A to Z: Everything you need to know about renting a property in New York
When renting an apartment in New York for a long term, potential tenants often face the peculiarities of the real estate market in New York, for which they are not ready. In my blog on New york realty real estate agent, broker of Evans Real Estate Dmitry Stasyuk laid out the process of renting housing in New York on the shelves to simplify it as much as possible for those who are looking for an apartment.
In New York, there is a fairly tough legislation that regulates the relationship between the owner and the tenant. First of all, this is expressed in the fact that it is possible to evict a tenant, even if he has ceased to pay rent, only by a court decision. This process is quite expensive, requires the involvement of a lawyer and takes several months. Coercive methods such as changing locks, turning off water / electricity, entering an apartment and exhibiting things are strictly illegal. That is, if the tenant stopped paying and does not want to voluntarily move out - for the owner this is a guaranteed loss of thousands / tens of thousands of dollars. That is why rather high demands will be made on the future tenant.
What exactly the requirements should meet the future tenant?
The main thing that interests the owner of the apartment is that the tenant pays the rent on time. Therefore, a potential tenant will be checking income and financial discipline, i.e. no payment problems in the past.
Income. In New York, there is a rule that the tenant's annual income (gross, before taxes) must be at least 40 times more than the monthly rent (40x rule). If an apartment is rented per family, then the total income of the spouses is considered. With this ratio of “income / rent” it is considered that the tenant should not have problems when paying for an apartment.
- to rent an apartment for $ 2 000, you need to show an annual income of at least $ 80 000;
- to rent an apartment for $ 2 500, you need to show an annual income of at least $ 100 000;
- to rent an apartment for $ 3 500, you need to show an annual income of at least $ 140 000;
- To rent an apartment for $ 5 000, you need to show an annual income of at least $ 200 000.
The 40x rule is fairly standard for the market, although the ratio “annual income / monthly rent” may be lower (35x) for very cheap houses, and vice versa for expensive houses (45x-50x).
Credit history. Under the social security number of SSN, the future tenant will check his credit history. The owner of the apartment wants to make sure that the potential tenant has no debts, and in the past he regularly paid on credit cards and other obligations.
What documents will the apartment owner request?
The standard apartment owner wants to see:
- Identity documents - ID, passport, etc.;
- Contact information on the previous place of rent (will call and check);
- A letter from work in which the position, term of employment, current salary, potential bonuses / commissions and other types of income are indicated (they will call and check);
- The last two salary checks;
- Tax returns for the past two years;
- Bank statements for the last two months;
- If necessary, information about your other assets.
All these documents / information need to be prepared in advance and always have on hand. Good options for rental apartments in New York diverge very quickly, so you need to be ready to immediately begin the process of applying for an apartment as soon as you find a suitable option.
What if I don’t fully match the portrait of the “ideal tenant” described above?
If your income is not high enough and / or there are problems with your credit history, then immediately let the owner or the agent who represents him know about it. Perhaps you will be immediately offered a solution. Often they will ask for an increased security deposit and / or offer to pay several months in advance. Another possible option is a guarantor. There are also special insurance companies-guarantors who are ready to vouch for you. The cost of such a "guarantee" is in the region of one month of rent.
What if I do not at all match the portrait of the “ideal tenant”?
In this case, you have the 2 option:
The guarantor. You can find someone (friend, relative, acquaintance) who can vouch for you and make a commitment to pay the rent if you cannot do this at some point. The requirements for the guarantor are the same as for the tenant (and the documents will ask the same), only the income applies the rule 80х - the annual income of the guarantor must be at least 80 times more than the monthly rent. In addition, the guarantor must be “local” - have a residence / US citizenship.
Payment of the entire term in advance. In the capital of victorious capitalism, money is still respected. Therefore, if you are willing to pay a year in advance (plus a security deposit security deposit), this should remove all questions. Although I know several expensive rental houses, where even this option will not be accepted - they want to see a steady income from a tenant.
What should I pay immediately?
If you meet all the requirements described above, then when concluding a lease agreement you will only need to pay for the first month of the rental and the security deposit (security deposit) in the amount of one month. And the brokerage commission, if an agent (agents) was involved in the transaction. Payments for reviewing documents are described below in the section on various types of houses.
Who will I rent an apartment?
In the text above, I have already written the phrase “apartment owner” many times. Now it is necessary to reveal who can be this owner, i.e. from whom will you rent an apartment? There are three types of apartment buildings in New York, depending on the type of property - rental houses, condominiums and cooperatives. The rental process in each case has its own characteristics in terms of time, additional payments and, in general, the probability of renting an apartment there.
Rental house (Rental building). All apartments in such a house are intended for rental. The house is recorded on the company, and the direct owner can be both an individual and a group of investors, a fund, etc. The rental house is managed by a specially hired management company (management company), it is through agents engaged in the delivery of apartments. All rental decisions will be made by this management company. Since leasing is the main business, the process of considering a potential tenant is quite simple and quick.
