Guarantor Standards

Many large landlords require guarantors to live in the tri-state area, some also require that they own a home. Others only require they live in the US and own a home. 40-45x the monthly rent=tenant 70-75x the monthly rent for a guarantor. You will also want a rider that requires the guarantee to continue with any lease renewals. Since it sounds like you are renting out your own apartment I would strive to get a tenant(s) that can handle the rent on their own. If not I would then want a local (NY) guarantor. It's difficult enough to deal with a local eviction or collection through the courts. Forget about a "civilian" trying to go after someone in LA.

Your particular co-op may also have standards that have to be met.

Mostly the guarantor will fear a damaged credit report should the tenant fail to perform and you then look to the guarantor for satisfaction.

Your managing agent will run credit on everyone but it is also a good idea to get credit reports beforehand and review it. The tenant can provide one from myfreeannualcreditreport, won't ding FICO and it is free once a year. Also in my opinion it is important to verify all information you are given.

I would disqualify a guarantor if he/she were not a US citizen, had poor credit.They have to have something to lose should the tenant fail to meet their obligations.

Keith Burkhardt
The Burkhardt Group

some landlords do not allow guarantors from homestead law states Texas and Louisiana. Others do not allow self-employed tenants. Some do not allow corporations as guarantors.

International applicants are often used to paying the full year in advance. I would not disqualify a guarantor if they were not a US citizen, but would require 3 - 6 months security depending on the situation.

80x is a general number. Don't get caught up in salary information, etc if the tenants provide a picture of financial health.

As stated, make sure to verify all the information. Paystubs, credit reports, employment information can and are often falsified.

Often times guarantors can be used without their knowledge. Make sure to have the guarantor portion of the lease notarized.

Best
Snezan (Broker)

As landlord, what is your goal? You simply want a qualified tenant to pay you 100% of the contracted rent, on time, right? .

One thing you can do for the "not as much declared income" renter -- ask for a security interest in a brokerage account. If set up correctly, the account can't trade below the value of the security interest, but the account owner can keep his long-term profitable investments, such as the guy who bought 1000 shares of aapl pre-split at $14

Or - offer http://www.insurent.com/ to your tenants. Insurent works well for those with lots of assets/income=irrelevant.
As landlord, all you want is the rent paid -- do you care if the tenant is living on his assets? Insurent allows a tenant with substantial assets and solid credit (who's willing to blow about a month's rent on the guaranty) to be overqualified to the landlord.

If you (landlord) ONLY look at AGI, you're gonna leave some very qualified tenants doing business with other landlords. Would you rather have a tenant just scraping by to make the 40x rent (as income), or a tenant with 400x the rent sitting in a brokerage account? If your goal is to have a reliable person who will pay you 100% as agreed, get a renter with lots of assets and a FICO above 760. Income is not always the most important part of a tenant's financial picture, right? Try to see the bigger picture.

Why in a million years do you want to rent your co-op apartment to someone who isn't financially capable of meeting the rental obligation exclusively on their own?

What is the guarantor scenario that is acceptable? You have a tenant. The tenant can't pay or doesn't pay 3 months in to the lease. Now ... what? You call the guarantor who doesn't answer your call, hangs up on you, tells you to go to hell, ... Now ... what? You go and call a lawyer, start spending dollars on both an eviction and separately to chase after the guarantor? This is an acceptable scenario to you vs:

You price your apartment right because it is a co-op and the prospect has to go through all these hoops to get in and has a limited time rental period because of your co-op rules. You find a reliable tenant, someone who has a good income and good rental record, and who you actually think you might get along with because that person is now in your apartment. That tenant, vetted, qualified, and all, pays you on time and everything works out.

So, choice 1 - unqualified tenant who needs to rely on a third party to get approved while that third party doesn't really give a crap about you, or choice 2 - qualified tenant on his or her own...

Let me append my first sentence:

Why in a million years do you want to rent your sole co-op apartment, the place that is a big portion of your net worth, to someone who isn't financially capable of meeting the rental obligation exclusively on their own?