How to show a landlord what we have in savings?

Question

My wife and I will be moving to a new, major US city soon, and will be renting an apartment. For the first 18 months, we will both be in graduate programs and our income will be rather low, about 2-2.5x rent.

However, after she finds a job after she graduates, we will have a healthily average income for the area. One reason we are considering this scheme is so we don't have to move after 18 months, and can find an apartment that fits our budget in two years.

We anticipated this, and have saved up what amounts to a good amount more than two and a half years' worth of rent for the apartments we're looking at in this new city. We are mostly looking at smaller units where I expect we'll be able to talk to the owner personally, but a few larger complexes.

We would like to be able to go to a landlord and say basically, we don't have three times the income (or whatever they ask for), but look, we have enough money to pay you for at least a year's lease without working, even though we will be.

We both have good credit, 750+.

What is the best way to prove this to a landlord? Is it a good suggestion to try? I'd even be willing to consider prepaying some amount of rent or a large deposit, but I don't know how landlords will feel about that.

Although I'm giving the whole background here, this question is really about the first 12 months where we're essentially trying to combine part-time wages with large savings.

If I'm a landlord, I have no reason to believe that the money you have in savings now will actually be used to pay your rent a year from now. I also have no reason to be as confidant as you that you'll get a job upon graduation. — chepner, Apr 01 '19 at 20:30
@chepner I mean, how do landlords know that the money you get from your job will actually be used to pay your rent? And that's ok, that's why people talk about things. || Your suggestion seems like overkill, but please post it as an answer so I can see how other people feel about it. — Azor Ahai -him-, Apr 01 '19 at 20:47
I've gotten an apartment with no job (student) just because my credit was good. Try and see how it goes. — zalpha314, Apr 01 '19 at 21:41
"we will have a healthily average income" while I hope for you that it will be the case, you don't actually know that — njzk2, Apr 02 '19 at 03:47
@AzorAhai "how do landlords know that the money you get from your job will actually be used to pay your rent?" They don't, but they do know that it all else fails, the rent defaulter has income to pay to a court to recover their losses. (Of course there may be people who are prepared to give up their jobs voluntarily just to avoid rent payment, but they aren't many of them around). — alephzero, Apr 02 '19 at 13:03
@njk2 It might surprise you to learn that I know a bit more about her employment chances than you do, and that there are many more details here than I asked about. If I needed advice on that, I would have asked a different question. — Azor Ahai -him-, Apr 02 '19 at 15:04
@alephzero How is that different from getting judgment against the assets I have? You may also have skipped the part where we do have income, just not quite enough to qualify for all the apartments we like, and she likely won't get a job immediately (I have a stipend). — Azor Ahai -him-, Apr 02 '19 at 15:07
You can offer a higher security deposit such as 2x or 3x and that will show them that you are serious about not screwing over the landlord. — MonkeyZeus, Apr 02 '19 at 15:18
As a landlord, paying a year in advance would show you are serious. Offer to pay a year in advance minus the interest on your savings account. They would be discounting the rent (in a very minor way) and you would effectively not be losing the interest on savings. — Keeta - reinstate Monica, Apr 02 '19 at 16:18
@Keeta There is no way I'm prepaying rent for a year with what amounts to a 2% or less discount. That leaves me vulnerable to not being able to withhold rent if it becomes necessary. If the discount gets closer to 15% or more, then we'd have a conversation. — Azor Ahai -him-, Apr 02 '19 at 16:23
In other words, you have the money in savings but you have no intention of making any promise to use it to pay rent. You basically have proven that in your case savings holds no guarantee and should not be considered toward consideration for approval. — Keeta - reinstate Monica, Apr 02 '19 at 17:08
My current roommate has a very low income but a lot in savings. She qualified to rent where we live by showing a bank statement rather than an income statement. Obviously this varies from landlord to landlord, but I wanted to drop a note here saying that some landlords will go for this. — Todd Wilcox, Apr 02 '19 at 17:16
@Keeta Anyway, please put your suggestion in the answer box, since the other landlord seems to disagree that prepaying a year's worth of rent is necessary and it's good to get the community's input. — Azor Ahai -him-, Apr 03 '19 at 00:08
"some landlords will go for this" - fair enough. IME, all we want to know is if you're in debt, pay your bills on time, and if you've declared bankruptcy. Bank statements and tax returns don't tell me any of that. What tells me almost everything I need to know, is if you'll cough up $20 in cash, non-refundable, on the spot, for a credit check. If I won't like what I'll find, you probably won't. IDC what the score is. Do you pay your bills? — Mazura, Apr 03 '19 at 02:28
@AzorAhai you've taken a rather confrontational tone on this thread to people who are trying to help you out. If you take the same tone with a landlord who essentially you asking a favour of, do you think that will help or hinder your cause? Learn to schmooze — Darren H, Apr 03 '19 at 06:41
I find this fascinating - because in the UK, your income isn't checked most of the time when renting. What is usually asked for is 3 months rent as deposit (which will then be held in a 3rd party area so that they can't spend it without your approval/contestation). This means if anything bad starts to happen, they have some way of covering their losses. After that, your life is your life; and nothing to do with them. — UKMonkey, Apr 03 '19 at 10:05
@UKMonkey: three months rent as a deposit in the UK? In my experience, six weeks is more common. — Paul D. Waite, Apr 03 '19 at 11:35
@chepner : especially as it was common a while ago for illegal immigrants to pool their money together into the account of one of them, so he can get admitted as a tourist, then immediately transfer the money to the account of the next one. Until authorities wised up and started demanding long-term balance reports. If I was a landlord, why woudln't I be suspicious when seeing a large bank account presented by an otherwise poor person, and wonder whether it isn't just some loaned money which might disappear the next day. — vsz, Apr 03 '19 at 17:05

