e. interest and dividend payments on investments, bonuses and commissions earned in addition to salary, etc. should be provided to corroborate any numbers included in your application.
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Consumer Credit/Criminal Background & Other Screening Reports: Credit history and rating is a significant part of the decision process for a landlord or management company, you will submit fees of between $50-300 per applicant to have a credit check run by your Agent, the landlord, or the management company. Included with these checks are typically a criminal background screening, with a landlord reserving the right to reject any applicant who has any blemishes on this regard.
Note: You should bring with your other documents to the first meeting with your agent a copy of your three-bureau credit screening report (with FICO Scores) which is available for free from a number of organizations. The three bureau report is the most complete and will give you & the team the best information so as to be prepared in advance for anything a landlord might find.
Credit reports obtained on your own are typically not accepted by a landlord in lieu of running their own background screening. They may be used at the discretion of an Agent or Landlord for the process of screening co-op and condo applicants where a professional management company is involved and will need to run credit as part of a Board review process.
NEW YORK CITY RENTAL MARKET DATA & COMMENTARY
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Making a decision to rent a home is no small commitment. A lease is a legal contract that requires the tenant to make significant payments, typically on a monthly basis, for a term typically of 1 or 2 years. This adds up to $10s of thousands for even the lowest priced units in Manhattan & Brookyn. Therefore, the decision of which property you lease comes with a significant financial obligation. But furthermore It will have a meaningful, direct impact on nearly every aspect of your life for the next year or longer. Because afterall, home is where the heart is; it's a sanctuary from the hustle bustle of daily life in a big city; and its where many important memories are made; all the while also serving as the launching pad for nearly all aspects of your life, and those of your roommates and/or family members.
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When we face decisions of this importance, we find that it helps us to feel more comfortable when we arm ourselves with knowledge on the subject in question. To that end, the facts, figures and commentary provided here will help you gain a better understanding of the NYCmarket today, historically and going forward.
