One Reason Why Many Urban Renters Can't Just Move, Even If They Still Have Money

[Guest guest]

I thought many people would like to see why the laws concerning landlords

who rent moldy apartments have to be toughened up. Many urban renters can't

move with ease, especially if they have become unemployed because of mold

illness. They would not be able to find anyplace to move to. Not 'any nice

place' - Anyplace.

This article is in the New York Times so it's about New York City, but the

situation described here applies to some degree in any large city that has a

similar scarcity of rental housing. Basically, rental housing is

increasingly scarce in a lot of places because many people can't afford to

buy (For example, in San Francisco, even the smallest one bedroom

condominium costs a half million dollars)

Even if you are employed, that is a huge amount of money, if you are

unemployed, forget about finding any place, anywhere. You don't have any

choice but to try to hang on to 'what you've got', really. You won't get

anything else until you get back on your feet, financially, and have been

that way, employed in a good paying fulltime job, for at least a year.

___cut here_____

http://www.nytimes.com/2006/11/26/realestate/26cov.html

Only the Strongest Survive

By TERI KARUSH ROGERS

ALTHOUGH qualifying to rent an apartment in New York City is not yet as

tough as winning admission to Harvard or Yale, it increasingly feels that

way to a large contingent of aspiring tenants — even if they actually

attended Harvard or Yale and easily passed muster with their previous

landlord.

Among the 50,000 background checks run this year on Manhattan tenants by

On-Site.com, a national background-checking and leasing service used by some

landlords and managing agents, fully 41 percent of applicants garnered a

rating of either " reject " or " maybe " (21 and 20 percent respectively).

That means a fifth of would-be renters are being shown a different door than

they had hoped, while another fifth struggle to upgrade their conditional

status.

With paychecks lagging behind the 10 to 15 percent rent increases for

market-rate apartments over the last year, many more would-be tenants fail

to scale the standard annual income threshold of 40 to 45 times the monthly

rent.

That means that if you want to rent a studio for $2,000 a month, you need to

earn $80,000 to $90,000 a year (much higher figures, by the way, than the 36

times the monthly rent required in the rest of the country).

Renters who flunk the income test must prove themselves in other ways.

Landlords are demanding extra cash up front, solid credit records and local

guarantors who earn around twice the income threshold and are willing to

bare their finances to both strangers and kin. Even then, a history of

litigation against a prior landlord usually triggers automatic

disqualification.

Landlords can afford to be picky, because vacancy rates have lurked beneath

1 percent for a year, according to figures provided by Citi Habitats. And

they defend their standards quite simply: higher rents mean that more money

is at stake if a tenant stops paying.

" It's very pro-tenant here in terms of the courts, " said L. Malin, the

chief operating officer of Citi Habitats. To evict someone who isn't paying,

" it can take six months to go through the right legal process, " he said.

" That's six months of no rent. "

Unhappily for apartment seekers shackled with a housing court history,

landlords usually slam the door. " It is the policy of 99 percent of our

customers in New York to flat out reject anybody with a landlord-tenant

record, no matter what the reason is and no matter what the outcome is,

because if their dispute has escalated to going to court, an owner will view

them as a pain, " said Jake Harrington, a founder of On-Site.com, based in

Los Altos, Calif.

Around 15 percent of New York City applicants processed by On-Site.com have

been involved in landlord-tenant court cases, a " drastically higher " figure

than found elsewhere, Mr. Harrington said. Renters are presumed litigious if

they stopped paying rent to a slumlord or even if they acquired a court

record by mistake.

Jill Jordan, a Halstead Property agent, said she had a client who paid two

months' rent in advance before leaving on a lengthy trip. The landlord

failed to account for it and filed a collection action against the woman

that surfaced in a background check when she wanted to rent her next

apartment. That triggered a demand for a bigger security deposit and

requests for more financial information from her guarantor. He declined, and

Ms. Jordan's client had to walk away.

