Question for landlords and experienced tenants

Parent Cafe
1

<p>My daughter, who is graduating from college this week, has discovered that she needs a guarantor in order to rent an apartment in the major city to which she is moving.</p>

<p>This is not a huge issue. My husband earns enough to qualify as a guarantor.</p>

<p>But my mind is jumping ahead five years. This same daughter hopes to work for about three years and then enter a full-time MBA program. If, after she gets the MBA, she gets a job in a major city, would she need a guarantor AGAIN because she will have no work history for the two preceding years?</p>

<p>If she will need one, it could be an issue. By then, my husband, who is not the world’s healthiest specimen, could be retired, and my salary is probably too small for me to qualify as a guarantor. Her only other living relative is a brother who also would be unlikely to qualify.</p>

<p>Are there any landlords or expert tenants out there who can comment?</p>

2

<p>When my DDs were in UG, most rentals demanded parents signing, BUT, we knew of some landlords who would take a students financial aid package (including loans) instead. Does your DD have good credit? Does she have an off campus rental history? If so, push the rental people to accept that</p>

3

<p>She does have an off-campus rental history (and the landlord there did not require a guarantor).</p>

<p>But she does not have a credit history. This is something she will need to work on to facilitate future rentals. It did not occur to anyone in the family that she should get a credit card until four months ago, and she did not have enough opportunities to use the card to establish a credit history. Obviously, she should use the card whenever possible from now on to help her with future rentals.</p>

<p>The need for a guarantor right now is not a problem for our family. I’m mostly anticipating future situations when there might not be anyone who earns enough to qualify. My husband and I are older than most parents, and our financial situation a few years down the line might be quite different from our current situation.</p>

4

<p>Marian, I think so long as she has established a credit history in the not too distant past she would not need a guarantor a second time. I work for an attorney who handles a fair amount of landlord/tenant issues - most of our landlords would not require a guarantor for a recent MBA grad with prior work experience and a positive credit history.</p>

5

<p>That’s exactly the kind of guidance I was looking for, Sabaray. Thank you.</p>

<p>The expertise on this board is amazing, as always.</p>

6

<p>I really don’t think it will be an issue 5 years from now. We ask parents to sign for their college students (sometimes!), but not for someone who would be, what, 27 or so by then? </p>

<p>She should be very timely and responsible in her current rentals so she can get good recs from the landlords if she needs them in the future and work on building a credit history. Even when she returns to grad school, she may have funding or a TA of some sort, so she might not technically be “unemployed”.</p>

7

<p>As far as the credit card, she doesn’t need to charge a ton on it. She can use it very sparingly and pay her bills on time; that is what builds a credit history. If she wants to charge $25 a month, that will be enough to show she pays her bills on time.</p>

<p>If she has a job she should be able to pay a small bill each month. Both my kids put some of their utilities bills on their credit card; this allows them to earn credit card points or cash back, while paying a bill they had to pay anyway.</p>

8

<p>Thanks for the guidance about how to use the credit card for maximum improvement of credit rating.</p>

<p>My daughter has a job (starting six weeks from now) and she is accustomed to using a debit card. She just needs to get used to buying some things on her credit card instead. Like many young people, she prefers to use her debit card because it’s what she’s used to and because she doesn’t have to take any further action (like paying a bill). But that’s a habit she will need to break.</p>

<p>One more question for you experts: I co-signed when my daughter got her credit card, but the people at the bank that issued it said that since her name was first on the account, its use would count toward her credit rating rather than mine.</p>

<p>She can probably get a credit card without a co-signer within a few months after she starts her job. Should she do that instead of continuing to use her current credit card?</p>

<p>As for paying bills on time, that will not be a problem. This is a very responsible young person, who has been paying rent at her off-campus apartment on time for two years now. Paying monthly bills where you don’t receive a notice in the mail (like rent) is hard; paying bills where you do get a notice (like with a credit card) is easy. I’m not worried.</p>

9

<p>We’ve found a couple of possible alternatives to the cosigner depending on the landlord - </p>

<ul>
<li><p>Some places will waive the income requirement as long as the renter has x amount in her account with that x being anywhere from 3 to 6 months x the monthly rental cost.</p></li>
<li><p>Some places will waive the income requirement as long as the renter puts down a larger deposit. They’ll still get the deposit back at the end of the rental period but the apt has it on hand for more of an offset in the event the tenant fails to pay the rent.</p></li>
</ul>

