Renting In Manhattan What You Need To Know and Prepare
Renting in a Rental Building
Renting in a Coop Building
Renting In a Condo Building
Broker's Fee - What to Expect
This is a step-by-step process of renting in New York City. NOTE THESE Rental Rules are Unique to New York City! Items categorize as "necessary" in this guide are crucial; It may seem cumbersome; however, I can guarantee that if you do your homework, the process will flow much more smoothly. Assume that there are no exceptions to the items on these lists.
Organize and prepare the necessary information to bring with you, including:
• Letter of employment and salary verification (include start date if not yet employed)
• Bank account numbers (checking and savings), credit card numbers
• Names, addresses and phone numbers of previous landlords
• Names, addresses and phone numbers of accountant and attorney, if applicable
• Names, addresses and phone numbers of personal and business references
• Tax returns
• Pay stubs
• Expected bonus (verification from employer)
• Additional sources of income with verification
• Personal identification with photograph — driver's license or passport
If Relocating, prepare the necessary funds before coming to New York. Landlords will not accept personal or out-of-state checks. They require certified funds. Anyone renting or relocating must:
• Try to establish a New York bank account before you begin your search. If this is not possible, bring the necessary funds with you.
• Bring enough traveler's checks to cover the cost of two (2) month's rent (which must be converted into CERTIFIED CHECKS). This comprises the first month's rent and one (1) month's security.
• Bring funds to cover the broker's fees if your company is not paying the fee. Brokerage fees are paid by you, the tenant, in New York City. These fees are due upon signing of the lease. However, if your employer is paying the real estate commission, they will be billed directly.
• Bring funds to cover a Credit Check: $25 to $50, which can be paid by personal check.
• Bring funds to cover possible move-in/move-out fees (See Co-op/Condo Funds Needed).
The day of your appointment you will meet with the agent who will be working with you. Then you will be taken to each apartment that the agent has scheduled for you to see.
When you have made your apartment selection, you will be asked to fill out a rental application and one or more miscellaneous documents. Your agent will negotiate price and lease terms for you. Upon acceptance, a credit report will be done, and your references will be checked.
Leases will be signed and checks presented.
Important Financial Considerations
AFFORDABILITY
As a guideline, you can expect to pay 25% of your gross annual salary for rent.
FINANCIAL ELIGIBILITY
To qualify for tenancy, most landlords require that you annually earn 40 to 50 times the amount of the monthly rent. Remember to take into consideration outstanding loans and liquid assets. Landlords are rigid in New York City, and cooperative buildings can be even more demanding.
LEASE GUARANTORS
If your salary level and total financial picture does not meet the landlord's requirements, you will need a co-signor, or guarantor, to guarantee the lease. Landlords prefer a family member who lives and owns property in New York, New Jersey or Connecticut. The guarantor must earn ample income. Extensive financial documentation may be required and paperwork cumbersome. Prepare your potential guarantor for this possibility in advance. Employers will seldom guarantee on behalf of employees.
INTERNATIONALS
If you pay taxes outside of the United States, or if you have a housing allowance from your employer, your eligibility is evaluated differently. Discuss these areas with your company's relocation department and with your agent.
Types of Buildings to Choose From
In New York City there are three types or categories of buildings in which you can rent: a rental building, a cooperative, and a condominium. Each of these types of properties have their own rules and regulations. It is important to understand the distinction between them as this will influence the timing and parameters of your search for a home. Our agents will work closely with you to determine which type of accommodation is the perfect fit for you and your lifestyle.
Definition: The entire building is owned by a landlord, and all of the apartments are available for lease. None would ever be available for sale.
A rent stabilized rental building is subject to guidelines for yearly rental increases. Rent stabilization was established in the late 1960's in response to the critical housing shortages and low vacancy rates in New York City. Rent stabilization sets limits on the amount that owners can raise the rent for vacant apartments or renewals of existing leases. The guidelines for yearly increases are set in July and become effective every October. As a tenant in a rent stabilized building one has the right to renew the lease indefinitely and the right to sublease the apartment with the Landlord's permission, subject to obeying all the terms of the lease.
A non-stabilized rental building is not subject to any specific guidelines. The rent level is based on a free market system subject to typical supply and demand influences. The terms of the lease are established by the landlords' specifications and requirements. Options for renewal may be included in the lease.
