The numbers may seem absurd: To qualify to rent an apartment in New York City, you’ll need to show that you make 40 to 50 times the monthly rent and have good credit. So, for a $2,500 a month apartment, landlords want to see prospective tenants making $100,000 or more.
Yes, there are still some landlords that have more flexible financial requirements for prospective tenants, but if you can’t meet those requirements or your credit history needs some rehab, all hope is not lost. One way you can still qualify and get approved as a tenant is to ask someone to be your lease guarantor—someone who agrees to be legally responsible for your rent. In other words, if you default on the rent, the landlord goes after them.
Obviously, that’s a big ask. For that reason, family members typically serve as guarantors, although anyone who meets the requirements can be one.
The financial requirements to be a guarantor are even steeper than those for potential tenants; guarantors need to show assets of 80 times the monthly rent. “Enough to pay for their housing plus your housing,” says Daniele Kurzweil, an agent with the Friedman Team at Compass. (Generally, they also need to live in the tri-state area, as it’s easier if things actually do end up court.) Head here for more info on what a lease guarantor is.
So asking someone to act as your (and potentially, a roommate's) financial safety net—and disclose the nature and amount of their assets—is a bit different from borrowing a few bucks or the car for a weekend getaway.
“It’s a serious commitment and one the guarantor shouldn’t take lightly,” says Andrew Sacks, an agent with Citi Habitats. If they agree, they are on the hook for the full amount of rent if for any reason the tenant stops paying. "I don’t think many people would be willing to guarantee a lease for someone they don’t know well—or don’t fully trust. That would be a recipe for disaster.”
So if you’re going to ask someone to be your guarantor, you should put your best foot forward in an effort to get to “yes.” Here’s what to consider when making your case.
Be honest—with them and yourself
You’re asking for a big favor, so being upfront and transparent is key. This is not the time to be squeamish about talking money. Be clear about the rent, your finances, and what is needed from them as your guarantor.
Make it clear that you understand the responsibility involved (on your part and theirs) and you understand its seriousness. Trust is a major factor in these relationships, and if you’ve given someone any reason to doubt your reliability in the past, you should acknowledge and address that. (If you can’t, you may want to rethink asking that person.)
Have a plan
Ease anxieties your potential guarantor might have about getting stuck with a hefty bill and legal woes by offering a plan if you lose your job or get stiffed by a roommate. The guarantor is helping you get the apartment, but should not be seen as a source of cash in a tight spot. Make sure they know you know that.
Know what’s needed, and be sensitive to privacy concerns
It’s important to come to this conversation informed and prepared. Guarantors are asked to present the same information and documentation as a prospective renter—that means pay stubs, financial statements, tax returns, and credit check.
“I always say, better to give more than is asked for so the landlord will not come back and ask for additional documentation,” says Kurzweil. “If a guarantor presents as overqualified—instead of borderline qualified—it will make the process easier.”
Kurzweil says it’s not uncommon for guarantors to desire some discretion regarding their financial information.
“Many parents do not feel comfortable having their children see exactly how much money they have, and worry about imparting such sensitive information to them. They do not want them knowing exactly how much they have, for various reasons,” she says. “I always explain that their financial documents will come directly to me and that the applicant will not see any of their materials. This goes a long way in making someone feel comfortable in parting with sensitive information. If they know it is going from point A to point B, without [their child] being the intermediary, they immediately relax.”
If, for whatever reason, it doesn’t work out with your prospective guarantor, you still have options. An institutional guarantor, such as Insurent (a Brick Underground sponsor, FYI) can act as your lease guarantor for a fee.
It’s even possible for first-time renters to qualify on their own, as Insurent only requires an annual income of 27.5 times the rent (or 50 times the annual rent in savings), and this can be the combined income or savings of several roommates.
Insurent’s average fee for U.S. residents is 65-90 percent of one month’s rent, and 95-110 percent for foreigners without a U.S.-based credit history for one-year lease guarantees.
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