Hart CO · Accepted Answer · 2019-04-01T19:50:23.640

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Landlords vary wildly on policy, some are more rigid than others on income requirements. In a college town it will be more common for potential tenants to not meet income requirements. For students some landlords will request that parents co-sign, but others will recognize your savings as adequate proof of ability to pay. This is sometimes a concern for retirees as well. You won't know how landlords will react until you talk them.

Personally, when I have been approached by potential tenants in a situation like yours I run my standard background/credit check and in lieu of (or in addition to) income verification through their employer I request a few months of bank statements and the last couple tax returns to evaluate their financial situation. I respond best to those who simply clearly state their situation and their concern about income requirements up front. I normally do first month's rent and a damage deposit at the beginning of a lease, but in a situation like yours I might also collect last month's rent at lease start.

Assuming you otherwise check out as a decent tenant I don't think you'll have a problem finding a willing landlord. You'll have to shop around to see what responses you get, but you'll save a bit of time by inquiring about the rigidity of their income policy and explaining your situation up front.

edited Apr 01 '19 at 19:50

answered Apr 01 '19 at 19:18

Hart CO

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Thanks for the response. Just to be clear, it's not a college town, but a major city, and we're graduate students so I wouldn't particularly want our parents to co-sign (just out of fear that means we're over-budget). You would find bank statements and tax returns sufficient to believe our balance? – Azor Ahai -him- Apr 01 '19 at 19:23
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Yeah, if your bank statements show a substantial balance and show that it didn't just appear suddenly that is helpful. Tax returns are a bigger deal with the self-employed than with students, but still helpful to assess your situation. Collecting first month, last month, and a damage deposit also really helps offset the risk. – Hart CO Apr 01 '19 at 19:30
Yeah, they'd show every monthly deposit we've made for two years. I just thought bank statements might be pretty easy to fake. – Azor Ahai -him- Apr 01 '19 at 19:33
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@AzorAhai They could be faked, but with good credit scores and enough money to pay last month up front it feels unlikely. Tax returns could be faked too, I have no idea if they are copies of the ones you actually filed or a separate set you conjured up. If it was all a lie and you pay each month, I never know. If it was all a lie and you stop paying, I have to evict, and I still might never know that you lied. Plenty of people with good income live paycheck to paycheck, landlords just hope that they prioritize having a place to live over other expenses. – Hart CO Apr 01 '19 at 19:43
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It's good to hear that it's that simple. I was worried I'd have to carry around a canceled cashier's check or something to show the bank would write it for me. – Azor Ahai -him- Apr 01 '19 at 20:48
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If the landlord is really concerned about fake bank statements, they could get your authorization to permit the bank to confirm the information, just as they can arrange to confirm you haven't faked your paystubs or other documents. I've never known of that happening though, and realistically, most landlords are looking for enough indicators of reliability to be comfortable renting to you, not a detailed verification of your finances. Every landlord will approach this differently though; I've seen some with clear policies on how they count savings toward required income. – Zach Lipton Apr 01 '19 at 20:52
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@ZachLipton That's true, I hadn't even thought of trying to verify with the bank. I think because there's just not much to gain from lying, most everyone wants to avoid eviction. – Hart CO Apr 01 '19 at 21:23
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Bank statements and tax returns? What, are they running for president? Credit score to see if they're in debt and whether or not they've ever declared bankruptcy. You're either running section-8 or some extremely choice apartments ;) – Mazura Apr 01 '19 at 22:32
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@Mazura They can run for president if they want, but all I care about is their ability to pay rent which is something credit score doesn't really help with. Income/asset verification is quite common, it's all about reducing risk of non-payment/eviction. – Hart CO Apr 01 '19 at 23:06
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Note that the maximum deposit is limited by law in many states. For example in CA a security deposit is limited to 2 months rent by law for unfurnished places. By asking for "last month" you are electing that the deposit can be used for rent in the last month of tenancy, in principle you are just as entitled to ask for a 2month security deposit and still request last month rent is paid, which gives you more protection as a landlord than simply "last months rent" – crasic Apr 01 '19 at 23:14
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@crasic However, in some places security deposits can't be used for rent at all, so a large deposit does nothing if you're worried about delinquency and not damage. – Azor Ahai -him- Apr 01 '19 at 23:20
