You applied for an apartment, and the landlord reviewed your application. Then you got the news saying you got a conditional approval. It’s not a YES, but it’s not a NO either. So, what does it mean?
A conditional approval means that the landlord is open to renting the unit to you, subject to conditions. However, something in your application raised a concern. They just want more information or assurance before they sign on the dotted line. You can think of it as a yellow light, not green but not red either.
Getting a conditional approval is very common. Many renters face this situation and still get their keys. Read on, and let’s learn how to turn a conditional approval into a signed lease.
Common Triggers of a Conditional Approval
You can’t fix a problem if you don’t know what it is. Here are the three leading causes of conditional approval from landlords.
Thin Credit History
If you have a thin credit history, you literally do not have much of a credit history. Perhaps you’re young and just getting started. Maybe you’ve always paid cash and avoided credit cards like the plague. Regardless of the reason, landlords have little insight into your financial responsibilities.
Credit history is how landlords evaluate potential risk. If there’s little to nothing to look at, they don’t feel confident. This doesn’t mean your credit history is bad. It just means there isn’t enough information to make a decision. That can be enough to warrant a conditional approval.
High Debt-to-Income Ratio
Your debt-to-income ratio is a comparison of the amount of money you owe each month to the amount of money you make. Let’s say you make $3,000/month. Your monthly debt payments add up to $1,500. That means your DTI ratio is 50%.
Most landlords prefer a DTI ratio below 30%-40%. The reason is fairly simple. If a majority of your income goes toward other debt payments, how will you pay rent? Landlords will hesitate if your DTI is too high, even if you have a perfect payment history.
First-Time Renter Status
We all have to start somewhere. If you’re a first-time renter, you have no rental history. Landlords can’t call your previous landlord to see how you did. There’s no payment history to indicate you pay on time. There’s no way to demonstrate that you care about keeping a home in tip-top shape.
Landlords love references. If you don’t have any, they don’t have much confidence in you as a tenant. First-time renters (many recent grads and people transitioning from parents’ homes fall into this category) are likely to see conditional approvals as a result. A professional property manager knows that thoroughly screening tenants can save you from possible legal and financial headaches of a future eviction.
Property managers usually run this screening to confirm whether a tenant is approved or not.
Strategic Steps to Turn Conditional Approval Into a Signed Lease
Property managers use a standard set of criteria to determine eligibility, which is why knowing what conditional rent approval is can help you negotiate better terms for your lease. Let’s take a look at some strategic steps that you can follow to turn a conditional approval into a signed lease.
Communicate Well
Reach out to your landlord or property manager ASAP. Don’t wait around. Don’t assume they know or understand your situation. Simply ask them what the condition is and what they require from you to move forward.
Use a friendly, professional tone in your communication. Assure them that you are serious about wanting the unit. Often, a quick email or phone call can be enough. Many landlords love renters who are honest and easy to communicate with.
Communicating clearly and professionally with your landlord will show them that you’re trustworthy. And trust is something a skittish landlord is looking for before handing over a key.
Review Your Budget
If your landlord has concerns about your income or DTI ratio, revisit your budget. You might be able to fix the problem without too much effort.
Create a list of all of your monthly expenses. Next, look at how much money you have left each month after you pay rent. If you’re cutting it close, you have a few options. You can offer to pay the first and last months’ rent up front. If a landlord sees you have the funds for this, they know you were able to save money. Which means you are less likely to run into trouble paying rent later on.
Another option is to offer a larger security deposit. Some states have limits on how high your deposit can be, but if they don’t. Providing an extra deposit gives the landlord something to fall back on if something goes wrong. This ultimately reduces their risk when renting to you.
Sit down with your budget and make sure renting this unit is realistic. Don’t just do this to convince the landlord, do it to convince yourself.
Secure a Co-Signer
A co-signer essentially vouches for you when renting an apartment. If something happens and you can’t make rent, the co-signer is responsible for the lease. This is one of the best ways to convert a conditional approval to an apartment signing. In fact, getting a co-signer will immediately strengthen your rental profile.
Typically, co-signers are parents, family members, or close friends with good credit and verifiable income. When a landlord sees an applicant with a solid co-signer, they perceive far less risk.
Make sure you have a conversation with your potential co-signer. They aren’t just throwing their name on the lease. They are taking on financial responsibility if you don’t pay rent. Make sure they understand the implications before agreeing.
If you don’t have family that can cosign for you, consider a co-signer service. There are companies out there that will cosign for you for a monthly fee. Consider this a last-ditch effort if you don’t have family who can help.
Final Words
A conditional approval is not the ideal result you expect. But it’s really nothing more than an opportunity to show the landlord you are good rental risks. Landlords want to screen all tenants using a standardized criteria. They aren’t purposefully trying to drive up rejection rates. They just want reassurance that you’ll pay rent on time and treat the property well.
Thousands rent each year with conditional approvals and still end up with the apartment. You can too. Just stay calm, hurry up, and present your landlord with solutions.
