How Does the NYC Rental Process Work?
Locking up a new place to live in NYC is no easy feat. It’s not just an apartment search, that’s merely the beginning, it’s an entire process in which speed is paramount. Let me take you through the various steps of renting in New York City, but no matter which type of building you want to move into the basic approach remains the same – fill out an application, submit supporting documentation, and await approval to attend a lease signing.
As you begin the process it’s best to think of yourself as an applicant, not a renter. What do landlords want from ideal applicants? Generally speaking they want applicants who have credit in good standing and earn at least “40 times the rent.” This is a simple math calculation that determines if the landlord will consider you “qualified” to rent the apartment. If the apartment’s rent is $2500 a month, the applicant needs to earn at least $100,000 a year to qualify ($2500 x 40 = $100,000). If the apartment’s rent is $3000 a month, the applicant should earn at least $120,000 a year ($3000 x 40 = $120,000.) Please be sure to keep the “40 x” rule in mind as you look at apartment price points but realize it’s a general rule. Some owners look for 45 x, even 50 x, the rent.
TIP – If you don’t earn the required salary, search for Condos or Co-ops. Many times these are owned by smaller landlords who tend to be more lenient than larger ones.
Once you’ve cleared the price point hurdle, the next step in the rental process will depend upon which type of building you want to move into. New York City has three types of buildings: a Condo, a Co-op, and a traditional rental. Each building type has its own application procedure. Let’s break them down.
Traditional Rental Building
Of the three options, applying for an apartment in this type of building is typically the simplest. Many applications are just one page long and are submitted with minimal supporting paperwork such as a letter of employment from your employer, two to three recent pay stubs, I.D., and, possibly, a copy of your most recent W-2 tax form.
Application fees for traditional rental buildings range from $0 to $175 (nonrefundable).
TIP — If you’re short on time and must be moved in to an apartment in less than three weeks don’t bother with anything but a traditional rental. Condos and Co-ops have board approval periods that can take several weeks to conclude.
If you want to rent in a condominium building — dubbed Condo for short — your application must go through the building’s board just like a purchaser would have to. A Condo board is comprised of a small number of the building’s resident owners, who are elected to oversee the well being of the building. The owner of the apartment you want to rent, or your rental broker, may ask to pre-screen you by running your credit report and reviewing your paperwork before asking you to fill out the board package. Don’t be alarmed, this is standard procedure. You’ll still need to submit the same type of paperwork as you would for a traditional rental building, meaning recent paystubs, a letter of employment, etc. Thereafter you will be asked to fill out the “board package”.
The Condo board package is a volume of paperwork that typically consists of a more elaborate application, more detailed questions about you, the applicant, and tells you about the policies and procedures for living in the building. The board package will also include the actual lease and riders. Both you, and the apartment’s owner, must agree to the details in the board package, and sign it in order to submit a complete board package to the Condo board. Once the board has everything in writing and sees that you have agreed to abide by the building’s rules and procedures, it will approve you to move into the building. This is why the process of renting a Condo takes far longer than in a traditional rental.
Application fees in a Condo vary from $150 to $2500 (some refundable).
TIP — Condo apartments typically have higher quality finishes than a traditional rental apartments.
Renting in a Cooperative building, or a Co-op, means you are renting from a share holder of the buildings corporation. Basically, a private cooperation was formed to own the building and everyone living inside the building owns shares of this cooperation. However, you must become a special insider, of sorts, before the cooperation will let you move in. This makes Co-ops the most difficult type of rental to secure but oftentimes it can be the most sought after living arrangement in New York City.
Much like Condos, Co-op buildings also have a Co-op Board and use board packages. The application process is similar to a Condo, but far more rigorous. Besides the standard job and salary documentation, Co-op boards will also want copies of bank account statements, will want to know what money you have in retirement and brokerage accounts, will want you to submit multiple professional and business letters of reference and will require you to come in for a personal interview. Moreover, whereas a Condo board does not have the right to turn down an applicant once an owner approves and signs the board package, a Co-op board most certainly can turn you down. Additionally, Co-Op boards never have to disclose why an applicant was rejected, but typically it’s because the board felt the applicant wasn’t as financially sound as they’d like.
Application fees for Co-ops range from $1500 to $4000 (some refundable).
TIP – Many times a Co-op rental is sought after because of this vetting process. You and your neighbors have been carefully selected.
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