Atlanta Property Management Blog

Renting out an investment property? Here's how to find a reliable tenant

System - Monday, March 27, 2023

If you've purchased an apartment or townhouse in New York City to rent out, it can be a solid investment—but only if you find reliable tenants. The same goes if you've outgrown your space and are looking to rent it out in the current white-hot rental market rather than selling in the sluggish sales market. 

Either way, as a first-time landlord in NYC, navigating the rental landscape can seem daunting. Should you work with a broker or handle the listing yourself? What are the most reputable search websites? What types of information should you require? 

Besides protecting your property, finding a tenant who is financially and otherwise responsible will save you the hassle of dealing with disputes later on. NYC law is notoriously pro-tenant and recent changes have only strengthened that stance.

Plus it's hard to have a problem tenant removed. "Landlords are not in the business of evicting people. It’s the last thing we want to do," says Arik Lipshitz, CEO of DSA Management Group. "The only way to prevent evictions is to screen applicants properly before they move in. It’s more important now than ever."

As such, "the rental process in NYC is different than in other parts of the country as there are often approval processes by the building (depending on the property), which often include a credit check and processing fees for the potential tenant," says Julia Hoagland, a broker at Compass. 

And renting an apartment involves more than just posting a classified ad. You'll want to be strategic about pricing and marketing it to get the best ROI—and having your screening protocol figured out before listing so you don't miss out on qualified renters. 

Because in addition to location, timing is key in real estate. So the following guidance starts with the rules and tools and then covers ways to reach your target audience—all with the goal of landing the best possible tenant.

What can you consider when reviewing applicants?

Given the regulatory landscape, many leasing agents and landlords require applicants to provide a fairly thorough dossier—pay stubs, bank statements, tax returns, proof of employment or other funds (for gig workers), and personal and professional reference letters. They also impose a 40 times the monthly rent rule as a way of ensuring financial viability. 

That said, Dan Kandinov, an agent at Corcoran who works with small landlords, developers, and individual investors on rentals, says the 40 times rent rule shouldn't be black or white. "If someone is making 35 times the rent but has a good amount in savings, I think that should be taken into account along with landlord reference letters and all the rest," he says.

A credit check is also a must. "Our application includes a credit check and proof of income primarily, with credit being the most important in our view," Lipshitz says. "We prefer the low-income/high-credit applicant to the high-income/low-credit applicant." 

Scott Harris, an agent at Brown Harris Stevens, says they run a credit check and look at bank statements and the first two pages of tax returns. "This is a small hurdle, and it usually gives us enough data to know that your tenant is qualified and isn't going to be difficult."

And now that landlords can no longer reject a tenant solely because of information from the NYC housing court, you may want to follow their lead by relying more on criminal background checks and reference letters from previous landlords, especially since rental payment histories are not part of a credit check. 

Landlords are no longer able to collect a security deposit plus the first month's rent upfront, either, heightening the need for greater financial scrutiny. 

"Before the new rental laws, students and international renters might be stuck paying multiple months upfront," Kandinov says. Now he advises asking for a guarantor, typically someone with 80 times the rent in income "but we need to look at the whole application to make a decision." If that's not viable, he suggests pointing applicants to third-party guarantors like Insurent (fyi a Brick sponsor), which guarantees the leases at no cost to you.
You'll want to beware of renters who put applications on more than one property to avoid losing out on rentals—and then back out at the last minute since there's nothing at stake, says Erin Wheelock, an agent at Keller Williams New York City.  

She also reports that a lot of renters are asking for a right of renewal as a way of staving off steep rent hikes (in the wake of the pandemic) but recommends that any such renewal will be explicitly based on mutual consent  "The last thing you want is to end up being stuck with a tenant who was a nightmare. Weigh the pros and cons of having the same tenant at X price for two years but make sure the language is that you get to decide after the first year in case that person ends up causing trouble."

If you are considering listing on Airbnb, know that NYC requires a minimum stay of 30 days and that's only when the host (i.e., you) are present during that stay. That said, if you qualify, Wheelock says it's often the best way to recoup your purchase price and more.

How to go about listing the rental on your own

As with anything else in life, networking is often the safest bet—spread the word among your trusted friends and relatives and anyone else to see if they know of anyone who is looking for a rental in the city. Post it on your social media feeds. 

Otherwise, Harris says that posting online is the best way to go. StreetEasy is by far the most popular among landlords and brokers (and renters). The platform is easy to use and includes a free floorplan and 3D tour (through its affiliation with Zillow). It costs $185 for your ad to appear for two weeks, $250 if you want your ad to be a featured listing). 

Many NYC renters swear by RentHop (which per the website has 500,000 monthly visitors and generates 150,000 monthly leads). The basic a la carte plan is $20 for a seven-day listing. Landlords like being able to see an interested renter's full contact info, including maximum budget and preferred amenities.

The New York Times real estate classifieds cost $288 for a basic six-line ady to appear in the Sunday edition or $400 for Friday through Sunday (they no longer run classifieds online). You will need to send your listing to by Thursday at 2 p.m. to be included in that weekend's paper. 

If free sounds about right, you can list your rental on Craigslist, though scam stories persist and the onus is on you to suss out who's legit or not. 

Facebook Marketplace also costs nothing but at least you can rely on the public forum to weed out ne'er-do-wells. Plus there are groups such as Apartments and Rooms to Rent in NYC and NYC Sublets & Apartments that target people looking solely in the city.

Other free sites include CityRealty (for up to two listings), which claims to reach 10,000 potential renters. 

Once you have interested renters, you can hire a screening company (such as TSC or American Apartment Owners Association) to run credit checks to see if they meet your standards, but you can only ask the tenant to reimburse you $20.


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