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@crasic Last month rent is a common workaround in states that limit your deposit amount. It's not the same as a larger deposit. In CA tenant cannot use deposit to cover last month rent, but they can pay last month rent separate from deposit, according to this site at least: https://www.yourlegalcorner.com/articles.asp?id=102 But maybe it further varies by city? – Hart CO Apr 01 '19 at 23:27
@HartCO That does not sound quite right, California limits Move In deposit, commonly referred to as security deposit, to two months for unfurnished apts. It is up to agreement to determine if it can be used Last month. A separate last month deposit in addition to a two month security deposit is illegal but still commonly seen. Any deposit with landlord is subject to interest payment to tenant, a last month eligible status not withstanding. – crasic Apr 01 '19 at 23:53
@HartCO the line in your link is somewhat confusing ". If the lease states that the tenant paid first month's rent and "last month's rent" and a security deposit, then the tenant is relieved of paying the last month's rent. If, on the other hand, the lease states that the tenant paid first month's rent and "security for last month's rent" then the tenant is still required to remit payment of the last month's rent." Does not actually mean a landlord can sideline in a third month deposit, just that lease can specifically allow it to be used for rent. – crasic Apr 01 '19 at 23:55
Otherwise one can ask for two/three/four last months and the law is basically bypassed . – crasic Apr 01 '19 at 23:57
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@crasic Ah interesting, well I don't know CA, but common advice in many other states is to only use last-month over a larger deposit if the state limits deposit too much. In either case your point that it varies by state is a good one. – Hart CO Apr 01 '19 at 23:58
Now it's all about non-refundable move-in fees. Security deposits require being in escrow accounts, and far-from-worth-it legal rigamarole if you ever have a discrepancy. If you let them use a SD as last month's rent, what was the point. Nobody cleans anyway, so just take the money up-front to cover that for the next guy. – Mazura Apr 03 '19 at 02:17
RE: fake statements, you can have the bank send a letter of reference, which will state the previous high and low balances of the account and that it is in good standing, been open a while, hasn't bounced checks, etc. This letter can be mailed/faxed/e-mailed directly by the bank. This is often used for immigration, lending and other legal purposes. – user71659 Apr 03 '19 at 20:05

score 22 · Answer 2 · answered Apr 01 '19 at 23:18

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you could offer to pay 6 months rent up front and then move to paying monthly.

I did that when I moved to a new country with savings but no job and had no problem getting people to accept the deal. You will miss out on a bit of interest but it should make the process nice and easy

answered Apr 01 '19 at 23:18

mgh42

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This will probably make the landlord happy, but it carries a significant risk for you: if the unit turns out to be unlivable, or for some reason you have to break the lease, it may be hard to get back your money from the landlord even if you are entitled to it. – Nate Eldredge Apr 02 '19 at 02:49
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Wouldn't it be great if there were an escrow-type account with the following features: Tenant deposits N months' rent up front; tenant controls the account with the provision that during the N-month period the only permitted withdrawals are payments to landlord; after N months any remaining funds are fully released to tenant. This ensures that tenant's cash flow will not impair rent payments, while still allowing tenant to break the lease if tenant chooses to deal with the consequences. Essentially, it behaves just as if tenant has a secure job that will cover the rent. – nanoman Apr 02 '19 at 05:01
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I've heard of escrow-like solutions here in Israel - basically, you create a separate bank account, set it up so both you and the landlord must agree to withdrawals, deposit the desired amount there (maybe even get it to accrue interest somehow), and at the end of the lease you withdraw the amount back. I've never personally seen it done though. – Jonathan Apr 02 '19 at 07:44
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In Switzerland, there is also a similar escrow account type were the tenant deposits 2 to 3 months rent (i.e. security deposit). According to this link (https://www.rentprep.com/landlord-tips/escrow-account-security-deposit/) something similar exists. – Manu3l0us Apr 02 '19 at 09:20
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Why in the world would you start there? Horrible, negotiation strategy. Sorry but I have to down vote. – Pete B. Apr 02 '19 at 15:42
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I have done this too when moving between countries, and I have found that it works very well. – TonyK Apr 02 '19 at 20:53
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@PeteB. Is negotiation a major part of this question? The OP's goal is to rent this apartment (at its standard rate) despite relatively low income relative to the rent, and this answer seems like it fits that. I may just be showing my ignorance here, so could you quickly outline some negotiations that you envision might take place? – Upper_Case Apr 03 '19 at 12:40
@mgh42, what country was that? This didn't really fly in the US. – Gascoyne Nov 21 '20 at 06:25

