It is darn near impossible to rent a unit in New York City without a landlord collecting a security deposit. The security deposit is an amount collected by the landlord, typically a month’s rent, only to be used or reimbursed after the lease’s termination to cover any excess damages and unpaid rent. It must be kept in a separate account and landlord of buildings with 6 units or more are required to keep this in an interest bearing account. The security deposit is due at lease signing,
Even though one month of security deposit is somewhat of an industry standard, some landlords require a two-month or three month deposit. There is no limit on the amount of security deposit a landlord may ask for in New York State. It is a means of leverage, so if your situation is a bit complicated (e.g. self employed or commission based) you should be prepared to shell out some additional security deposit.
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Wednesday, December 30, 2009
Monday, December 28, 2009
What is Net Effective? In the NYC Real Estate Rental Market
Monday, December 28, 2009
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The net effective is an advertising technique used in the Real Estate to draw more attention to an advertised unit. You will most likely see a small asterisk (*) next to the price indicating that the amount advertised is not the actual monthly rental amount.
What is Net Effective?
Net Effective is essentially the amount being paid out to the landlord as rent after all rent concessions. Usually, this only incorporates any period the landlord offers as free rent. I have seen landlords offer anywhere from two weeks to 3 months of free rent. The actual monthly rent is multiplied by the actual months the tenant will be responsible for paying and the twelve months of the year.
Example:
Large No Fee 2 Bedroom in Tribeca only $2500*
The actual price for the unit is $3,000 per month plus 2 free months of rent. The calculation is simple
$3,000 Monthly Rent X 10 Months of Rent to Pay= $30,000
$30,000 Yearly Rent / 12 Months in a Year= $2,500
The example above illustrates a $500 discrepancy only to emphasize the potential difference. An apartment could be listed at $1833.33 but actually be $2,000 with only 1 free month or it could be listed at $1925 but actually be $2100 with 2 free months on a 2 year lease.
All concessions are conditional and vary in length of time. Most “free rent” is cashed in (point of time where tenant does not pay rent) towards the end of the lease term. Most landlords do not allow accept the net effective rent as a monthly payment and you will have to pay the actual rent throughout the entire lease term. In any case, ask your agent.
What is Net Effective?
Net Effective is essentially the amount being paid out to the landlord as rent after all rent concessions. Usually, this only incorporates any period the landlord offers as free rent. I have seen landlords offer anywhere from two weeks to 3 months of free rent. The actual monthly rent is multiplied by the actual months the tenant will be responsible for paying and the twelve months of the year.
Example:
Large No Fee 2 Bedroom in Tribeca only $2500*
The actual price for the unit is $3,000 per month plus 2 free months of rent. The calculation is simple
$3,000 Monthly Rent X 10 Months of Rent to Pay= $30,000
$30,000 Yearly Rent / 12 Months in a Year= $2,500
The example above illustrates a $500 discrepancy only to emphasize the potential difference. An apartment could be listed at $1833.33 but actually be $2,000 with only 1 free month or it could be listed at $1925 but actually be $2100 with 2 free months on a 2 year lease.
All concessions are conditional and vary in length of time. Most “free rent” is cashed in (point of time where tenant does not pay rent) towards the end of the lease term. Most landlords do not allow accept the net effective rent as a monthly payment and you will have to pay the actual rent throughout the entire lease term. In any case, ask your agent.
Sunday, December 20, 2009
Qualifying for a Mortgage or a Rental Unit in NYC
Sunday, December 20, 2009
1
Qualifying for a rental unit or a mortgage in New York City is quite similar. Both require the client to earn a minimum income in order to qualify and to be credit worthy.
Where do these requirement come from?
It comes from something called “debt-to-income” ratio. The debt-to-income ratio is the gross income relative to debt. It calculates your ability to pay based upon your pre-tax earnings. It is the backbone to the credit market and also used to calculate your credit score.
If you are planning to rent or buy in New York City, you should keep in mind that at the current moment (December 2009) you should have no more than 30% of your annual income allocated to housing (non-utilities) expenses. Basically it is 3-to-1 ratio between the household's gross income and the actual housing cost. The total debt owed is broken up between monthly obligations.
Mortgage issuers are much more strict than landlords in Manhattan. Landlords typically ask “40 times the annual rent” as a household minimum income and usually are bit more flexible with the relative debt, providing that it is not too far out of the range. To obtain a mortgage in today’s market, you pretty much have to be practically debt free. Lenders calculate monthly mortgage payment and monthly maintenance fee, if any, as your housing expense.
As a rule of thumb, keep your debt low and search for units well under your 30% of your income.
To calculate your own debt to income ratio, please click here
Where do these requirement come from?
It comes from something called “debt-to-income” ratio. The debt-to-income ratio is the gross income relative to debt. It calculates your ability to pay based upon your pre-tax earnings. It is the backbone to the credit market and also used to calculate your credit score.
If you are planning to rent or buy in New York City, you should keep in mind that at the current moment (December 2009) you should have no more than 30% of your annual income allocated to housing (non-utilities) expenses. Basically it is 3-to-1 ratio between the household's gross income and the actual housing cost. The total debt owed is broken up between monthly obligations.
Mortgage issuers are much more strict than landlords in Manhattan. Landlords typically ask “40 times the annual rent” as a household minimum income and usually are bit more flexible with the relative debt, providing that it is not too far out of the range. To obtain a mortgage in today’s market, you pretty much have to be practically debt free. Lenders calculate monthly mortgage payment and monthly maintenance fee, if any, as your housing expense.
As a rule of thumb, keep your debt low and search for units well under your 30% of your income.
To calculate your own debt to income ratio, please click here
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