THINGS YOU NEED TO KNOW
Types of Leases - Rent Stabilized Lease or Non-Stabilized Lease
Type/Style of Housing
Hi-Rise Luxury Buildings,
Pre-War Buildings,
Elevator Buildings,
Brownstones,
Walk-ups.
Rental buildings can be virtually any type of building found in New York City.
Approval Process
1 to 7 business days
• When to Begin Your Search
Not more than 4 weeks before you would like the date of the lease to begin. Apartments are not vacant for long in New York City, so the "window" for viewing is a small one. If you begin your search too soon, none of the apartments you saw will be available when you're actually ready to sign a lease.
• Funds Needed
First month's rent; one (1) month's rent for a security deposit (which is refunded upon vacating the apartment, assuming that the apartment is returned to the landlord in the same condition in which you received it, and that the terms of the lease have not been violated); and funds for a credit check to be conducted. The brokerage commission is due upon lease signing. (If company is not being billed separately.)
Definition: A cooperative (also known as a co-op) is a building which is owned by a corporation comprised of the tenant shareholders of the building. Each tenant shareholder owns a number of shares in the corporation associated with his or her apartment (the number of shares depends on the apartment size and floor where the apartment is located) rather than owning the apartment itself. The tenant shareholder has the right to occupy the apartment as his or her home by holding a proprietary lease to that apartment.
Importantly, in co-ops you are subletting from an individual who in turn becomes your landlord. Rental prices are established by supply and demand and, as such, can vary widely. The building is subject to rules and regulations set forth in the By-Laws of the corporation. An owner of an apartment in a co-op must get permission from the Board of Directors of the co-op to rent the apartment. When permission is granted, the lease is subject to any restrictions or qualifications placed on subleasing by the Board of Directors of the cooperative.
Types of Lease
A co-op Sublease Agreement is the type of lease issued. The lease term is usually for one year with the option to renew based upon Board approval. In most co-ops owners are not allowed to rent for more than a two year period.
Type/Style of Housing
Pre-Wars, Post-Wars, Brownstones or Townhouses, Luxury Hi-rises, Lofts
Cooperative Building (CO-OP) Approval Process
The approval process can take anywhere from 4 to 6 weeks. A "board package" must be submitted to the Managing Agent of the cooperative for review by the Board of Directors. The elements of the board package differ from building to building; however, in almost all cases extensive financial information is required: tax returns, financial statements with all verification, personal and business references, etc. In most co-ops the board requires a meeting with the prospective tenant. Importantly, in a cooperative there is the risk that a prospective tenant can be denied acceptance by the co-op's Board of Directors.
When to Begin Your Search
Since approval for tenancy is a lengthy process, you should begin your search at least 6 weeks before you would like the lease to begin.
Funds Needed
Fees associated with co-op leasing can range from $200.00 to as much as $1,000.00. The fees include the application processing fee, credit check, and move-in and move-out fees which are usually refundable. The first month's rent and one month security are due as well. As always, the brokerage fee is payable upon lease signing. (If company is not being billed separately.)
Definition: A condominium or Condo is a building in which the apartment is classified as "real property" and is owned by an individual. You, the tenant, lease the apartment directly from the condo owner. Rents, as in co-ops, can vary widely as they are determined by supply and demand.
Types of Lease
Condominium Sublease Agreement: Since there are no restrictions concerning how long an owner is allowed to rent, length of lease can be negotiated.
Type/Style of Housing
Usually Hi-Rise Luxury buildings; very rarely Pre-Wars. Condos are a relatively new phenomena to New York City, and as a result tend to be more recent construction.
Approval Process
An approval process is usually required, but it is not as difficult as the co-op process. A board meeting may or may not be required. The length of time for approval varies from building to building, but it is usually not as long as a co-op approval process.
When to Begin Your Search
4 to 6 weeks prior to desired lease date.
Funds Needed
The first month's rent; one month rent for a security deposit; application fees; move-in/move-out fees are also necessary, and they can vary. Again, the brokerage commission is due at lease signing. (Unless your company is being billed separately.)
Building Terms
• Brownstone or Townhouse: 4 to 6 story buildings built in the 1800's through the early 1900's. These can be single family houses or can have been converted over the years into multiple apartments. As a single family home, a townhouse or brownstone offers buyers privacy and the ability to purchase without the cooperative board process. Some apartments in townhouses can have grand living spaces and, therefore, will be quite expensive. Generally, these buildings afford more "charm" with features such as gardens, fireplaces, beautiful floors and ornamental wood moldings. In almost all cases these buildings will not have a doorman.
