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Old 02-21-2014, 01:54 PM
 
Location: Manhattan, New York (Hell's Kitchen)
77 posts, read 132,998 times
Reputation: 119

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I'll apologize upfront is there's already a thread somewhere hidden on this - I searched and couldn't find it (although there are plenty of 40X threads, none I could find touched on these items.)

So I've been in New York for around 5 years, and am on the brink of a promotion that *should* put me in an income range where I can comfortably afford a large 2 bedroom in Manhattan and still save what I have targeted. Since moving here I've lived with roommates and just been added on to their leases, so I've only been indirectly exposed to the 40X rule.

My question is - 40X of what exactly? If you just get paid a flat salary and have no before-tax retirement contributions, bonuses, etc., that's clearly a simple question. However there are at least 5 "income" numbers I could list, and I'm sure many are in the same boat:

- Total gross income from year-end paystub including discretionary performance bonuses (largest)
- Taxable income from W-2 (generally the above minus before-tax deductions like 401(k)) (2nd largest)
- Annual salary, not including bonuses (3rd largest)
- Taxable income from W-2, not including bonuses (4th largest)
- Net income (smallest)

What are most landlords looking for, if there is a fixed and general "standard"? Obviously I'd prefer to base this on my total all-in gross income, but I wouldn't be surprised if landlords wanted to base it on salary only. Also, do landlords generally look at this for only one year?

Thanks in advance!
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Old 02-21-2014, 03:04 PM
 
2,848 posts, read 7,548,561 times
Reputation: 1672
Quote:
Originally Posted by HK10019 View Post
I'll apologize upfront is there's already a thread somewhere hidden on this - I searched and couldn't find it (although there are plenty of 40X threads, none I could find touched on these items.)

So I've been in New York for around 5 years, and am on the brink of a promotion that *should* put me in an income range where I can comfortably afford a large 2 bedroom in Manhattan and still save what I have targeted. Since moving here I've lived with roommates and just been added on to their leases, so I've only been indirectly exposed to the 40X rule.

My question is - 40X of what exactly? If you just get paid a flat salary and have no before-tax retirement contributions, bonuses, etc., that's clearly a simple question. However there are at least 5 "income" numbers I could list, and I'm sure many are in the same boat:

- Total gross income from year-end paystub including discretionary performance bonuses (largest)
- Taxable income from W-2 (generally the above minus before-tax deductions like 401(k)) (2nd largest)
- Annual salary, not including bonuses (3rd largest)
- Taxable income from W-2, not including bonuses (4th largest)
- Net income (smallest)

What are most landlords looking for, if there is a fixed and general "standard"? Obviously I'd prefer to base this on my total all-in gross income, but I wouldn't be surprised if landlords wanted to base it on salary only. Also, do landlords generally look at this for only one year?

Thanks in advance!

40x the gross annual income. So if you are looking at a $3,000/month apartment, you should make at least $120,000. Landlords may vary on whether they allow you to include bonus, since that is variable income, but I was always able to include it.

In terms of what landlords look for, it depends. Of course someone who can afford the place. They typically run a credit check as good credit is indicative of good behavior. They may ask for employment verification. Some do not allow pets. If you look at a co-op it becomes a lot more complicated because you need to be approved by the board, and it can come down to simply not liking you.
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Old 02-21-2014, 04:03 PM
 
Location: Manhattan
2,498 posts, read 3,748,782 times
Reputation: 1608
I'm a real estate agent and landlord/management companies look for 40x's the monthly rent on your annual salary.

NOT including bonuses and not exactly what your tax returns say.

Whatever your employment letter and pay stub dictate along with possible mention of bonus pay in the employment letter may help but I've had denials only cause of the employment letter not meeting the 40x rule.
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