Renting a Home in a Big City
Learn the extra costs and challenges that come with renting in a major metro area.Moving to a large metropolitan area? Get ready for higher rents, more stringent rental application standards and — depending on your experience as an apartment hunter — the possible need to use an apartment broker.
While conventional wisdom has been that renters should spend no more than 30 percent of their income on their monthly rent, those who live in metropolitan areas may have to shell out more. With low vacancy rates in many cities, landlords have raised rents and closely scrutinize prospective tenant applications for any sign of financial trouble before offering a lease.
"There's greater emphasis on checking applicants out before letting them in, especially people who have lost their homes due to foreclosure," explains Jeff Cronrod, a landlord in Los Angeles and a board member of the American Apartment Owners Association. "About 4 percent of applications now involve fraud, either through stolen identities or lying about something on the application."
Landlords routinely ask for proof of steady income, good credit and the ability to meet security deposit requirements. Rental applicants may also have to pass a criminal background check and eviction check.
While large metropolitan areas may draw renters relocating for new jobs, finding a new home on a budget can be a challenge.
"The price, cost of living and access to jobs in New York is different here," says Michael Pagano, broker-owner of Page Real Estate in Astoria, a popular multicultural neighborhood in Queens. "There's more jobs in New York, but the cost of living may be double that of other places. A friend of mine is renting a three-bedroom place in Florida for $700 a month. In Astoria, a three-bedroom would be $2,500."
Michael says apartments in areas like Astoria, which offer easy subway access into Manhattan and have low crime rates, are in great demand because monthly rents are lower than in Manhattan. The broker, who administers hundreds of properties throughout New York, says Astoria rents run from $1,300 to $1,500 for a one-bedroom apartment.
The average monthly rent for a one-bedroom in Manhattan, without a doorman, is $2,929, according to a recent MNS Manhattan Rental Market Report. A one-bedroom in a building with a doorman averages $3,692 a month. Ultra-luxury properties were not included in the analysis to determine average monthly rents.
"With the high cost of living here, you need to earn 35 to 40 times your rent," Michael says. "If you don't, you have to have a guarantor who earns a six-figure salary and has savings accounts. And forget about landlord concessions. There's no such thing as a free month of rent here."
The Review Board
While the rental application process for apartment buildings is similar to that in most cities, those who want to rent in co-op or condominium buildings may also have to pass muster with a residential review board.
"Oftentimes, a co-op or condo board will ask for pay stubs, bank statements, a credit report, tax returns and references," Michael says. "Nobody wants anyone to move in who's a non-performing person."
He says the best way to get into a good apartment is to use a broker, who will show you properties and handle the lease agreements for a fee. Broker fees in New York are typically equal to one month's rent, but may run as high as 10 percent to 15 percent of the first year's rent.
In Chicago, monthly rentals are slightly lower, but as with any large city, location is the key. Neighborhoods with parks, theaters and restaurants within walking distance are coveted, along with areas where public transportation is readily available.
"Renters have to know that the location factor is just as important as things like the size of the apartment, the appliances and amenities in determining the monthly rent," says Adam Peri, marketing manager for Horizon Realty Group, which manages properties throughout Chicago and its suburbs. "We have 1,700 tenants, and the average price for a one-bedroom in our portfolio is a little over $1,000."
What you get for your rent can vary greatly from building to building. Adam says, for example, Horizon Realty owns its apartment buildings and offers a concierge service that will help with obtaining tickets to movies or shows — or reservations for Zip Cars or restaurants.
"The service is free to our tenants," Adam says. "The rental market is good here, so we're not doing it as a concession to draw people. We're just service-oriented, and this adds value to our tenants."
The biggest challenge of renting in large cities may be narrowing down your search parameters. After determining your budget, Adam suggests, you should research communities before looking at actual properties.
"If you're new to the area, find out where you'll be working and where your friends are first," Adam says. "Look online, and do your due diligence about management companies. Get an idea of how the companies work and how they manage their buildings before you sign the lease."