Lease requirement: 3 times your salary? (apartments, rental, credit rating)

[wall st kid]

Have a question. I have a friend who's looking to rent an apt in LA. Its not from an individual, its in an apt complex thats run by an out of state company. On the lease, it says that the income requirements you need to earn 3 times annual rent and show proof. She wont make the cutoff (the apt she wants to rent is like 1900 and she doesn't make 70k).

Did anyone ever get turned down on something like this? how strict are they about the 3x rule, does anyone know?

Thx

[perks]

One-third of monthly income is the generally standard limit. Unless she has zero debt and a sky-high credit rating, I wouldn't expect a corporate-run complex to cut her any slack.

[Des_Demona]

I agree with the above poster. If she can show other forms of income though like alimony, child support, or regular deposits into the account from some other source and use it as steady income that might work. Or have someone co-sign with her who can bring the total income up. I did that with my aunt when I had to make the 3 times the rent quota for my 1600 dollar place. Even if the other person isn't living there they can just pretend to live there like a parent or something and co-sign. If your friend wants to rent a 1900 dollar apartment in LA and doesn't make 70k though... I doubt she's going to do to well here. I think that's kind of the point of that requirement. If you don't make at least 100k, you can't really live here without suffering and struggling.

[Kingsnkali]

That rule sounds stupid. Many people out there could live fine on the rent ($1900) being 50% of their take home income. Is that rule based on gross salary (income)? They would have to look at your debt load/credit history to make a broad rule like that make any sense of fairness.

I could live like a KING on $3800 extra a month after rent!

And even if the rule was based on gross income, you would probably still have close to $2800 left over after rent. Seems high to me. Especially for someone using public transportation etc.

[LivingLikeAGradStudent]

But if a person with a higher debt(housing)-to-income ratio decides to buy a car or take a trip or pay for a funeral, it would be that much more difficult to pay the rent. And $1900 for one person is a pretty high rent in L.A., especially for someone who doesn't make a great deal of money.

[perks]

Kingsnkali, the 1/3 ratio is generally based on gross (pre-tax) income. So, assuming you take home 2/3 of your paycheck after taxes, then theoretically 50% of your take-home income could be spent on rent...and I think that's a perfectly reasonable limit.

From the perspective of a former landlord, I'm not sure I'd be comfortable renting to someone who spent two-thirds of their after-tax income on rent. What happens when their car finally quits, or their kid needs braces, or they get laid off work? Their ability to fulfill their rental obligations while they deal with their financial emergency is going to be significantly diminished. Why would I even dare risk my rental income in that fashion?

[Josh22]

Not all places require 3 times that rent, I've heard as little as 2 times the rent. (and some landlords may not even require an exact limit, it just depends on who the owner is really and if they are willing to rent to you or not)

Although I think the 3 times limit is pretty high. If the rent is say $800 a month, and you make $2,000 a month ($13/an hour, 40 hours a week), then you'd fall short of the income require. Three times $800 = $2,400. I think they should be less strict on the requirement, but it all depends on the owner.

[perks]

The flexibility will probably depend on the cost of the apartment. Managers of lower-end units are going to be more lenient on your income than managers of higher-end units that would attract wealthier tenants.

[Des_Demona]

Yeah when we talk of 3X rent price we are talking huge corporation apartments and upscale luxury places. Not independent landlords or lower income housing. Those places can be very lax on the requirements.

[javonnibrustow]

YEA... im trying to figure out the same thing. I was told today that my salary should be 4x! Rent'll be about 1350-1590. Hypotheticly... grossing 3200/mo and not paying taxes on it. Would that work? 4x though? What the hell? 4 times would be 76,000. Should I apply anyway? A second person will be swithcing jobs and will be making more. Together the salary might be close to 80k or so soon. Any thoughts?