If you’re getting ready to move to New York City, one of the things that might shock you is the price of apartments. New York City is one of the most expensive cities in the US to rent an apartment — but what happens if you’re not able to find one you can afford? In New York City, you can find a guarantor to help.
And it’s not uncommon to need help because New York City landlords set a pretty high bar for lease applicants. For example, to apply for their apartment, most landlords are going to ask that you have at least a 700 credit score, make 40 times the monthly rent annually (i.e., if the rent is $2,000, your salary before tax needs to be $80,000 at minimum), and have funds in a US bank account. If you can’t meet these, your application may not be accepted — unless you have a guarantor.
Are You Using a Guarantor to Rent Your First New York City Apartment? Here’s What You Need to Know
What is a guarantor though? And how do you know if you need one? Legally, a guarantor is someone who co-signs your lease saying that if you fail to pay the rent, they will be held responsible. It’s a way of providing proof to the landlord that they’ll get their rent money, even if you aren’t able to qualify for the lease.
Domestic renters often call on family and friends to help out if they need a guarantor, but for foreign nationals, it can be tough to find someone if you’re moving to the US for the first time. The other catch is that many landlords will only accept someone as a guarantor if they live within the Tri-State area — meaning New York City and a portion of New Jersey and Connecticut. Their application standards will differ too. On average, landlords will ask that guarantors make 80 to 100 times the monthly rent annually. Drawing back to our earlier example at $2,000 a month, a guarantor would need to have at least a $160,000 salary.
What Paperwork do Guarantors Need to Have?
You’ll need to collect copies of a job letter, tax return, bank statement, credit report, and photo ID. If they’re self-employed, they are also going to need a CPA letter stating how long they’ve owned their business, how much the business is worth, and what their income is. Make sure they’re comfortable giving you this information and try to have everything in your email rather than carrying these documents around the city. You’ll want to have all of this ready before you start your apartment search.
Does Your Landlord Accept Guarantors?
Once you find an apartment you’re interested in, you’ll need to make sure your landlord is willing to work with a guarantor. It might sound crazy — but some landlords don’t accept them. It’s crucial that you tell your broker, if you’re working with one, and any of the landlords you’re communicating with that you plan on using a guarantor. Don’t try to use multiple guarantors, either. For example, if one of your parents isn’t comfortable having all of that responsibility and wants to have your mother or father sign as well, the whole deal could fall apart because the landlord won’t have multiple guarantors. If your guarantors don’t live in the Tri-State area, you’ll also want to check what other states your landlord allows, if any
What Are Institutional Guarantors?
In some cases, like with foreign nationals, it might be more beneficial to work with an institutional guarantor. Which is where a financial company acts as the co-signer in a rental insurance program. To work with companies like these, you will have to pay anywhere from 70 to 110 percent of the first month’s rent. The key benefit with institutional guarantors is that they will already have relationships with landlords, so you won’t have to worry about your landlord denying them. Sometimes they’ll even work on your behalf to develop a new relationship with the landlord of your desired apartment if they’ve never worked with them before. Many landlords will be more willing to work with an institutional guarantor than they will a family member or friend.
For foreign nationals, these companies are perfect for navigating a tricky rental market for the first time. Insurent and the Guarantors are two great companies to consider.
For more information, check out our interview with Aaron Victorson of the Guarantors below.