If you're retired and looking to rent an apartment in New York City, meeting a landlord's income requirements can be complicated.
Since you don't collect a pay check anymore, you'll need to show you have the income generated by your social security, pension, or investments to satisfy a landlord's concerns that you can pay the rent reliably.
If you don't meet a landlord's financing requirements—most want to see an annual amount of 40 times the monthly rent and a credit score above 700—there are still some workarounds. You can find a guarantor or a small "mom-and-pop" landlord who might show more flexibility. Here are your options if you're retired and looking for a rental.
Meeting income requirements
Adrian Savino, director of leasing and business development at Living New York, says retirees typically submit a CPA letter to a landlord in lieu of an employment letter. In addition, they can present investment statements or bank statements that show liquidity, as well as tax returns from previous years to give an idea of their payment history.
Scotty Elyanow, an agent with Compass, points out that rent reforms passed in 2019 have made it more complicated for renters who don't meet income requirements but have plenty of money in the bank. In the past, a landlord might have taken additional security—either several months or even a year's rent in advance—but that is now against the law. A landlord can only take one month's security from a tenant—a measure designed to reduce the upfront costs of renting in NYC.
Using a guarantor
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If you don't meet a landlord's income requirements you may need to find a guarantor. This is an individual who can guarantee the rent if you default. Elyanow says for some retirees this can be their son or daughter.
A guarantor needs to have an income of 80 times the rent in order to qualify. So on a $2,000 rental, a guarantor's income needs to be $160,000. They'd need to be prepared to supply documents like proof of employment, a CPA letter if they are self-employed, their most recent tax returns (usually the past two years) as well as an asset statement showing funds in a checking or savings account. There's also the standard credit check.
If you don't have a friend or relative who can step in as a guarantor, you may need to find an institutional guarantor. These are companies to which you can apply directly and their services are widely accepted throughout the city. You still need to show a level of income but it's much lower than a landlord's requirements. For a fee, typically one month's rent, they will guarantee your lease.
Jeffrey Geller, founder and chief operating officer of the lease guaranty company Insurent (a Brick Underground sponsor), says his company qualifies retirees on their pension and social security, and their income only needs to be a minimum of 27.5 times the gross monthly rent.
"Insurent qualifies retirees on their cash at banks or marketable securities or IRAs being a minimum combined of 50 times the gross monthly rent," he says. For retirees the fee normally averages between 75 and 90 percent of one month's gross rent for a 12-14 month lease.
Work with a small landlord
There's plenty of evidence the rental market is getting increasingly competitive as the pandemic recedes, but if your credit score isn't in the 700s and you fall short of the income requirements, you may still find landlords willing to rent to you, Savino says.
Landlords have been forced to show more flexibility over the past 18 months because so many of their apartments were sitting empty. "A lot of it depends on the landlord—in the last year they've had no choice but to be more flexible on requirements," he says.
That might mean approaching landlords individually and presenting yourself and your financial package. "If you find a private landlord who is willing to look at the overall package and say 'yes,' then you are fine," Elyanow says.
An experienced broker will also be able to do a lot of the legwork in terms of finding a landlord with flexibility.
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