Get Familiar with These Financial Terms

Finding a new home in New York can be stressful. But knowing these common financial terms will definitely help you.

 Financial Eligibility: You may think that, with your solid credentials and squeaky-clean background you have what every landlord is looking for. But if you don’t have a rental history, be prepared - most landlords in New York City will require that you have a guaranteed income that’s 40 to 50 times above your monthly rent amount. They’ll also take your outstanding loans and liquid assets into consideration. And, if you’re looking to rent in a cooperative building, expect even higher demands and more questions about your financial past. While these requirements may be considered extreme in other cities, they are the norm in New York City.

Lease Guarantor: If you have applied for an apartment but do not meet the landlord’s financial requirements, they may require that you obtain a guarantor (also known as a co-signer) before they will consider renting to you. Most often, a landlord will prefer that your guarantor is a family member who lives and owns property in New York, New Jersey or Connecticut. Guarantors will be required to earn as much as 100 times your monthly rent amount, and are often expected to produce extensive financial information, so it’s best if they’re prepared in advance for these possibilities, either by you or by your broker.

International and Foreign Tenants: If you are relocating from another city to New York, it might be a good idea to determine a budget with your supervisor and/or broker. If you are moving to New York from another country and have no rental history in the U.S., be prepared to pay extra security fees. You may also want to save more money for rent, as some landlords may ask you to submit up to one year of your rent in advance.

Credit Application: Potential landlords will expect you (and your guarantor, if applicable) to complete a credit application. Also be prepared to submit additional information in the form of tax returns, pay stubs and letters of reference from past employers.

Required Funds: On the first business day after you select your apartment, your first month’s rent and security deposit (which usually amounts to one month’s rent) will be due. Usually, these amounts are preferred in the form of more than one certified check or money order, and not a personal check. Alternatively, these amounts can be submitted in the form of a traveler’s check which can be purchased with cash from a Manhattan bank account. Be prepared to pay an application fee of $50-$100 for rental buildings, and $150-$500 for condominiums and co-op buildings. Any brokerage fees not paid by your employer will also be immediately due.

Brokerage Fees: The majority of Manhattan brokerage firms charge 15% or less of your first year’s rent (if your lease is over one year). For shorter term leases (e.g. 3-6 months), your brokerage fees will be equivalent to one month’s rent. If you have a housing allowance from your employer, they may have been able to arrange a discounted rate, so it’s important to verify this before speaking with your broker. Alternatively, your employer may have submitted the partial fee, leaving you to pay the balance. Ask your broker about specialty properties, as these may be ‘cobroke’ – shared between brokerage firms and may mean you’ll need to submit the full 15% fee.  As stated before, fees are usually due at the same time you submit your security deposit and rent checks. Never make your brokerage fee check payable to your agent; it must always be payable to the brokerage firm itself.