Countering a court record is difficult but not necessarily impossible. By

law, it cannot be reported after seven years. For people who want a place to

live now, not five years from now, an upfront confession with supporting

documents can turn things around.

" More information is always helpful, as far as we're concerned, " said Laurie

Zucker, the vice chairman of the Manhattan Skyline Management Corporation,

which manages 35 rental buildings in Manhattan. " There may have been a

problem with the apartment like a leak. You never know. "

If you have any blemish on your record, smaller landlords may be more

lenient, especially for renters able to pay more upfront. " You'll have a

much easier time dealing with them, " said Barak Dunayer, the president of

Barak Realty.

He recommended seeking individual owners who are leasing condo units. " I can

usually kind of talk them into it, " he said. " Whereas with those big

landlords, I'll be lucky if they return my calls. "

JoAnn Schwimmer, an associate broker at DJK Residential, agreed that smaller

landlords tend to be less selective. " I want to say it's because they

haven't been burned as many times, " she said.

Whether a landlord owns one or many dwellings, tight supply means he or she

can aspire to renters with sterling credit histories. " Before, if you had

bad credit, landlords would take either a guarantor or six months' or a

year's security or rent upfront, " said Amy Herman, an agent at Halstead

Property. " I see a lot less of that. They're looking only for a person with

good credit. "

Anita Ray, a 31-year-old merchandise planning consultant, thought her credit

was good enough.

" I work so hard, I have a college degree, I make so much money, I have an

incredible career, and I can't rent a place, " lamented Ms. Ray, whose

college run-in with credit cards cropped up like a cold sore during a

fleeting apartment search this summer.

Ms. Ray said she had been a model fiscal citizen since graduation. But the

managing agents of two no-fee luxury buildings downtown disagreed that her

credit had been rehabilitated enough by a decade of good behavior. They

demanded security deposits ranging from $5,000 to $10,000, despite Ms. Ray's

offer to produce an out-of-state guarantor and a very qualified local

co-signer.

Ms. Ray balked. She chose to remain in her $1,700-a-month Upper East Side

walk-up (whose landlord had required only a guarantor), an apartment she had

found with the help of Ms. Schwimmer.

" It kind of makes you feel like you've done something wrong, " Ms. Ray said.

" You feel like a kicked puppy or something. Now I'm looking to buy a condo.

Not a co-op. I don't want to go through this again. "

Even as credit history is increasingly viewed as an oracle of

rentworthiness, too much reliance on it may handicap renters unjustly while

painting an unrealistically positive picture for landlords.

One reason is that reports furnished by the three major reporting agencies

may hold inaccuracies. Equally troubling for both landlords and tenants is

credit bureaus' scoring. Consumers are graded on a scale of 300 to 850,

producing a so-called FICO score. But the score is geared toward creditors,

not landlords — and creditors, unlike landlords, seek customers who carry

interest-accruing balances on their loans and credit cards.

" So the most financially sound person is going to pay off their credit-card

balance in full, but the best credit-card customer is not that person, " said

Mr. Harrington of On-Site.com, which weighs FICO scores against factors like

references from prior landlords, housing court history, length of employment

and cash flow. Applicants with FICO scores below 650 receive closer

scrutiny, but high scorers are not given a pass.

" We have people all the time with a 700 to 800 FICO score, but their

landlord-tenant record is horrible, " said Mr. Harrington, citing a recent

incident in which his company called the former landlord of a woman who had

moved to New York from Georgia. Although her income and credit were

excellent, her ex-landlord reported that she had not paid the rent for three

months and abandoned her dog when she left.

" She had plenty of money, " Mr. Harrington said, " but she was a really

irresponsible resident. "

Even with a dicey credit report, a would-be renter who has lived through

extenuating circumstances — a divorce, for example — can be greenlighted.

" For some reason, when people go into a divorce, if it's nasty, people stop

paying their bills more often than not, " said V. Maschi, the

director of leasing for Glenwood Management, which handles more than a dozen

luxury buildings in Manhattan. " If it's a housewife who wasn't working, it

depends on where she is in the divorce. If there's been a settlement already

and she's getting support from her husband, we just look at that as income.

