By Pamela Roman, Managing Broker, Station Cities New York & New Jersey
Welcome to New York. In this extremely competitive, extremely fluid marketplace which favors the landlord and leans towards the highest and best offers, arming the prospective tenant with advance knowledge of the rental landscape is our superpower. Our highly talented team of relocation real estate agents aims to demystify the ins-and-outs of securing a rental by providing support and guidance based on real life solutions. The solutions are ever changing, and our goal is to continually educate our clients on what is working right now. The hurdles can be challenging but with the right support and information, they are not insurmountable. Information on third-party guarantors, what they are, how landlords require them and how best to source is one example of our continuous education for clients and tenants.
Landlords in New York have the legal right to require a ‘guarantor’ as the backup financial security for a tenant’s payment. A Guarantor will guarantee the payment of rent in the event of default by the tenant. Effectively, this is an insurance program to ensure rent is paid. This requirement is especially important to understand if you are a recent arrival in the US, with no credit history.
Here’s some background on the Guarantor process and how your Station Cities broker can help.
New York Is a Landlords’ Marketplace and Landlords Set the Terms
- The vacancy rate for many customer-requested neighborhoods in New York is between 3-5%. Demand far exceeds supply.
- Landlords have many potential tenants for all vacancies and will rent to the best qualified, least administratively challenging tenants, with preference often given to those with strong US credit and low risk to the landlord.
- Even well-qualified potential tenants with strong credit histories and an income of 40-to-50 times the monthly rent can find it challenging to secure rental housing in New York.
- Landlords can ask for proof of Guarantor or other assurance before booking a viewing or finalizing lease terms.
- Not all landlords accept third party Guarantors, and they are not required to do so.
- In rare cases, a renewed Guarantor policy may be required by the landlord at lease renewal.
Expect the Landlord to Require Proof of Financial Resources
- Landlords have the legal right to limit their risk. Demonstration of financial resources and payment security are common practice, and tenants should expect that many landlords will have this requirement.
- Your agent will discuss options for providing the requested assurance; if the landlord specifically requires a Guarantor, your agent will advise and make referrals to reliable Guarantors.
- If a Guarantor is required, the tenant follows these steps:
- Open a US-based bank account as soon as possible with assets equal to a minimum of 2-6 months’ rent.
- Expect information required by the landlord to include proof of total compensation, US bank account, type of Visa, and job role and employer details.
- Secure written, documented pre-approval from a third-party Guarantor and bring the qualification certificate when they visit apartments with their broker.
How a Guarantor Works
- Receiving a quote to be qualified from a third- party Guarantor is quick, easy, and free online.
- A few reputable Guarantors known to New York City landlords include: The Guarantors, Insurent.com and sayrhino.com.
- Each program is slightly different but standard requirements to secure approval are a Foreign or US Government Issued Photo ID, Visa, and Letter of Employment on company letterhead.
- The nonrefundable cost to a tenant with no US credit history is approximately 60% to 110% of one month’s rent.
- The Guarantor fee is nonrefundable even if the payment service is never used; there is no refund at lease termination or move out.
- Note: Some employers cover the cost of the Guarantor as an employee benefit.
How Your Station Cities Broker Can Help
Not every landlord has the same requirements and not all landlords who want proof of financial resources require a Guarantor. Knowing every aspect of the rental market and hundreds of New York City landlords is key to finding options and getting a rental secured.
- Our Station Cities brokers are experts in the New York City market and in understanding the requirements for new renters in the market, especially those arriving from outside the US on a corporate relocation.
- Station Cities brokers and can present buildings (typically owned by private landlords vs large property managers) that do not always require a Guarantor or previous US credit history.
- Our brokers are experts at providing landlords a “total picture” of the tenant, with proof of overseas asset accounts, landlord reference letters and overseas tax returns, etc.
- They will ask each landlord about their expectations for assurance of payment and recommend alternative solutions to Guarantors if the landlord agrees.
- If a Guarantor is needed, the Station Cities broker will walk prospective renters through the process step by step.
- Station Cities agents will advocate for transferees/assignees who meet all the landlord’s terms but cannot ask the landlord to waive their legal right to a Guarantor/security of payment.
Questions? We can help. Reach out to [email protected]