Use These Tips to Crush Your Rental Application
Landlords in NYC commonly require you to earn 40 times the monthly rent as your annual salary in order to qualify for the apartment.
For example, if you’re seeking a 2-bedroom apartment and the rent is $3,000/month, that means your annual salary would have to be at least $120,000 to qualify for the apartment. If your income alone is not at that level yet, the 40x rent requirement might be a harsh roadblock standing in your way.
Keep in mind: Landlords in NYC use the 40x criteria to try and minimize their risk that a tenant might default in paying the rent. In other words, the higher your income is, the less likely you are to miss a rent payment.
But even in NYC the 40x criteria is not a “law.” Landlords are not obligated to rely on that criteria. As a rental applicant, you can (and should) present the strongest application possible to demonstrate that you are a solid financial tenant, not only based on your income.
Here are 6 factors to utilize to help you outshine the rent criteria in your region:
Tip #1: Location.
As with any home search, if you are willing to look in a variety of neighborhoods, you are more likely to find a place within your budget. Don’t be too stuck on just one neighborhood, especially if the landlords there are demanding high rents and high incomes.
Tip #2: Collaboration (or Household formation).
You may be awesome by yourself, but you could be “awesomer” in partnership with someone else. That could mean a pure economic partnership, like a roommate, co-signer or guarantor; or it could mean something more substantial, like getting a place with your spouse, siblings, or even your parents. By joining with another working adult, the income on your rental application will be combined and can supersede the 40x criteria. These types of collaborations are easier to start when you all check your Ownerscope profiles first.
Tip #3: Documentation.
Most landlords will want proof of your income, such as paystubs, income tax returns and employment verification letters. Landlords will also want to check your credit, but you can provide them with a copy of your recent credit report and score to avoid an inquiry. They might also want reference letters or contact information from past landlords. When you have all of this documentation available (and saved as a PDF that you can forward from your phone), that shows a landlord (or their broker) that you are serious about handling your business, which can help you overcome the 40x criteria.
Tip #4: Pre-Qualification.
The type of documentation listed above is basically the same as what a mortgage lender would ask you to provide. Consider getting a pre-qualification or pre-approval letter from a mortgage lender and including that as part of your rental application, and tell the landlord that you would like to have your rent payment history reported to the credit bureaus. This approach is not common, but it can show the landlord that you’re serious about timely rent payments, because you’re planning to buy a home in the future.
Tip #5: No Hesitation.
When you go to view the apartment in-person, have all of your documentation available (in PDF and on paper if possible) AND have all of the funds available for the rental and security deposits that are required. Be ready on the spot to sign the lease, make the full deposits, or at least make an initial deposit to hold the place if the agent doesn’t have the lease available right then and there. The point is to be ready to close the deal on the spot with no excuses and no hesitation.
Tip #6. Delayed Gratification.
If you’re currently living in a decent place, then you might consider staying there longer and building up more savings, income, and credit until you (and your household) can purchase a home instead of renting. Set specific goals, check your Ownerscope profile today, and use Ownerscope to keep you informed and motivated toward achieving your goal of owning.
Don’t let the 40x criteria be a roadblock to your goals. In fact, share this insight with your circle, and help someone else break through toward their goals too.
Connect more and own sooner. Ask someone today, "What's Your Ownerscope?"