If not, we ask for a guarantor. "

Smaller landlords who rely on brokers to screen applicants can get an

incomplete snapshot, which opens a loophole for second-string tenants to

squeeze through.

" A broker's interest is most typically getting the deal done, " Mr.

Harrington said. Brokers make up about 10 percent of his New York clients,

he said, and they tend to request the least thorough (and least expensive)

background check that On-Site offers.

Sometimes, too, a large security deposit or a chunk of prepaid rent, usually

credited to the last months of a lease rather than the first, can offset

deficiencies in credit, income or employment history.

Most landlords expect tenants to have worked at the same place for at least

a year. Being between jobs is " kind of the worst thing ever, " said Jeff

Vogel, a senior agent at Citi Habitats.

If a tenant's record is less than blue chip, many landlords ask for a

guarantor within easy litigation distance (defined as New York State, New

Jersey and Connecticut) who earns anywhere from 60 to 100 times the monthly

rent. But guarantors also tend to come in the form of parents — an

infantilizing proposition for some renters.

" Unfortunately, when you try to rent in New York, you're very dependent on

your parents, " said Lux, a 24-year-old senior analyst for Stern

Investor Relations, who recently rented her second Manhattan apartment.

While her first landlord required only one guarantor for two roommates, the

new one wanted guarantors for two of three roommates.

" It was really hard to get all of our parents together, " said Ms. Lux, " and

it's hard, too, because you've been living here a year and trying to make it

on your own. "

Ms. Lux may be comforted by knowing that landlords apply similarly high

standards to much wealthier tenants. Last year, Gretchen and Weir sold

their 10-room apartment on the Upper West Side for $6 million — their total

investment was $1.3 million in the 1980's. The Weirs — she is a freelance

book editor, and he a substance-abuse counselor — sought a temporary rental

while they looked for a smaller place.

E. Vazquez, an associate broker at Coldwell Banker Hunt Kennedy, helped

them and their two teenage children find a three-bedroom apartment for

$10,000 a month. Yet because the Weirs didn't earn $400,000 a year, their

landlord requested and received a security deposit equal to six months'

rent.

Beyond requests for extra money and guarantors, many owners are tightening

requirements on pets and roommates.

Some are also screening out tenants for various, often idiosyncratic

reasons. Landlord repellents are said to include people with particular

occupations, like lawyers (too litigious) and musicians (too loud).

But paroled murderers and sex offenders may sail right through. Counter to

the national trend, most of the city's landlords match applicants' names

only to terrorist lists, said Mr. Harrington of On-Site.com. Gaining access

to New York State's Balkanized criminal records costs an extra $60 and

delays the application process by about a day, he said. And many landlords,

he said, believe that most crimes don't predict the risk of default.

For their part, brokers present a compelling case that their services pay

off for anyone with a blip in his or her past, provided that the client

finds the broker through a personal recommendation, rather than by

responding to an online ad.

" Agents know their landlords' preferences and are able to play matchmaker, "

said Chad , an agent at Mark & Company.

Brokerages sometimes curate lists of landlords who are more forgiving than

others. Halstead's includes Archstone-, a real estate investment trust

that owns 11 luxury buildings in Manhattan and applies the same

comparatively relaxed tenant standards to its buildings nationwide, a

tranquilizer in the high-strung New York market. " You shouldn't have the

same feeling in your stomach as when your dentist tells you that you need a

root canal, " said Jack R. Callison, an executive vice president of

Archstone-.

For second-tier renters who can't afford Archstone-'s price of

admission, the cold months are a strategic time to start an apartment hunt.

" It's always good to look in November through January " — traditionally a

slow period for rentals, Mr. Dunayer said. " Landlords have their properties

sitting on the market longer and may be more accommodating to anybody who's

less than perfect. "