Approval Requirements differ depending on the landlord/management company and/or on the building. The following are general guidelines that apply in most instances:
- Renters need to show income of at least 40-50 times monthly rent.
- Rent should be 25% of renters’ annual income. Ex: annual income = $100,000, rent $25,000 per year.
- Renters must show a secure and stable employment history.
- Renters needs to have good credit history. A major component of the approval process is based on the credit report.
- What makes a credit report bad?
- A couple old late payments are usually ok.
- High revolving balances are not good.
- Past due payments that are outstanding are bad.
- Delinquencies and collections are very bad.
- A public record (a day in court) is bad
- A Landlord-Tenant record is very bad.
If you think your credit report is bad, advise your Paul Griffith Real Estate broker so they can prepare you for the application process. Landlords/management companies have different ways of dealing with credit problems.
Some landlords/management companies allow renters to increase security deposit while others require a guarantor. Some may simply reject the application. Your Paul Griffith Real Estate broker will advise you in order to save you time, money and frustration.
- Renters must show a good rental history.
- Rental, credit and employment information is generally referenced and submitted in form of a letter or sometimes by a phone call.
- Renters need to have a social security number. If you do not have a social security number or are not applying for one you must have a guarantor co-signing your lease.
- Bank Statements: In most cases landlords/management companies require copies of a renters’ 3 most recent bank statements from a checking, savings, stock account or any other financial institution.
- Renter should have backup detail sheets available upon request.
- Most rent application forms require listing bank account information.
- Letter of Employment: Renter should get a Letter of Employment on their company’s letterhead, with the following:
- Length of employment
- Annual income.
- Letter of Landlord Reference: Letter of reference from a previous landlord is one of the most important reference letters a renter can submit to a landlord/management company who is processing their application.
- Pay Stubs: copies of renters’ 3 most recent pay stubs are usually required.
- Students need to have a guarantor co-sign their lease.
- Tax Returns: Some landlords and some management companies require potential renters to include a copy of their most recent Federal Tax Return (1040).
- Renters should have their tax return available just in case it is required.
- Self-employed renters: if income comes from different sources, you will be required to submit tax returns and a letter from a CPA stating the nature of your business, as well as, projected future income.
- Business owners looking to rent are almost always required to submit a tax return.
- Renters can get a co-signer or guarantor to co-sign the lease for you.
- Some owners will allow tenants to prepay 6 months to 12 months rent up front.
- Guarantor or co-signer: A guarantor or co-signer is a person who guarantees the entire rent for the entire lease term and lease renewals should a renter default on their rent payments. A guarantor can be anyone who agrees to sign on behalf of a renter and who is willing qualified to act as a guarantor.
- Qualifications of a guarantor or co-signer: documents required from a guarantor are similar to applicant(s):
- Application Form: Same form as the applicant fills out.
- Credit Report: A guarantor’s credit report must be in good standing.
- Federal Tax Returns: A guarantor is required to submit federal tax returns as proof of income.
- Guarantor must show annual income of 80-100 times monthly rent.
- A Guarantor is not required to be present at lease signing.
In some cases, landlords/management companies require a guarantor to reside in the tri- state area (New York, New Jersey or Connecticut).
In majority of cases an offer or an acceptance letter for a new position is not sufficient to show employment.
Certain buildings won’t accept students. This is legal in NY State and not challengeable in a court or law.
If renters do not meet the above mentioned criteria there are usually two possible solutions: