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Who's allowed to be your guarantor besides your parents?

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In a city where the median rental price for a studio is well over $2,000 it's not surprising that many renters need a little help to qualify for their apartments. Traditionally, if a renter doesn't make at least 40 times the monthly rent (or their income isn't consistent, say in the case of a freelancer), landlords will require that they have a guarantor, who makes 80 times the monthly rent, and is legally bound to pay the rent in case the renter themselves default.

Usually the first person a renter will look to for a guarantor is a parent, but what if your parents can't do it, either because they don't make enough money, are retired, have a credit score under 700, or live out of the tri-state area (the traditionally preferred geographical limitations), or even the country?

"Parents are the first people that landlords look for when it comes to guarantors," says Mirador Real Estate's leasing director Daniel Itingen. "Then it goes down the list to grandparents, uncles, aunts and siblings, etc. "The most common relationship outside a blood relative is an employer," he says. 

That holds especially true for someone who's moving to New York for a job. "Sometimes employers will offer that as a perk. But keep in mind that typically the landlord wants the individual boss to be a guarantor, and not an LLC."

Sherry Mazzocchi, a broker with Citi Habitats, had clients who used their boss as a guarantor. "That was kind of delicate, but I explained that I wouldn't share the boss' income or other personal info with the applicant. It all worked out really well. Everyone was all smiles at the lease signing," says Mazzocchi, a broker with Citi Habitats. 

But it doesn't always work that way, she says. She had another experience when a landlord refused to accept the tenant's boss as a guarantor, possibly because the boss lived out of state, she says.

In that case, Mazzocchi's clients went with Insurent Lease Guaranty (FYI: a Brick Underground sponsor), which looks for renters pay a fee of anywhere from 70 to 110 percent of a month's rent (depending on their qualifications). In the event that renters don't make 27.5 times the monthly rent (a requirement for Insurent to guaranty your rent), a responsible party can back them up. (In that case, the responsible party just needs to make 50 times the monthly rent, rather than 80 times, as landlords require, or have 80 times the montly rent in bank, savings or stock market accounts; they can be anyone the renter wants—no relation required, says Charles Schoenau, managing director of Insurent.) 

As for non-blood relatives as guarantors: The likelihood of a landlord going for that kind of thing depends a lot on the type of landlord. “This is simply an example of using alternative apartment types (i.e. condo or co-op versus standard rental unit) in order to get clients approved despite using a far removed guarantor," says Michael Bethoney, a broker with Citi Habiats. "Individual owners are often more flexible than the big management companies. I previously had a pair of clients (roommates and co-applicants) apply for an apartment in a luxury condo building in the Financial District. They used one guarantor who was a 'close friend' of one of the applicants. He made more than 80x the monthly rent, and the individual condo unit owner was fine accepting him as a guarantor for two applicants who didn't even meet 20x the annual rent for the apartment (let alone the 40x standard without a guarantor).”

Sometimes it doesn't even have to be a friend at all, says Molly Franklin, a broker with Citi Habitats. "Years ago after splitting with a boyfriend his mother actually acted as my guarantor for my new apartment. She either really loved me, or was so happy we had split that she was willing to potentially finance my exit."

 

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