Otdfbt

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.

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.

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

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.

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.

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.

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.