Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Seem to me that the standard formula of 40 x monthy rent = Gross income that many landlords in NYC require should be tweaked for New Yorkers who don't own a car and don't plan on having one.
My rationale is as follows. Most national - not just local - financial experts suggest that under normal circumstances, one's budget for rent should be between 25%-30% of one's gross income. Now, we're talking recommended for average situations (if one can spend les, great). Here In NYC when the 40 x rule is applied , it results in one paying 30% of one's gross in rent. This then falls within the national range that the pundits suggest.
My argument that landlords ought to increase that percentage and allow potential tenants without a car to pay a higher percentage of their income on rent is premised on the fact that in many parts of the five boroughs one does not need a car and many indeed do not own a car. There are car buying sites such as Edmond's that estimate the true costs of owning an average car - and that amounts to about $500 - $700 a month (not surprising, when one consider all the costs of car ownership - insurance, gas, depreciation, interest lost on down payment, parking, etc.)
Therefore, my contention is that since in NYC someone who chooses not to own a car is saving that sum less public transportation costs, then indeed, the nationally suggested budget allocation for rent as a percentage of income should be adjusted by landlords in NYC thus allowing a tenant to qualify for rent that is a higher percentage than 30% of gross income, i.e one should be able to enjoy/qualify for a unit where one's income can be 35 times rent instead of the standard 40 x rent guideline.
Any Thoughts?
Last edited by Moderate Guy; 11-24-2008 at 09:08 AM..
Reason: typo
I don't understand the 40x rent formula. People on this forum say that it's how most landlords operate in NYC... which is confusing because millions of people in NYC have family incomes lower than that requirement. How many New Yorkers actually pay less than 1/3 of their income on rent?
I don't understand the 40x rent formula. People on this forum say that it's how most landlords operate in NYC... which is confusing because millions of people in NYC have family incomes lower than that requirement. How many New Yorkers actually pay less than 1/3 of their income on rent?
You have situations where 4 or 5 people live on top of each other sometimes to meet the requirement thus qualifying for a closet.
You have situations where 4 or 5 people live on top of each other sometimes to meet the requirement thus qualifying for a closet.
I'm talking about household income though. Median per capita income is less than half the 40x rule for a $1000 apartment. Median *household* income in NYC is still under 40k. A household can have 4 or 5 people. So there are millions of people in NYC whose *household* income is less than what would qualify for a simple $1000 apartment (jamming 3-5 people into a studio) under the x40 rule.
I'm talking about household income though. Median per capita income is less than half the 40x rule for a $1000 apartment. Median *household* income in NYC is still under 40k. A household can have 4 or 5 people. So there are millions of people in NYC whose *household* income is less than what would qualify for a simple $1000 apartment (jamming 3-5 people into a studio) under the x40 rule.
That figure would include people who live in NYCHA projects or who receive Section 8 assistance. Some Mitchell-Lama rentals might be included in this figure at the lower end, but this program is more for moderate-middle income wage earners.
That figure would include people who live in NYCHA projects or who receive Section 8 assistance. Some Mitchell-Lama rentals might be included in this figure at the lower end, but this program is more for moderate-middle income wage earners.
True, but that's probably only 10-20% of the population at most. I don't know Mitchell-Lama and the others, but the projects and Section 8 combined only cover 8% of NYC residents. Plus, how many of those are living in Queens, where the household income is still under 40k?
I'm talking about household income though. Median per capita income is less than half the 40x rule for a $1000 apartment. Median *household* income in NYC is still under 40k. A household can have 4 or 5 people. So there are millions of people in NYC whose *household* income is less than what would qualify for a simple $1000 apartment (jamming 3-5 people into a studio) under the x40 rule.
You've got to factor in a number of circumstances for this seeming discrepancy.
There are many landlords, for example, in the outer boroughs in single/multi family houses who rent out attics, basements, bedrooms, etc., and don't report that as rent income and coincidentally their tenants don't report their income for census, demographic, financial reporting purposes and are thus excluded from the stats you quoted.
Also remember that there are approximately two million NYC residents in rent controlled/rent stabiliized units who further skew the data. Finally, note that you quoted a median which would mean half above, half below as vs. an average.
Last edited by Moderate Guy; 11-24-2008 at 12:32 PM..
Reason: typo
There are many landlords, for example, in the outer boroughs in single/multi family houses who rent out attics, basements, bedrooms, etc., and don't report that as rent income and coincidentally their tenants don't report their income for census, demographic, financial reporting purposes and are thus excluded from the stats you quoted.
That's a good point. But still, the median household income the areas that tend to have large apartment complexes are still under 40k. (looking at a thematic map of census tracts) Basically almost all of Brooklyn and western Queens, for instance. I've been looking at ads on craigslist for these areas, and usually they'll mention they require things like a credit check, but not a 40x income requirement -- the 40x is mostly in Manhattan ads that I've seen.
The areas where more apartments are probably illegal and/or tiny rooms of small buildings have higher median incomes. Obviously the areas full of projects have very low incomes... some census tracts under 15k per household.
Quote:
Also remember that there are approximately two million NYC residents in rent controlled/rent stabiliized units who further skew the data.
So that 40x requirement doesn't apply to rent stabilized units?
So that 40x requirement doesn't apply to rent stabilized units?
The rule does NOT apply to Section 8, Mitchell Lama, Rent Stabilized, Rent Controlled, illegally rented basements, attics, bedrooms, etc. The rule I introduced in the thread was meant to focus on the free market rental standards set currently by most NYC landlords in Manhattan and some buildings in the outer boroughs.
I agree. It is a little frustrating to be told that you don't qualify for a more expensive apartment when you're quite sure that you can afford it, knowing your own expenses and such.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
