If your child rented an apartment during his college years, then you’re probably already familiar with the realities of that awful financial triumvirate: first and last month’s rent and security deposit. But once your young adult is out in the real world, there’s another financial reality to consider: he needs to qualify for that apartment. That means a decent salary, a decent credit rating and an absence of student loans and/or credit card debt so debilitating it will impact his ability to meet his rent obligations. Plus, of course, he has to find a place. So here’s the rundown on what a typical new renter will need to get in the door, because chances are, you may be co-signing that lease.
First off, understand that rental costs today are very different from those of your youth. The extreme, of course, is Manhattan, where a studio apartment in the Village was running $2,500-$2,900 in 2009, according to Citi Habitats, and a one-bedroom cost $3,500 and up. (A “junior one-bedroom” or “convertible,” by the way, are just another term for a studio apartment with a wall between the bed and the rest of the space.) And landlords, according to a recent New York Times story, want tenants whose salary is 40 times the monthly rent. You do the math. Chances are, Mom and Dad will be co-signing that lease, and perhaps fronting some cash to help cover rent, the security deposit, the application fee - which includes a credit check - and a broker’s fee that may equate to nearly twice the monthly rent. It’s enough to make you yearn for those days in the dorms. (And it's definitely enough to make any parent bring up the "have you shopped other neighborhoods?" question, especially in New York City.)
Encourage your child to do his apartment rental homework online before he decides where to move, and to abandon any Hollywood-fueled misconceptions about real estate. Carrie Bradshaw’s fabulous, affordable, blue-walled apartment only exists in fiction. In real life, people with entry-level jobs have multiple roommates, very small rentals and no doorman.
If you are the guarantor for your child’s rental, be prepared to relinquish an astonishing number of financial papers, including tax returns and pay stubs. The landlord will probably run a credit check on you, as well as on your young adult, so this is a time to be aware of any credit problems – that missed cell phone bill or your child’s late credit card payment from freshman year could be a major problem. Any identity theft issues – an issue that afflicts college students in particular – may crop up now, so it may be wise to run a pre-emptive credit check of your own.