I gather this is to ensure you can make your rent.
I assume they’re shooting for your rent equaling a given percentage of your salary, or lower (e.g. rent = 40% or less of salary). The question is: Is this percentage arbitrary and different for each rental company, or is it somewhat standardized (and if so, what is the standard)?
While I’m here:
The application also requests my credit card and bank account information. I guess they would get it eventually anyway, if I paid my rent using check or credit card, but is there really any reason for them to request this (or me to provide it) ahead of time? Makes me feel uneasy.
When I was looking at apartments about a year ago, most wanted proof my monthly income was at least 2.5-3 times the monthly rent.
I don’t think I would feel comfortable giving a company my credit card or bank account information unless it was for the express purpose of setting up a recurring charge/withdrawal of my rent. I did provide the company from which i ended up renting with my social security number so they could run a credit check.
That sounds right to me. When I was looking, they wanted the rent to be 30% or less of your income. Once the application is accepted, they’ll ask for paystubs or a w-2 as proof. As for the bank account numbers, I never put those on an application. Frankly, unless they are doing a draw right out of your account, I don’t see any reason for them to have them anyways. Besides if they want them, they can grab them right off your rent check.
I gather this is to ensure you can make your rent.
Yes.
Our application form to rent asks that people give us their job information, along with a name and number to call to verify this. If not employed, i.e. a student, retired, on social services (I’m in Canada) the application states that we will require something to verify income (tax statement, bank statement, etc.). We ask for bank and credit references, including numbers, but that’s been on the application since before I started working there, and if someone does not want to put that information down, I do not demand they do so.
We do have an obligation to the property owner to properly assess potential tenants, and verifying they have means to pay the rent is one part of our jobs.
And yes, the property managers have been known to whip out a calculator and do a quick check to see if an applicant’s income is in line with the rental rate of the property they wish to rent.
Ok, but what is “in line”? You’re not going to rent a $800/mo. apartment to someone who only makes $10,000/year. What about $20k, or $30k? Is there a set percentage you use, or does it vary depending on other things like the applicant’s rental history?
In NYC when I was apartment hunting it seemed to be that rental companies want your salary to be at least 20x the monthly rent, and for guarantors they’ve asked for 60x the monthly rent.
IME if rent is $800/mo you should be making at least $28000 to $30000 per year.
That seems low, that’s 60% of your income.
Rental property manager here. We look for 40-50% of the net income as the absolute cut off. At 50% we want the last month’s rent up front and 1.5 months security.
When I was looking at apartments, they wanted your monthly pre-tax salary to be at least X times the monthly rent. I remember looking at complexes where X had a value of 3.5 and ones where it had a value of 2.5. So it does vary by complex, but not hugely.
Rules on “rent should only be so much of a percentage of your income” are often modified in expensive areas like NYC and the Bay Area.
Isn’t that also because most residents in NYC and some in the Bay Area are likely to not own cars? You can spend more of your income on rent if you’re not making car payments, gas, repairs, and car insurance.
Update: I just called the place, they said their guideline is your salary should be 2.5 times your rent.
Thanks for all the help, everybody.
It may vary by jurisdiction. For example, in Ontario certain rent-to-income ratios can be considered illegal according to the Human Rights Act.
I think this came up before and I think I asked the same question… what’s the point of doing that? You can get that info from pulling a credit report.