Renting an apartment on a FIRE income

[medelste]

Hi,

We're thinking of taking the FIRE plunge in the next year, selling our house in NY, and finding a new place in the US to move to a low- or no-tax state. We want to rent - at least initially - to find a good state/city/neighborhood. One thing we're wondering about: if we RE and have no paychecks coming in - only dividends, how will it look when landlords evaluate us during the application process? Will most landlords be satisfied to see $1MM in the bank if we have no income? Or will that greatly limit our options?

Thanks for sharing!

 

[FUEGO]

I'd email the landlord a copy of my balance sheet and offer to provide brokerage statements as back up. A LL wants a stable tenant that can pay. Proving you're a millionaire with ample liquid assets to buy his place many times over seems to be a reasonably good way to rent a place.

 

[razztazz]

I did exactly this when I retired. I was used to renting having had a job where I moved around a lot and didn't know enough about the area I was moving to, to roll into town and buy something. Didn't seem to matter to them. Also, if they give you any crap just write a big check and pay they entire lease period (usually 1 year) up front. I was prepared to do that if they hassled me but didn't need to.

 

[Sunset]

I used to have a job requiring me to move to different cities.
I'd look to rent a place.
To reassure the landlord if they expressed nervousness about my ability to pay I'd pay couple of months in advance.

You could also pull your credit report for free from one of the large credit reporting companies, print it out, and have it to show your history of paying bills (if you don't have a bad report )

No matter what, you will find some landlords who won't rent to you for all sorts of odd reasons, and there will be others who will rent to anybody walking by. It is a matter of luck each day.

 

[tbilltubbs]

Expect to make application and pay for credit check by LL. Beyond that, additional payment up front, and/or verification of assets will likely be enough.

Don't expect your net worth will cause anyone to swoon.

 

[Lakedog]

Since retiring and selling my house, I have been renting in a few different areas (coastal, lake front, etc) and only one owner has asked for documentation of income or ability to pay the rent. I do have pension income but in most cases I have only mentioned that I am retired (with no verification of income).

My experience may be due to typically meeting the owner/manager in person prior to renting but I have not always done this. Some are satisfied with first months rent and a small security deposit while others have required two months rent up front. I think you will find this to be highly variable.

 

[2B]

If the landlord has any sense, they will pull your credit report. At one point I sold a house when I was out of work. I rented an apartment. I brought in a bank statement that showed I had around $100,000 in it. Between that and my credit report I didn't have any problems. I definitely wouldn't take something in that showed you have $1MM+. $100,000 is weird enough for most apartment managers to see so I wouldn't want to totally weird them out.

 

[medelste]

Thanks for sharing your personal experiences. I found this thread on Bogleheads. While you folks luckily have had success, this is full of stories of the challenges that I feared.

http:// https://www.bogleheads.org/forum/viewtopic.php?f=2&t=158064

 

[walkinwood]

Thanks for sharing your personal experiences. I found this thread on Bogleheads. While you folks luckily have had success, this is full of stories of the challenges that I feared.

http:// https://www.bogleheads.org/forum/viewtopic.php?f=2&t=158064

You may have trouble with apartments that are managed professionally by "management companies". Individual LLs will be more accommodating & typically like an older, child-free tenant. We didn't have any issue after showing proof of our financial assets. LL did a credit check.

Your plan to rent is a good one. We did the same for a year when we moved and though it was expensive, it kept us from making an even more expensive mistake by buying in the wrong neighborhood / town. All the best.

 

[Sunset]

For sure, professionally managed large landlords will go by the book, more likely to say "no job, no rent".

As a small private landlord myself, the credit history report is most important, which is why I suggest printing yours out for free first.

I've had people show up with new car, dressed nice, but I pull their report and it shows they don't pay bills even while earning a good wage.

I ended up renting that place to a couple with older children, the man had just lost his job, wife worked at a low paying job. Their credit report showed they paid their bills all the time. Their references were also good (folks who knew them 15 years).

So I rented to them, as I'd rather have someone who misses a payment because they can't pay vs someone who won't pay.