<p>Regardless of what the landlord says up front it’s okay to ask about alternatives that might exist like the above two I mentioned and also to keep in mind that not all landlords have the same requirements (which are sometimes ‘wishes’ more than requirements).</p>

<p>In areas right around larger colleges the complexes may be more used to renting to people without a work history yet with good payment records so if it’s an option for the area where she intends to live she might want to check out complexes by a larger university.</p>

<p>So far my kids have managed to stay in multiple large complexes in multiple parts of the country without me having to cosign.</p>

10

<p>One way my son established a good credit history was by paying his car insurance by credit card. He has USAA insurance as well as a USAA checking account and credit card. Rather than having his monthly premiums automatically deducted from the checking account or paying online by transferring the funds from checking, USAA suggested that he have the premium charged to his credit card. He pays his bill in full anyway (doesn’t charge much other than gasoline and the occasional Amazon purchase) so this was an easy decision.</p>

<p>Last week he graduated from college and moved into an apartment in the city where he will be working. The building management didn’t require a cosigner as long as his gross monthly income was at least 3 times the monthly rent, which it was. And he was told by both the local electric company and by AT&T that they wouldn’t require a deposit from him because of his excellent credit history. That alone saved him about $500.</p>

11

<p>To UCSD-UCLA_dad</p>

<p>My daughter offered to pay a larger deposit. The offer was turned down. She has enough money in the bank to cover the whole year’s rent. And the salary in the job she will be starting next month meets the “three times the rent” requirement. None of this helped. My daughter got the impression that at this apartment building, the rule is “new graduate = need for guarantor.” No exceptions.</p>

<p>Part of the problem may be that it’s a seller’s (landlord’s) market right now in the city where she will live. She discovered that there are very few apartments available right now in her price range in safe neighborhoods. The landlords hold all the cards.</p>

<p>I think there is a possibility that she might have been able to rent an apartment without a guarantor if she had looked in one of the neighborhoods near the universities in the city where she will live. But she didn’t want to do that because those buildings are full of students, and she will be a working person. She thought it would be too noisy when she would be trying to sleep. Also, the rents near the universities were higher than what she will be paying in a different area.</p>

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<p>We’ve had the same problem in the Evanston area. DD’s landlord last year and her possible landlord next fall both wanted more info than our mortage company - tax returns, pay stubs, bank statements, you name it. The guy agreed to waive all my financial details if she could show she had a year’s rent. Then he’s thrown roadblocks with everything we’ve shown - he wouldn’t count mutual funds in her name; when the bank acct was jointly in her mother’s name, he wanted twice the funds, and that too not just her share, but for all three roommates together. Must be a seller’s market there.</p>

13

<p>Very regional. DS is in about the same financial boat as the OPs DD and also has his UG degree. In fact he has had a credit card With good history for five years and we still had to cosign and guarantee.</p>

14

<p>H is going with D1 to go apartment hunting next week. We’ll see what happens. </p>

<p>D1 has been getting a lot of marketing mails of applying for a credit card, including AmEx… She is not interested because she doesn’t see the need. She has our cards.</p>

15

<p>Marian:</p>

<p>That’s too bad. It really doesn’t make sense when the person’s willing (and able) to put down a larger deposit and can demonstrate a large bankroll in the bank showing they’re not exactly destitute and will be able to make the rent payments.</p>

<p>There was one apt complex in the area around UCSD (a nice one) that made it pretty clear they didn’t want students and put some requirements on renting that clearly made it tough for students to be able to rent and probably made it tough for others just starting in their career also. However, there are plenty of other nice apt complexes in the area to choose from that didn’t have these requirements.</p>

<p>My kids found that the requirements did vary from complex to complex and sometimes they were stringent and sometimes they were flexible even if they didn’t advertise it. I’m sure this may be impacted by the region.</p>

<p>Is she getting the same story from lots of places?</p>

16

<p>My son’s prospective apartment required a guarantor because the roommates combined were $20K short of the required annual salary. Seemed to us, and we had the income to be the guarantor, that we were not interested in guaranteeing the rent for three Ivy educated and gainfully employed young men. Our advice was to find a less expensive apartment that they could qualify for. </p>

