*This has not been edited for content. SIPA does not recommend one real estate agent, salesperson, representative, or company over another. This is not an endorsement of the agent or company’s services.
By Melissa Amin Diaz:
As a SIPA alum, I had to go through the painful process of renting an apartment in New York City. I knew I wanted to live in a central location off campus that was not too far from SIPA or the attractions in Midtown and Downtown, but I was not fully aware of the rental process. When I arrived to New York I immediately realized that my expectations were far from reality.
In this blog I wanted to share a guide on what you need to know and what you will need to do to find the right apartment, for the right price, in the smoothest way possible. Hopefully this will help you avoid the stressful moments I had to pass through.
Before starting your search, prioritize your wants and needs. Determine what is important for you. The three main variables when choosing an apartment are price, location, and size. Prioritize them in order of importance for you and keep them in mind when you start your search.
Determine your Financials
Having your financials clear is a critical preparatory work. Many landlords require an income of 40 to 50 times the monthly rent. They will also do a credit check on you and expect it to be above 700. This means that to rent a studio apartment for $1800 a month, you must prove an annual income of at least $72,000 a year ($1800 X 40) and have a credit score of around 700. Another way to determine how much rent you can afford is by determining 30% of your income. Real Estate professionals say 30% of your annual income is an appropriate amount to spend on rent.
After determining how much rent you can afford, consider the upfront and ongoing monthly expenses that come with renting an apartment. The upfront expenses include: application fees, broker’s fees, first and last month rent, and security deposits. Rental application fees are between $65 to $100. Brokers usually charge between 12%-15% of annual rent or a one-month rent. The security deposit is usually a one-month’s rent, but it’s refundable at the end of the lease if no damages are incurred in the apartment.
This is a good example of your upfront expenses for a $1800 studio apartment in Upper West Side.
|First and last month Rent||$3,600|
|Broker’s fee||$3,240||($1800 x 12×15%)|
|Security Deposit||$1,800||(1 month’s rent)|
The ongoing monthly expenses are your utilities and cable/internet bills. Electricity and gas are your usual charges and will vary depending on the building and zone you decide to rent. Water is usually included on the monthly rent.
Regarding monthly ongoing expenses, utilities vary depending on the building and usage. Cable and Internet can be $80 approx.
At this point you might be asking, what if I can’t prove I have an income of 40 times the monthly rent? What if I have no credit history or have a poor credit score? There are three options to consider:
- Find a Guarantor
A guarantor is someone who guarantees payment on the lease. They need to prove an annually income of 80-100 times the monthly rent and will have to sign paperwork plus provide financial documents such as pay stubs and tax returns to the landlord. Lets say you want to rent the Upper West Side studio apartment for $1800 per month., Your guarantor has to prove an income of at least $144,000 a year showing his or her tax returns and personally guarantee your lease. Guarantors don’t need to be relatives, but most landlords prefer that they be from the Tri-State area (NY, NJ, CT).
- Pay for a Guarantor
There are institutions that provide the guarantees for renters that do not meet the lease terms landlords require. Insurent is one of the biggest companies in NYC. The average Insurent guaranty fee for non-U.S. parties without U.S. based credit and social security numbers is 110% – 115% of one month’s rent. For international students, Insurent qualifies them based on their parent/father being a Responsible Party solely on the Agreement. The parent will just need to have an annual income of a minimum of 50x the monthly rent in their home country or have cash liquid assets at banks/marketable securities at banks/brokerage firms of a minimum of 80x the monthly rent in their home country or elsewhere. The application is free of charge. The required documents are Copies of passport and Visa and School ID, copy of passport of parent acting as the responsible party to Insurent, and Copy of letter from accountant confirming the parent’s funds.
- Bigger Security Deposit or Upfront Rent
Committing to a bigger security deposit with the landlord or paying your rent upfront might also be the solution. These options vary depending on the landlord and what information you can provide in the process.
Incoming students: Don’t forget to review the Welcome Portal for tips from the Admissions Office on house hunting (such as the webinar), and the on-campus housing application form.
Determine Living Style
Now its time to determine the living style you want. These styles have an economic impact as well. The three most common options are: Finding roommates, living alone, or subletting.
Sharing an apartment with roommates allows you to afford a bigger place in a neighborhood you like more. They help cut monthly rent and up front / ongoing expenses. If you decide to have a roommate, make sure you find someone who is compatible with you.
Living alone is the most expensive option, but gives you complete privacy.
Subletting an apartment or room can be the cheapest and easiest option. You don’t have to pay a broker’s fee, you usually don’t have to submit paperwork and financial requirements leases ask for, and you just move in with no need to buy furniture or set up utilities.
Find your Neighborhood
New York City is made up of five boroughs, including Manhattan, the Bronx, Queens, Brooklyn, and Staten Island. Within them, there are different neighborhoods, each with their own mood and vibe, as well as different price ranges and public transportation methods.
- Convenience in transportation
Living close to the metro, preferably a station that has an express train stop or a location that doesn’t need to change trains or bus line, would make your life easier and save you a lot of time. For example, Red line trains go north to south direction through eastern Manhattan. If you choose a location close to the red line you can get to downtown Manhattan or upper Manhattan much faster and cheaper than taking a cab. Make sure you choose a neighborhood that public transportation is convenient and fast to get to class.
Manhattan is expensive. However, prices will vary depending on the neighborhood you choose and the time of the year. You can find better deals in Bronx, Queens, Brooklyn, and Staten Island, but make sure you follow the same rule of living close to a metro station that offers a convenient way to get to class without too many complications.
3. Moods and Vibe
New York has something for everyone. They don’t call it the capital of the world for nothing! Visit the neighborhoods that you think you will like to live before starting your official search. Make sure the mood and vibe of the area is what you are looking for and will be happy with.
Remember to start your search 30-60 days ahead of time. If you search too soon or too late, you may not see the best of what’s available.
Apply and Sign Lease
Once you find the apartment you like, move fast. New York City is a competitive city and desirable apartments come on and off the market quickly.
These are the documents you and/or your guarantor will need:
- A letter from your employer stating your position, salary, length of employment and opportunities for bonuses
- Your last two pay stubs
- Your last two years of tax return
- Your last two months’ bank
- Contact information for previous
- Verification of other assets, if a
- Photo ID (Driver’s License, Passport, )
Revise the lease before signing it. Make sure the terms of the lease, the rent payment, security deposit and all clauses in the lease are right and clear to you. Remember this is a long-term commitment.
Congrats, you got accepted!
Once you get the keys to your new apartment, get creative. Give it your personal touches and make it feel like home. Learn how to live in a small space and take advantage of every inch of your new apartment or room. If you have any questions, please contact me at email@example.com.