In a number of years, they never missed paying me for each month, and the man now has 4 jobs.

 

[KarenC]

I had a couple of years where I was renting an apartment without a job. What I encountered was a requirement that I have savings that was at least as much as a multiple of the total rent for the lease term, ranging between 2x and 3x. These were all professional management companies.


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[tryan]

If you have a problem just offer 6-12 months paid upfront. Then - no problem.

 

[KB]

I just co-signed for an apartment for my son last month. Since neither of us is working, I had to show my income was 5 times the rent. I had to show a bank statement and my brokerage statement...and then I ended up giving them an excel spreadsheet of all my various incomes because they come in at different times over the year. The spreadsheet worked.

 

[tmm99]

I had a couple of years where I was renting an apartment without a job. What I encountered was a requirement that I have savings that was at least as much as a multiple of the total rent for the lease term, ranging between 2x and 3x. These were all professional management companies.


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What do you mean by savings? Is it OK most of your money is at after tax Vanguard?



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[tmm99]

I just co-signed for an apartment for my son last month. Since neither of us is working, I had to show my income was 5 times the rent. I had to show a bank statement and my brokerage statement...and then I ended up giving them an excel spreadsheet of all my various incomes because they come in at different times over the year. The spreadsheet worked.

Can you tell me what you mean by "my income"? Would it be dividends or something more steady like social security?


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[KB]

Can you tell me what you mean by "my income"? Would it be dividends or something more steady like social security?

Yes, my income included pension, SS, dividends, interest and capital gains. I tried to explain that much of my income came in December (hence the bank statement) but then showed them the brokerages statement too which showed the total dividends and capital gains.

It finally became clear to them when I gave them a copy of my spreadsheet which showed the income month by month. Some months very low, some much higher.

 

[KarenC]

What do you mean by savings? Is it OK most of your money is at after tax Vanguard?

Good question. I only gave them statements to verify my cash savings (which was fortunately enough to clear the bar). Since I had no intention of dipping into retirement savings, I didn't include that.

I was thinking about how I would handle this issue after retirement. I want to be pretty circumspect about who knows my net worth. I think I'll try to arrange it so that, in those instances where I need to provide verification of a sufficient amount of savings, to move the minimum amount of money into a account at my credit union. (I would then move it back to where it was before afterwards. This is assuming that there would be a better place than my credit union for cash savings; if that's not the case, it makes that part easier.)

Another thing to note is that the management companies for apartment complexes don't seem to require periodic reverification. That surprises me a bit, but I'm not going to complain.


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[papadad111]

To avoid disclosure of net worth, I think it might be possible as others have said to just write a check for the initial lease term, say, 6 months ... Paid up front and in full.

Or perhaps just giving a 2 or 3 month "security deposit " will be adequate assurance for landlord.

 

[ERTX]

It is harder to get a mortgage on dividend income (get ready for some major hoops). For renting I would go through a rental company like Century 21 Rentals. Your rent may be a little higher but they have a solid maintenance program.

 

[ERTX]

To avoid disclosure of net worth, I think it might be possible as others have said to just write a check for the initial lease term, say, 6 months ... Paid up front and in full.

Or perhaps just giving a 2 or 3 month "security deposit " will be adequate assurance for landlord.

I tried that once. I was going to pay 36 months rent in advance. He thought I was a drug dealer and did not rent to me. I finally went through, my previous post advice, a rental agency and he wanted last 2 years of dividend income and I just gave him my last two end of year brokerage statements and he ok it. My net worth never came up, he just wanted proof of 3x income over the rent.

 

[haha]

I tried that once. I was going to pay 36 months rent in advance. He thought I was a drug dealer and did not rent to me. I finally went through, my previous post advice, a rental agency and he wanted last 2 years of dividend income and I just gave him my last two end of year brokerage statements and he ok it. My net worth never came up, he just wanted proof of 3x income over the rent.

Many people here don't like income, they are "total return investors" . So when you talk about your income, are you including realized capital gains, or only dividends, interest, SS and pensions and annuities?