Finding an apartment in New York City is a journey in stress
management. You've done your internet research. You've
climbed a thousand steps. Now, you've found the place of your
dreams. Is it too good to be true?
It might. Why? Because the financial standing to qualify for
that apartment is an entirely different matter.
Landlords in New York City typically demand that prospective
tenants have an annual income of up to at least 40 times one
month's rent and a credit score of at least 700. In a market
where increases in rent outpace increases in income, it is often
difficult for prospective tenants to meet these high
To help prospective tenants overcome qualification difficulties,
companies like Insurent and TheGuarantors offer rental payment
insurance on behalf of tenants that provides landlords with a
guarantee that the landlord will be made whole in rental payments
if the tenant defaults under the lease. Companies like Insurent and
TheGuarantors have capitalized on strict landlord requirements by
offering tenants less stringent financial standards than typical
New York City landlords. TheGuarantors, for example, insures
tenants with incomes as little as 27 times one month's rent and
who have credit scores as low as 630. The company also considers
liquid assets and income earned outside of the country, a benefit
for international tenants. The premiums for TheGuarantors'
policies range from 5 to 7% of the annual rent, depending on how
risky the tenant profile.
Companies like Insurent and TheGuarantors fill an important
niche by helping prospective tenants who would otherwise never
qualify for many quality apartments while reducing landlord
exposure to default risk and vacancies. Developers of new
construction are also provided protection in high cost markets
where the prospective applicant pool of qualified renters may be
smaller, allowing for a larger number of applicants to qualify as
In markets with rising rents, Landlords now have a new guarantor
option. It will be interesting to see if similar services make
their way into the world of corporate real estate.
This article is presented for informational purposes only
and is not intended to constitute legal advice.
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In a Law360.com article published on January 2nd titled "California Real Estate Legislation and Regs to Watch in 2017," Andrew McIntyre of Law360 addresses the challenges facing the California real estate market in the new year.
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