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More NYC renters turn to guarantors to qualify for an apartment—or trade up to a larger one

Guarantors are accepted for this two bedroom at 239 East 14th St., #4F, which is no fee and offering one month free.

Citadel Property Management Corp./StreetEasy

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It might seem counter intuitive: Even though rents have fallen in New York City, a greater number of renters are enlisting the help of a guarantor in order to qualify for the apartment they want.

One explanation is that the current rental market represents an opportunity for some renters to trade up in NYC. Using a guarantor—on top of the lower rents and other deals landlords are offering to fill the many vacant apartments—can boost your spending power and get you more space, nicer amenities, or a better location—or all three.

In other cases, anecdotally it appears that New York City’s rents are low enough to draw New Yorkers who earn less, including civil servants who couldn’t afford to live in Manhattan before. And some of them are turning to guarantors in order to secure their apartments.

Joshua Young, vice president of market rate operations for Clinton Management, the property management arm of Douglaston Development, says his firm’s entry level studios and one bedrooms have seen a 50 percent increase in the use of guarantors over the past 60 days.

Young says teachers and nurses looking to rent in NYC are still falling short of income requirements (starting salaries for teachers range from $57,845 to $87,510; the average registered nurse salary in New York is $85,610).

Landlords generally want tenants that earn annual salaries of 40 times the monthly rent, plus have good credit, so someone who earns about $85,000 likely qualifies for an apartment that rents for around $2,125.

Adam Frisch, senior managing director of leasing at Lee & Associates, also sees more civil servants like fire fighters and teachers among the new tenants at his buildings.

“These people have strong unions and job security,” he says, noting that while their incomes are lower than the many lawyers and bankers who have left the city, “they are more secure.”

Covid has made NYC affordable

He points out that Covid has made it possible for civil servants to rent on the Upper East Side, namely doorman buildings with 500 to 600 apartments—and that’s where renters who need the help of guarantor are more likely to get a lease, Frisch says. These buildings have so many units to rent, he says, and are more willing to take guarantors.

For example, the average rent on a non-doorman studio on the Upper East Side fell 3.7 percent to $1,787 in December, according to the most recent Manhattan rental market report from MNS. That was the second least-expensive rent for non-doorman studio in Manhattan behind Harlem.

Trading up within the building

Young says some renters are upgrading to larger apartments in their buildings and using a guarantor to “close the gap.”

“Since they already qualified for the one apartment and have good rental history,” Young says, “they are using a guarantor to close the gap on a more expensive apartment.”

He offers an example of a renter with a 600-square-foot, one bedroom on the seventh floor who wants to upgrade to a 700-square-foot, one bedroom on the 35th floor with water views. If their annual income falls “short on the 40 times [the monthly rent] they will have a parent or institutional guarantor close the gap,” he says.

Trading up in this manner is for renters of higher-priced apartments, he says.

“These tenants are smart and financially responsible and do not want to live outside of their means just because someone else is on the hook for it,” Young says.

Renters can turn to either personal guarantors—like a friend or family member—or institutional guarantors, which sets a lower threshold for the amount you need to earn in exchange for a fee.

Consider the renter who earns $80,000 and has good credit. On their own, they likely qualify for a $2,000 a month NYC apartment using the standard formula of 40 times the monthly rent—but if they use a guarantor they can try to upgrade to a much pricier apartment with nicer amenities, an important consideration when you’re spending more time at home.

How to qualify with a guarantor

If that renter uses a personal guarantor, Young says they qualify for an apartment if the guarantor makes 80 times the rent. So with a guarantor who earns $400,000 per year, you could live in a $5,000 a month apartment.

If you didn’t have a family member willing to be a guarantor, you could turn to an institutional guarantor like Insurent Lease Guaranty (a Brick Underground sponsor) which will qualify a tenant for 27.5 times the monthly rent—so the tenant who earns $80,000 can go for an apartment asking $2,900 a month—and these days you can rent an apartment in a prime neighborhood in Manhattan for that amount. (A search on StreetEasy for apartments in Manhattan with two or more bedrooms for $2,900 a month turned up 42 listings—including some three-bedroom apartments in Hudson Yards, Upper West Side, the Upper East Side, the East Village, and Greenwich Village. All were no-fee and most offered two or three months free.)

Many New Yorkers are often a little below the landlord’s requirement of 40 times the monthly rent, says Charles Schoenau, managing director at Insurent.

Renters who are not working because they are students; in between jobs; or are entrepreneurs and do not take a salary during the year, or have a very low salary; or are retired and do not work are also eligible to use Insurent.

Renters in this scenario can qualify if their parents or family friends either earn a combined income of 50 times the monthly rent, or have 80 times the rent in bank or brokerage accounts—the amount is high because the thinking is they would need to cover their own expenses in addition to yours.

And those who do not work (such as students, retirees or New Yorkers who are in between jobs or are entrepreneurs and who do not make 27.5 times the monthly rent from a job) can also qualify with Insurent on their on their own if they have 50 times the rent in bank/brokerage accounts in their own name(s).