• Elevator Buildings: This description is usually reserved for a non-doorman building that is six to twenty stories tall. There is usually an intercom security system, and some may have video security. These buildings could fall into the pre¬war or the post-war category.
• Loft Apartments: Former commercial or Industrial buildings that have been converted into apartments. Generally, these are large open spaces with high ceilings. They are usually found in Greenwich Village, SoHo, TriBeCa, Chelsea, Flatiron and lower Manhattan and often do not have the services of a doorman.
• Luxury Doorman Buildings: These are generally associated with new construction or are apartment buildings that were built from the 1980’s throughout he present. These buildings tend to be condominiums. They are typically twenty to forty or more stories with doorman and concierge services. You may also find many with health clubs and swimming pools.
Building Terms
Prewar Buildings: Prewar buildings are those built before World War ll. These buildings are usually ten to twenty stories and are not known for views, except of course those along the Park or River. They are recognized for architectural interest with features such as larger rooms, fireplaces , hardwood floors and higher ceilings. These can be doorman or non-doorman buildings.
Postwar Buildings: These buildings were built between the late 40’s through the 1970’s. They are generally hi-rise and are constructed of white , red or brown brick. Most will have doormen. Postwar apartments may actually afford more space than their prewar counterparts in studio, one and two bedroom sizes.
Walk-Up Buildings: This is the least expensive type of housing, and the quality can vary widely. Usually these are 4 to 5 story buildings with no doorman and no elevator, hence the term "walk-up." They were originally constructed as multi-family housing and lack the charm and elegance of traditional brownstones or townhouses.
Apartment Terms
Familiarize yourself with the following terminology. It's almost all unique to New York City. It's also important to know that we speak in "number of rooms," as well as using the definitions below. A room in Manhattan must be at least 100 square feet and have a window...except in the case of a kitchen. Most kitchens are considered rooms, unless they are Pullman types, which would be found as part of the living room. And we don't count baths as rooms. So, a Three Room Apartment would be comprised of a Living Room, a Kitchen and a Bedroom. A Four Room Apartment would have a Living Room, a Kitchen, Two Bedrooms, or One Bedroom and a Dining Room. You'll hear the term Half of a Room, e.g., Three And A Half Rooms. This means that the Living Room has an alcove adjacent to it which is not quite the size of a true room, or in some cases it may mean a foyer large enough for dining. Review the list below, and check with your agent for further clarification.
Alcove: An area adjoining the living room space of an apartment. It is generally less than 100 square feet and, hence, not considered a full room . It can be used for dining or an additional sleeping area. Depending upon size, it may actually be “walled off” to create an additional bedroom.
• Alcove Studio: A one or two room apartment with a separate alcove (see above) which can be used as a sleeping area.
• Classic: The word "classic" is usually followed by a number indicating the number of rooms in an apartment. It is generally associated with pre-war apartments that meet a criteria of room numbers and design for buildings of that period. However, a “classic” can exist in a post war
• Convertible or Flex: This is typically an apartment with an alcove adjacent to the living room that can be used to create another bedroom. By utilizing this "flexible" space, we can "convert" the apartment from a one bedroom to a two bedroom. Hence, a one bedroom with this alcove could be called a Convertible or Flexible Two Bedroom.
• Duplex: In New York this means an apartment
• Junior: Again, this is an apartment with an alcove off of the living room which can be converted into a bedroom or used for dining. A Junior 4, for instance, would be a three room apartment (living room, kitchen and bedroom) which has the potential to be four rooms by using the alcove space to create an additional room.
• Loft Area: This is an additional space created in apartments with very high ceilings. The loft area is constructed above the traditional living area, accessed by a staircase or ladder, and used for extra storage, sleeping or living space (e.g., a mezzanine).
• Studio: One or two rooms with combined living and sleeping area. If the studio is one room, the kitchen will be of the Pullman variety. If it is two rooms, the kitchen will be separate.
BROKERS FEES
Broker’s fees are paid by the tenant. The industry standard fee is 15% of the annual rent. This one time fee is shared (co-broked) among all agents involved in the deal. If the owner pays ½ of fee the renter will be required to pay the reminder. If the owner pays the full fee the tenant will not be required to pay.
