The New York Times
April 20, 2008
Finding Your First Apartment
By VIVIAN S. TOY
THE dream: finding a one-bedroom, one-bath apartment in an elevator building with a doorman in Greenwich Village for $2,000 a month.
The reality: nearly impossible.
Spring is the season when newly minted college graduates flock to New York City to start their careers. They begin the search for their dream apartment, brokers say, with the same single-minded determination that earned them their degrees and landed them their jobs in the first place.
But that determination only goes so far when it comes to Manhattan real estate.
The first shock for a first-time renter will probably be the prices.
Consider that the average monthly rent for a one-bedroom in the Village is more than $3,100 and that the average for a studio is just over $2,200. Or that the average rent for a one-bedroom in a doorman building anywhere in Manhattan is close to $3,500.
The thousands of new graduates who will be driving the engine of the city’s rental market from now until September will quickly learn that renting in New York is not like renting anywhere else.
The second shock is likely to be how small a Manhattan apartment can be. It is not uncommon in New York, for example, to shop for a junior one-bedroom or a convertible one-bedroom, neither of which is a true one-bedroom at all but really a studio that already has or can have a wall put up to create a bedroom.
Aside from the realities of price and space, the requirements set by New York landlords are also bound to help turn a bright-eyed first-time renter’s outlook grim. To start with, landlords want only tenants who earn at least 40 times the monthly rent, which means an $80,000 annual salary for a $2,000 apartment. According to census data, more than 25,000 graduates ages 22 to 28 moved to the city in 2006, and their median salary was about $35,600.
Those who don’t make 40 times their monthly rent need a guarantor, usually a parent, who in turn must make at least 80 times the monthly rent. In addition to a security deposit, some landlords also want the first and last month’s rent. Tack on a broker’s fee and a prospective renter for that $2,000 apartment is out of pocket nearly $10,000 just to get the keys to the place.
“There’s a lot of stuff that doesn’t happen in other markets,” said Gary Malin, the president of Citi Habitats. “On top of that, every owner also has their own requirements, so just because you qualified here doesn’t mean you’ll qualify there. And there’s no rhyme or reason to it.”
So the key to finding that first apartment is to learn as much as possible about the market before arriving in the city and also to know that keeping an open mind will make the search easier. “People who walk in with blinders on and can only say, ‘I want, I want, I want,’ when their budget doesn’t allow for it, they create this anxiety,” Mr. Malin said. “You have to be flexible and you have to come to the city armed with information and financial paperwork.”
Mr. Malin said that the volume of calls his agency has fielded in the last few weeks would suggest the city is headed for another strong rental season. The market was so tight last year that the vacancy rate hovered under 1 percent, but the rate has now inched a little over 1 percent, he said, so there will be slightly more inventory and prices may stay stable.
Daniel Baum, the chief operating officer of the Real Estate Group New York, a brokerage in Manhattan, said he felt the market had softened enough that there might be room for negotiation, particularly in areas that recent graduates would consider better suited for their parents, like the Upper East Side.
In certain neighborhoods, he said, “there may be opportunity to get concessions from landlords; maybe one month’s free rent or a chunk of the brokerage commission.”
To understand the rental market, brokers and recent first-time renters recommend searching the Internet for listings and getting recommendations from friends who already live in the city. That elusive $2,000 one-bedroom apartment, for example, can be found in neighborhoods like Harlem, Morningside Heights and Washington Heights, probably in a nondoorman building. And the average price for studios is below $2,000 in the East Village, the Lower East Side and neighborhoods north of Midtown.
Most real estate agency Web sites have guides that explain the intricacies of New York’s rental world. Citi Habitats sends agents to about 20 universities nationwide to offer seminars on what it takes to get an apartment.
Cullen Hilkene, an agent who ran a Citi Habitats seminar at Princeton University last week, said that prospective renters need to know the limitations the market might impose on them. “I give them information so they can figure out how they’re going to be able to live in New York,” he said. “It’s better to know sooner rather than later that they need to bring in a roommate because they won’t be able to rent a studio on their own.”
Alex Sooy, who moved into a two-bedroom near Union Square last June with his roommate, David Isaacs, said he knew the first thing they had to decide was whether to use a broker. For placing you in an apartment, brokers typically charge 15 percent of the annual rent or 1.8 times the monthly rent, which means $3,600 on a $2,000 apartment.
Mr. Sooy said he tried looking online for no-fee apartments, “but we would have to go to all these places on our own and work individually with the landlords and that was an overwhelming process.” Like many recent graduates, Mr. Sooy and Mr. Isaacs planned to travel after graduation and they had only three days to hunt for an apartment. “We hated to pay the fee, but it was the easiest way to look at a number of places in a row without having to do so much legwork ourselves,” Mr. Sooy said.
Their goal was to find a $3,000 two-bedroom downtown. They visited eight apartments with brokers from two firms before choosing one near Union Square with two real bedrooms, as opposed to ones carved out of a living room, for $3,600. They did not need guarantors because Mr. Sooy works for a consulting firm and Mr. Isaacs works for an investment bank and their combined income satisfied the landlord.