If you decide to rent an apartment in such a house, then the agent will give you a special form to fill out, you provide all the information, attach the necessary documents, and within one or two days you will receive an answer whether they will rent you an apartment or not. Then you can sign a lease and plan your move. As for additional payments, you will have to pay for checking your credit history (about $ 100-120 per person) and sometimes $ 200-500 for reviewing documents.
Condominium (Condominium, Condo). The classic and widespread form of ownership, in which each apartment has its own owner (private person). And it is he who will make the main decisions on the apartment: whether or not to take a specific tenant, bargain on the price, etc. But the owners rarely rent apartments on their own, usually an agent is involved. Accordingly, the agent will show the apartment and communicate. If you decide to rent an apartment in such a house, the agent will give you a form to fill out. You provide all the information, attach the necessary documents and within a few hours or one or two days (depending on the speed of communication between the agent and the owner) you will receive an answer - are you ready to hand over it or not. But agreeing with the owner is not enough, you still need to get approval from the Condominium Council (Condo board). This process is formal (the Council cannot refuse), but mandatory. To get approval from the House Council, you need to fill out the necessary forms and attach documents. The management company checks everything, requests additional documents, if necessary, and submits all this to the House Council, which in turn gives the final approval. This entire process can take from a week to a month. And this is very important to consider if the date of the intended entry is already close. As for additional payments, you will have to pay for checking your credit history (about $ 100-120 per person), for reviewing documents: management company - $ 300-800; and a condominium - $ 300- $ 800. In total, you will need to pay an average of $ 700-1500. For expensive houses, this amount can reach $ 2-000. This is a big difference compared to the rental houses from the previous paragraph.
Cooperative (Cooperative, Coop). With this form of ownership, the company owns the entire house, and the “owners” of the apartments own the shares of this company. The rental process in such a house is similar to a condo rental. The owner will make the main decisions, and the communication will go through the agent. In addition to an agreement with the owner of the apartment, you also need to get approval from the Council of the cooperative (Coop board). The difference is that in the co-op this council has a very big power and has the right to refuse to rent, without even explaining the reasons. In addition, the package of documents that will be required of you will be more. And after reviewing all the information you will be assigned a personal interview with the Council of the cooperative. And only after this interview can they tell you whether they are taking you or not. In terms of time, this whole process may take even more time than in a condominium - at least a few weeks. Again, this point must be taken into account if the date of the intended entry is already near. As for additional payments, they are comparable to payments for renting in a condominium and will be on average $ 700-1 500. Another important point: in cooperatives there are often restrictions regarding how many years the owner can rent an apartment. For example, you can take 2 years from 5 years of ownership. And this means that you can live in an apartment for a maximum of two years and then you will be obliged to move out.
If you look at the offers of apartments on the market, for example, Manhattan, then the ratio by house type will be the following: 75% of apartments will be in rental houses, 20% in condominiums and only 5% in cooperatives.
What is the role of the agent, and whose interests does he represent?
It is very important to understand what the role of the agent may be and whose interests it represents. As I wrote above, the owners themselves almost never dealt with the delivery of apartments (the number of apartments from owners is about 1%). For this job they hire agents. The owner and the agent sign a contract, and from that moment on, the agent exclusively represents this apartment. Therefore, when you contact the found ad, you always get on the agent. This agent can tell you about the apartment, show it and answer any questions about the apartment / house / rental process. But keep in mind that this agent represents the interests of the owner. His task is not to find you the best option for rent, his task is to rent this apartment at the most favorable price for the owner. This agent is called the agent of the owner (landlord's agent).
If you decide that you do not have the time and / or desire to understand all the intricacies of the rental market and independently search for apartments, prepare documents, communicate with the management company and get approval from the house, then you can use the services of an agent, which in this case will be help you and will represent your interests. This agent is called a tenant agent (tenant's agent).
An agent can easily and unobtrusively move from one category to another. For example, you came to see an apartment. The agent exclusively represents this apartment and is now the owner's agent. You looked at the apartment, you didn’t like it very much and you ask the question: “Do you have other apartments in this house / area?”. “Yes, let's show you,” the agent replies. And leads to show other apartments. If he continues to show his exclusive apartments, then he is still an agent of the owner. If he will show apartments, which are exclusive to other agents, then he has already started working on your side, i.e. became an agent of the tenant (and for this he will ask you a commission, although you did not explicitly discuss this). In general, an agent is legally obliged to speak and even give a form for signature, which says whose interests he represents. But not every agent does this.
Who pays the commission and what is its size?
