I've heard that Manhattan rental apartments require that you make at least 40 times more than the monthly rent in your annual BASE salary, not including bonus. So let's say a finance professional has a base salary of only $100K but makes about $300K in bonus. Does that mean he can't live in an apartment that costs more than $2500/month in rent even though he can clearly afford to live in a much nicer place?
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i think that is for someone who is just starting a job and has no savings. i for example will be just coming out of college and making 60k this year, but likely getting a bonus that big at the end of the year. however, with no prior bonus to keep me afloat, i really only have that salary during the first year to pay off rent and other expenses. the 2nd/3rd year i am in manhattan though i would have that bonus savings to be able to rent a much nicer apartment. it's a cash flow issue.
Just have your parents co-sign the apartment with you.
********"Babies don't cost money, they MAKE money." - Jerri Blank********
I don't know of any landlords that will look at your savings rather than income. It has been my experience that no landlord will put faith in this unless you've got some very serious savings. As atropolation suggested, having your parents co-sign the lease is an acceptable work-around here.
There are some additional ways around this, however. For example, if your offer letter specifies a targeted bonus, most landlords will allow this to be considered part of your base salary. This is how I handled the "proof of income" requirement when signing up my apartment.
Smuguy97,
If you don't mind me asking, how much are you paying for rent in your new apartment? From talking to people, it seems like finance people upgrade their apartments quite frequently in Manhattan. But their base salaries don't really change; it's their bonus that goes up drastically.
I ran into a couple of landlords who required a co-sign even though I (barely) made the income requirement. Bottom line is sometimes even if you pass the requirements, you don't pass the requirements especially if you're straight out of college.
I pay $2,950 for a single. However, when I initially came out of undergrad, I shared a two-bedroom and our total rent was lower than my current rent.
the 40x rule is generally used by all brokers. To not go by it, you have to have a significant amount of cash. I had a million after undergrad in one of my accounts and they laughed at it....and I remember a guy in my old job (a MD) talking about this.
So if it's 40 times just the base salary, who lives in these ridiculous apartments that charge $5000+ for rent? There's almost no job that has a BASE salary of say, $500K.
have to have a lot in savings. Or you buy a place. a broker isn't going to count your bonus as guaranteed salary - b/c it's not. Especially earlier on in your career. That's why you trade up during the years...once you have some good savings, you are fine. And unfortunately, most mgmt companies wont' take a full years rent in advance...
And a lot of these ridiculous apartments are held by people with MORE money than investment bankers. yes, inv bankers contribute to a lot of the wealth in manhattan, but there's old money and tons of foreign wealth.
I don't know EXACTLY how the 40x thing works I just remember guys talking about it at work...
Maybe it depends on the broker or on your line of work in finance, but the owner of my apartments had no qualms including both my salary and expected bonus referenced in my offer letter as my "base compensation". Perhaps it is different in sales / trading jobs, but at the PE fund where I work you can expect at a minimum to receive the "targeted" bonus.
A $5K per month apartment requires base compensation of $200K (not $500K), so its really not that ridiculous.
That seems a lot more accurate. Why don't you just call and ask a broker that very question re:rent. It would save you a ton of time.
********"Babies don't cost money, they MAKE money." - Jerri Blank********
As first year analysts, most of you will be capped off at $1500/month (60K salary) from landlords. Anything more and you will need someone to co-sign (80x-100x for cosigners).
After you get your first year bonus, you can move up. Having earned your bonus, it is easier to convince the landlord to include it in your total comp. If you bonus is guaranteed, many landlords will let you use it for your comp.
Now, a little bit of advice, don't spend every penny on rent. Share an apartment with some friends and 1500 should be fine. getting a 1-bedroom convert for 2 people isn't tough. It is much easier splititng an apartment with 3 or more people to fit under the 1500 budget.
Most of your signing bonus will go towards furniture an apartment fees. Security deposit and brokers fees of 1 month will eat nicely into your signing bonus. That nice flat screen tv will eat in your signing bonus.
First year is rough on your finances. Don't make it any tougher. Suck it up for a bit and you can start living large as a second year.
Some analysts with deep pockets buy their apartments. However, unless you're seriously loaded, I don't suggest this. Most analyst programs are 2-year stints, and many go somewhere else afterwards. After factoring closing costs an interest expense, it is tough to break even on buying an apartment within 2 years without a large price appreciation.
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