<p>They did, and are moving in next weekend! This one’s a nice place too, and substantially cheaper even tho the area of Manhattan is not quite as <em>hip</em>. </p>

<p>Your mileage may vary, depending on your child’s income, the city, the location, and the parental safety warning bell unit.</p>

17

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</p>

<p>The story she got from lots of places – several months back, when she made some preliminary inquiries – was “We don’t know about availability this far in advance. To know what’s going to be available around July 1, call us in late May.”</p>

<p>Then, when she called in late May, 9 of 10 places said “We have no studio apartments coming available between now and mid-July.” The 10th place had one studio apartment available. After finishing her calls to the rest of her list, she called this place back and said, “Yes, I’ll take it.” Two days later, after the credit check, she was told that she needed a guarantor.</p>

<p>Of course, there are other apartment buildings in the city, and there was the option of paying more and getting a one-bedroom instead of a studio. But she had pre-screened a lot of buildings for price, neighborhood, commuting distance, proximity to mass transit (and ability to function without owning a car), and good ratings on review sites (especially in terms of maintenance and safety), and these were the top 10 that fit the criteria. </p>

<p>I don’t think the problem is one of choosing an excessively fashionable neighborhood. The area where my daughter plans to live is not hip, but it is safe. I am comfortable with the idea of her living there from the safety point of view, and I don’t think she’s going too far upscale. After all, she does meet the income requirement (except that her job won’t start for a few more weeks). </p>

<p>Besides, my husband and I didn’t object all that strongly to the idea of a guarantor. As I said earlier, my main concern about guarantors is the idea that we might have to do it again years from now, when financial circumstances may have changed.</p>

<p>Actually, we might have to do it again as early as next week. Our son, who is just finishing a master’s degree, is also looking for a new place to live in a new city (not the same one as his sister) and will be visiting apartment buildings next week. I would not be surprised if we get another phone call.</p>

<p>Re marketing mail about credit cards: They don’t mean that the young person will necessarily be accepted without a co-signer. My son discovered this several years ago.</p>

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<p>My s found that with a good credit history and proof of employment in the new city he was relocating to, he had no problem getting a lease. Perhaps this is a good time for your dd to sock away savings as well, as this can help when rental agencies do a credit and bank check. Good luck!</p>

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<p>Marian, I don’t know much about renting in the city but I am pretty decent when it comes to credit. She doesn’t need to charge everything on her card, just something small and keep paying it off in full each month. If she opened the card in her name and you cosigned for it, it should show up on her credit report (and I think it will show up in yours too). If you aren’t 100% sure about that she can get a free credit report and make sure it is on there. If she opens up another card in a few months then she will have two cards on her report but I honestly don’t think that will help her too much at the moment… they look at length of credit, meaning how long the cards have been open. When you open a new card it seems to hurt your credit score a little bit at the beginning but then over time it will go up assuming you pay it off well… so two new credit cards so close together for her first ever credit may not be the best idea since it’s still low from not having anything established in the first place. I could be wrong on that though. Doesn’t she have any other credit? Like loans or anything like that? I mean no offense by this but it always amazes people who use their debit card for everything and don’t start building credit. My parents had both my sister and I start building credit when we were 16. Items that show up on my credit report (in chronological order) are first CC at 16 (w/ a cosigner - co-signers name was removed when I turned 18), my student loans (original loans as well as my consolidated loan, no co-signer), my car loan from when I was 21 (w/o a co-signer), my CC that I got when I was 22 and graduated w/o a co-signer), and my mortgage payment (w/o a co-signer). Oh and my Kohl’s and Best Buy cards. I have a score in the 800’s and my 22 year old sister is in the high 700’s. Her credit history is just like mine except her car loan was at 20 and she doesn’t have a mortgage nor the store cards.</p>

20

<p>Thanks for the advice, fendergirl.</p>

<p>I can see why you have a good credit rating.</p>

<p>My daughter has no student loans and will not be buying a car (she doesn’t need one; she will be living in an area with good mass transit). But she certainly will need to start using her credit card every month.</p>

<p>I think a lot of young people use their debit cards for everything simply because they started out that way. It’s habit.</p>