score 3 · Answer 3 · answered Apr 03 '19 at 19:49

What is the best way to prove this to a landlord?

Explain your situation and offer three months rent up front (in addition to security deposit)

If they don't go for that (like if they have to use credit score) go to the next place.

Just a bonus point for you to think about...

One reason we are considering this scheme is so we don't have to move after 18 months

You might be in a better position to decide where you want to live 18 months from now.
In other words, you may want to move in 18 months anyway.
By then you'll know the city, the traffic, where your new friends hang out, etc.

You'll likely have a few (several?) thousand extra to cover the move + decorate the new place.

score 2 · Answer 4 · answered Apr 02 '19 at 15:54

I find Hart CO's answer excellent from individual landlords point of view, and agree with him 100%.

From a more corporate complex point of view there will likely be very little flexibility. If they have a income verification policy then you will not be able rent there. Unless of course they have a "substantial savings policy" then you are fine. If they only go by credit score, and many places do, they you will also be fine.

Corporate apartments are mostly inflexible. The property managers mostly do not have the authority to override corporate policy.

As far as verifying savings most take it on faith that a web print out, or screen shot, represents your actual bank balance. Sure, for those in the know, they can fake a balance in about 10 seconds. However, often times further verification is not necessary. Asking for a transaction history, as Hart CO suggests, would weed out a lot of fake balances.

+1 for "Probably true." I've heard Dave Ramsey (www.daveramsey.com) comment on the radio that there are apartments he can't rent because of their credit score rules, but he could write a check to buy the whole complex. (He hasn't made that comment in the last six months though.) — J. Chris Compton, Apr 03 '19 at 19:36

score 1 · Answer 5 · answered Apr 02 '19 at 20:05

This isn't for landlords specifically, but you might find it useful/interesting. When you go to buy a house, the lender will ask you for 3-4 months of bank statements to "prove" what you have in savings. This shows the lender your cash flow and that you have had that amount in savings for a long period of time.

If there are any recent large deposits, you are required to sign a letter stating exactly where it came from and if it's something that needs to be paid back or not. This prevents people from borrowing money from a parent just to deposit it to make your savings look better. Lying on the signed letter is fraud.

So, a landlord could possibly ask for this as proof, however, in practice I don't think that many people would be comfortable giving over that level of personal information for an apartment. It's expected for a multi-hundred-thousand-dollar loan.

score -1 · Answer 6 · answered Apr 03 '19 at 15:11

Note sure about the situation in the US (and it may vary from state to state or even city to city), but in some places it is a hard requirement to have a specific ratio between income and rent.

The landlord accepting to rent to someone who doesn't meet those requirements may make it a lot harder for the landlord to recover any unpaid rent.

In some situations, if the landlord has some kind of insurance for unpaid rents, this could apply as well (they will be the ones refusing).

Honestly, I'm not sure I share your certainty about the job your wife is going to get (either when this is going to happen or how much she will actually get paid), and planning something based on future and uncertain events seems like a recipe for disaster. So many things can happen between now and then, it's probably not a good idea to make a commitment you cannot hold if things don't go according to plan.

If you still want to go ahead, you can, as suggested by mgh42 offer to pay the first 3 or 6 months in advance. Or pay a deposit.

Note that what could be accepted or not will vary a lot depending on the market (city, location, type of apartment) and the associated offer and supply situation. If apartments of the category you are looking after are in high demand and going fast, a landlord will usually prefer a "standard" situation over a more complex one. If on the contrary apartments remain empty a lot, they will be a lot more flexible.

How to show a landlord what we have in savings?

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