Mr. Sooy says his rent is much more than the $400 a month he paid when he was in school and it eats up more than 50 percent of his after-tax income. “I would prefer to have more disposable income,” he said, “but it’s a good apartment and the location is great.”
Alicia Schwartz, a former Citi Habitats agent and director of howtorentinnyc.com, said that trolling the Internet for no-fee apartments had become easier in recent years. The Web site Craigslist, for example, offers no-fee listings by owners, no-fee broker listings where the landlord will pay the broker’s commission and fee-based broker listings.
There are also listing services that charge a fee for providing no-fee listings. Ms. Schwartz said, though, that those Web sites can be outdated. “At the height of the rental season, landlord listings change from hour to hour,” she said. “And the only ones who talk to landlords hour to hour are brokers, not listing services.”
It’s also possible to search for management companies directly. Ms. Schwartz’s Web site lists some 300 management companies and posts uncensored reviews of many of them. “So many management companies have gone online that you can get an apartment without a broker, especially if you have a friend who’s rented through a company and can recommend it,” she said.
Some management companies represent only high-end buildings that would be too expensive for a typical new hire, but others offer a range of apartments.
For instance Jakobson Properties, which manages some 2,000 apartments in about 30 buildings in Manhattan and Queens, offers what it describes as middle- and upper-middle-income housing. Peter Jakobson Jr., a principal, said, “Our clientele is in school, going back to school, first job, second job, and not from New York.”
He says that Jakobson leases most of its apartments through its Greenwich Village office and its Web site, nofeerentals.com, but that brokers bring in about 35 percent of its business. Ms. Schwartz said, however, that some management companies work exclusively through brokers.
Lindsey Zuckerman, who has moved twice and found renters to take over her leases by advertising on Craigslist, knows that first hand. She said that the first time she listed an apartment, she had trouble getting through to her leasing company on behalf of prospective renters, but the company would take calls from brokers.
She also said Craigslist might work better for people who aren’t first-time renters. She recently sublet her $2,400 alcove studio in NoLita to someone who responded to her listing on Craigslist. “I got a ton of responses,” she said, “but they tended to be from people who already know the market. Students who wanted to see it a week from when I posted it would have been too late.”
Because the competition for desirable apartments can be intense, brokers and renters say that having all the necessary documentation in hand when apartment hunting is crucial.
Leslie Lazarus, the agent for DJK Residential who helped Mr. Sooy find his apartment, said that because landlords have such different policies, prospective renters should have guarantors lined up even if they don’t think they will need them. For people in the financial industry, she said, some landlords will accept bonus potential as part of their income and others won’t.
And while some landlords will accept the combined incomes of two or three roommates, some don’t and will require one guarantor who can cover the rent for all the roommates.
Many landlords require the same level of financial documentation for both a renter and the guarantor, which means a sheaf of personal records that includes tax returns, pay stubs, bank statements, proof of income for stocks or other investments and reference letters. “That can be a difficult thing for parents to understand because it is so invasive,” Ms. Lazarus said.
Brokers agree that being upfront about credit problems is also important because the $25 to $150 application fee that landlords charge goes toward a credit check. “Some people won’t have a credit history or they’ll have ruined it already with that $30 nonpayment to the cellphone provider,” said Senad Ahmetovic, a vice president at Halstead Property. “You would be surprised to see how many of those cases I’ve had, and they do not realize how damaging that can be to their credit score.”
The best time to plan a visit to the city to view apartments is four to six weeks before an expected move-in date. Brokers say that while most recent graduates want to stay downtown and want to look in the Village or in Murray Hill, more reasonably priced apartments can be found on the far east and west sides of town and on the Upper East Side, where there are more large apartment buildings, including Normandie Court on East 95th Street, a building so popular with recent graduates that it is known as Dormandie Court.
But Ms. Lazarus said that many 20-somethings consider anything above 86th Street to be the suburbs. “It all boils down to the money,” she said. “If you can afford what you initially say is your dream apartment, then great, let’s go out and get it.”
For others, the suburbs aren’t so bad.
How to Prepare for an Apartment Search
FINDING the right apartment in New York City is a challenge for anyone, but for recent graduates who are first-time renters, meeting the landlord’s financial requirements and coming up with enough cash to get in the door can be even more daunting.
This is documentation that many landlords want to see from prospective tenants and their guarantors:
A letter from an employer stating position, salary, length of employment or anticipated start date.
Pay stubs if already working.
Tax returns for at least two years.
Recent bank statements.
Proof of other income, like revenue from stocks, securities, real estate or trust funds.
Contact information for previous landlords.
Personal reference letters.
Business reference letters.
An estimate of the money that renters might need to have on hand to get a $2,000 apartment (* = not always required):
Nonrefundable application fee — $25 to $150
First month’s rent — $2,000
Last month’s rent* — $2,000
Security deposit — $2,000
Broker’s fee (15 percent of the annual rent)* — $3,600
TOTAL — $4,025 to $9,750
