Landlords or renters... Info on debt to income ratio please. :) (Miami: apartment, renter)

[sflove]

Hi everyone. I'm wanting to sell my house while selling is good but the rent has gone up so much it seems you have to make 45k+ just to rent a basic 2 bedroom apartment going by the 3x's rule. I'm not super confident that we will be making over 40k in the next year or so, so I'm wondering how strict landlords down here are about the 3x's rule. Thank you!

[MyITGuy]

Originally Posted by sflove

Hi everyone. I'm wanting to sell my house while selling is good but the rent has gone up so much it seems you have to make 45k+ just to rent a basic 2 bedroom apartment going by the 3x's rule. I'm not super confident that we will be making over 40k in the next year or so, so I'm wondering how strict landlords down here are about the 3x's rule. Thank you!

Miami was a hot market when I was down there (Over a year ago now), so I would assume that income ratio still plays a big part in their decision making process (30-40% of your income or less is the recommended amount for rent/mortgage).

If you already own, why are you looking to sell just to end up in a rental?

[sflove]

Well, we would stay here but this area is not the greatest. It's ok for now but if the market has a steep correction or crash would lose a lot of money. We could make a good profit if we sell soon. This area got kind of ghetto during the recession and the houses honestly are built cheap. I don't know that we will ever buy again.

[doom1001]

Originally Posted by sflove

Well, we would stay here but this area is not the greatest. It's ok for now but if the market has a steep correction or crash would lose a lot of money. We could make a good profit if we sell soon. This area got kind of ghetto during the recession and the houses honestly are built cheap. I don't know that we will ever buy again.

Sell when prices are still high,sounds smart,there's no doubt about it Miami is WAY overpriced!

[sflove]

Yeah, I figure will eventually be a buyer's market again. Even if there is no crash it could make this place tough to sell

[Marc Middleton]

3x the rent is pretty popular. I don't do as many rentals as i used to, but I would figure about 4 out of 5 ask for income documents.

Ironically, its the higher priced rentals that ask for way less. Places that are $4k-$5k/month often don't even ask for income where as a $1500/mo place wants your first born.

Remember its before taxes, not after. If your pay stubs show a ton of deductions (like 401k, health insurance, etc.), then just have your employer do a letter on company letter head showing your gross income for the year including any bonuses. A lot of landlords will look at the NEt and assume you can't afford it and not even pay attention to the fact that you contribute 6% of your salary to 401k, withhold extra $ for past taxes, etc.

Sadly in Miami, $45k year is borderline poverty. You need to be making $70k-$80k to live in the good parts of Miami and not struggle with the day to day costs (expensive restaurants, expensive car insurance, etc.). There was an article recently stating the $70k/year threshold about Miami.

At $45k, you're looking at $1200-$1300/mo for a 2 bedroom. That's a pretty tall order in most of Miami and even hard in most good parts of Broward that aren't 55+year old/senior communities.

[JacobMAX]

Originally Posted by Marc Middleton

Sadly in Miami, $45k year is borderline poverty. You need to be making $70k-$80k to live in the good parts of Miami and not struggle with the day to day costs (expensive restaurants, expensive car insurance, etc.). There was an article recently stating the $70k/year threshold about Miami.

At $45k, you're looking at $1200-$1300/mo for a 2 bedroom. That's a pretty tall order in most of Miami and even hard in most good parts of Broward that aren't 55+year old/senior communities.

Especially taking into account that the County's average income is around 45k - and one of the lowest in the Country (big cities), plus the rents keep steadily rising; for example a small decent 2bd apartment in a low-rise in Dadeland is gonna be nearly/around $2k. Quite small studios in new Brickell or Gables buildings are around the same price, I don't even know how much is a sizable 2bd but probably more than 3k, and going up. I was looking at houses and one (not even really nice) of them in West Dade had 5 offers, another one I looked took less than a week to rent.

For most people, the way it is with rentals now, I'd just recommend living someplace in South/SW Broward to not pay as much and live in a nice, safe and good neighborhood - and just put up with the commute, which might not be so bad depending on the area. Rental prices are completely non-sensical in Miami-Dade, nowadays it's usually better to go north or maybe buy.

[bale002]

Originally Posted by Marc Middleton

3x the rent is pretty popular. I don't do as many rentals as i used to, but I would figure about 4 out of 5 ask for income documents.

Ironically, its the higher priced rentals that ask for way less. Places that are $4k-$5k/month often don't even ask for income where as a $1500/mo place wants your first born.

I rent a unit somewhere in between those two figures and the criteria usually is three months rent/security deposit cash down in advance (so if monthly rate is $2,500 then $7,500 in cash upfront) and a personal background/credit check.

Ironic perhaps, but I suppose the reasoning is that if the renters can come up with some $7,000-$15,000 cash up front, then they probably have a big balance sheet, in addition to whatever employment, business and investment income.

At the $1,500 or lower level, the renter is probably depending solely on wage income, which is a relatively bad place to be in today's global economy.

To the OP, we don't know if the market will experience a sharp downturn, but there is nothing wrong with taking profit, and if the house is in a "B" or "C" neighborhood, its market value would be most affected by a sharp market downturn compared to, say, SFHs in "A" neighborhoods.

Good Luck!

[sflove]

We are actually already in South Broward although my husband is dying to move back into Dade. But that's probably not happening until we find better employment ( which we are currently in the process of looking for). We really have no reason to move South unless a new job winds up being in Miami. We will see I guess.

[Marc Middleton]

I mean 4% Unemployment, everyone is hiring..if you each can't get a $40k+ job, then there is something wrong with where you are applying, what you are applying for, etc.
My mother-in-law just moved back to S. Florida and at 60 years old with no college degree and 10+ years bookeeping experience, was able to get 5 interviews and 2 job offers in 1 week, all paying $44k-$49k/year.

Waiters/Bartenders at decent resorts/hotels make that which is why college grads in Miami go for that rather than a corporate job paying the same wage. Then they work their way up to better ****s making $55k-$75kyear or parlay their experience into a better/higher earning potential restaurant/hotel.