It goes without saying that the work of the agents should be paid. Sometimes the owner may decide to pay for the work of his agent, and then the apartment enters the market without a commission. no fee (do not think that there is no commission, it is just included in the rental price). Otherwise, it is assumed that the tenant pays the commission to the owner’s agent. I remind you that you can use the services of your agent, who will also need to pay. In total, depending on the number of agents, four scenarios are possible:
- You are looking for yourself (there is no agent on your side), find an apartment without a commission - the commission is zero;
- You are looking for yourself (there is no agent on your side), find an apartment with a commission - usually the owner's agent will ask for a commission in the amount of the 1 month rent;
- You use the help of your agent (this agent represents your interests), find an apartment without a fee - your agent will ask for a commission in the amount of 1 cost of the month of rent;
- You use the help of your agent (this agent represents your interests), find an apartment with a commission - you will have to pay 15% of the annual rental amount (this is 1,8 of the month) as a commission. Agents will share this commission 50 / 50.
It is extremely rare for expensive apartments the owner is willing to pay not only for the work of his agent, but also for the work of the agent representing the tenant. Then we have the fifth scenario - two agents participate in the transaction, but the tenant does not pay commission at all.
Is it possible to bargain?
Yes, bargaining is appropriate. The main thing is that in the process of bargaining there is no other tenant ready to pick up an apartment at the asking price.
For how long is the contract signed?
The standard contract period is 12-24 of the month.
For what additional I still should pay, except for rent?
The rent is usually not included: electricity and gas meters, Internet, television. In some homes you can rent a storage room. (storage), sometimes they take money for storing bicycles in a special room (bike storage). Sometimes (rarely) you have to pay for using the gym / pool. If the house has parking, it is almost always this separate company and there is a separate payment.
Apartments are rented with or without furniture?
Standard apartments are rented without furniture. Even if you see the furniture in the photos, then most likely it is the furniture of previous tenants. But it saves a huge secondary market or IKEA. Sometimes buying used furniture or new furniture in IKEA and selling or even throwing it out after the expiration of the lease period will be cheaper than looking for and renting an apartment with furniture. Another option - companies that rent furniture. If you still want an apartment with furniture, then you need to look for options in condominiums or cooperatives.
So, the theoretical part is over. We now turn directly to the description of the process of finding and renting an apartment.
When should I start my search?
Usually an apartment is put on the market for 4-5 weeks before it is released. Accordingly, it makes sense to start the search 30-60 days before your intended date of entry. But keep in mind that if the apartment is free now, and you need to drive in 1.5 a month, then you are unlikely to be expected in this case.
What sites to search for apartments?
There are a huge number of sites with rental offers. These can be real estate agency sites, sites of specific rental houses and housing complexes, bulletin boards, or general real estate database sites. In order to cover the maximum number of options when searching, I strongly recommend using sites-bases, where all market participants upload their ads. There are also a lot of such bases, I will not give comments on each, I will give only the best site in my opinion - www.streeteasy.com. I recommend this site for the following reasons:
- This site has the most coverage;
- On this site only exclusive options. Agents represent directly the owner, there are no unnecessary agents in the chain;
- This is the most operational and fast-updating site.
- The site has almost no fake and outdated ads;
- Convenient search system, including on the map, and the ability to customize notifications
In the summer of 2017, this site for agents introduced payment for each ad, after which the number of ads dropped dramatically. Therefore, agents use closed bases.
Keep in mind that the price you see in the ad will not always be in the contract that you give for the signature.
How to organize the search for an apartment?
Some useful tips for effective search:
- make a template letter in which tell a few words about yourself, indicate the expected date of entry, the desired lease term, the maximum budget (remember about the 40x rule) and other details. Immediately in this letter ask important questions for you - for example, is there an elevator in the house, is it possible with pets, etc. If you are not an “ideal tenant” write about it immediately and offer to pay in advance or give an increased deposit (if you can, of course). In response, the agent will say whether they will take you potentially or not, and you will find out how suitable the apartment is for you and whether it makes sense to go to watch it;
- set up a notification on the site - you will receive new options and price changes for already exposed apartments. As soon as you see a good option - immediately contact the agent and arrange a viewing;
- check out the apartment with all the documents prepared in advance. If you have a guarantor, then take from him all the necessary documents. If you use the services of the company-guarantor, then take from them a letter confirming that they are ready to vouch for you;
- take pictures of the apartment when viewing. When you watch the tenth apartment, you will not remember well what was in the first one. If the apartment is residential, and there are personal belongings, then it is better to ask the agent whether it is possible to take photos;
- Be prepared to rent an apartment immediately, if you see that this is the perfect option for you.
How to plan a move?
Many homes have specific entry rules. For example, you can not call in on weekends and holidays. Date and time of entry must be agreed in advance with the house. If you use the services of a company that carries things, then insurance should be provided to the house in advance.
Do I need an agent representing my interests, and how can he help?
You rent your first or second apartment, and the agent has been through this already dozens or hundreds of times. Do not forget, professional industry is playing against you - agents / companies representing owners are doing it professionally on a daily basis. That is why the vast experience of your agent, who leads you by the hand through this whole process, can save a lot of time and nerves (sometimes money), save you from mistakes and help you find an apartment in time.
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