« Do I need a guarantor to rent property? » This is the question that always goes through the mind of those who need to rent a property.
Fortunately, nowadays this is a bureaucracy that is already in disuse, thanks to the new guarantee possibilities offered by the market.
Want to know more about renting a property without a guarantor? So stay here in this post with us and we’ll tell you everything.
How important is the guarantor?
The role of the guarantor is to guarantee the owner of the property the payment of any debt left by the tenant, whether in case of delays in the payment of rent or damage to the property.
And who can be a guarantor? Anyone over the age of 18 who can demonstrate income as required by the landlord or real estate agent. It can be a friend, a co-worker or even a relative such as father, mother, brother, uncles and cousins.
Upon signing the contract, the guarantor becomes responsible, in the background, for the property, assuming debts that the tenant could not afford. In this type of contract, even the guarantor’s properties can be part of the agreement.
As it is a high-risk business, many people refuse to enter as guarantors in a rental agreement under the penalty of losing assets and incurring debts that are not even theirs.
Until recently, this was the only way to be able to rent a property. However, with the new possibilities of guaranteeing the owner, the figure of the guarantor was gradually replaced by more practical, modern and much less bureaucratic solutions.
What are the advantages and disadvantages of a guarantor?
If you think you need a guarantor to rent a property, it is important to know beforehand the advantages and disadvantages of this type of contract. Follow:
Advantages of renting property with guarantor
Debt payment guarantee
Many people believe that renting a property with a guarantor is only beneficial to the real estate agent or owner. But not. The tenant can also benefit from this type of contract.
This is because, if something unforeseen happens in the life of the person who rented the property, such as unemployment, the death of someone responsible for the financial part of the family or even a disabling illness that prevents the tenant from bearing the expenses of the property, the guarantor is automatically activated to replace the tenant on expenses.
Thus, the landlord manages to gain time to re-establish financially and return to assume the expenses.
The presence of a guarantor in the rental contract also allows the lessor to get lower rates and more affordable values, as the real estate agent and/or owner have a great guarantee that the rent will be paid on time.
Disadvantages of renting property with guarantor
Now, let’s get to the most controversial part of this story: the downsides of the guarantor contract.
Difficulty in finding a guarantor
As you noticed, the demands on the guarantor are many. He is indirectly responsible for the property at risk of losing personal property and financial stability.
Therefore, many people refuse to accept the invitation to become a guarantor. This is the first difficulty you may encounter along the way.
And even if you get a guarantor, you’ll have to deal with all the bureaucracy that this type of contract requires.
In other words, it is necessary to go to the notary’s office for the recognition and authentication of the documents, which will certainly also take up precious time for the person who accepted your “invitation”, in addition to forwarding copies of various documents from the guarantor.
Delay in releasing the contract
Even with all the requested documentation, it will still be necessary to carry out a credit consultation of the guarantor and the person who is renting the property.
This step requires time and patience until the contract is released and, consequently, the property.
Imagine that for one reason or another you cannot afford the property and the real estate agency needs to call the guarantor.
Most likely, this person will be from your family circle or friends and a situation like this has everything to generate discomfort and instability in the relationship.
Especially if the guarantor needs to disburse a large amount or cover your expenses for a long period.
This will certainly be a source of stress in the family.
How to rent a property without a guarantor: tips and solutions
This is where you’ll realize that you don’t always need a guarantor to rent a property. There are much simpler and uncomplicated ways to do this. Check out:
The shorts check, also known as shorts deposit or simply shorts is another type of guarantee that the landlord can offer to the owner or real estate agent.
In this option of rental without guarantor, the lessor agrees to deposit the amount equivalent to three months’ rent, including condominium fees, water, electricity and IPTU, as a guarantee of payment in case of default or damage to the property.
When the tenant leaves the property, this amount must be refunded in full, unless the lessor has debts or the property needs renovations. In this case, the owner can use this amount to cover expenses.
The disadvantage of this type of guarantee is that the lessor does not always have the amount equivalent to the advance of the three rents, which can end up making the lease unfeasible.
Bail insurance has been one of the options most used by real estate agencies to facilitate access to leases for those who do not have a guarantor.
With the surety bond, the tenant pays the amount equivalent to one and a half rent or two and a half rents, depending on the insurance company.
The advantage of this type of rent without guarantor, especially when compared to shorts check, is that this advance can be diluted throughout the year, that is, the tenant pays in installments and not in cash.
At the end of the contract, if there are no debts or reforms to be made, the tenant recovers the amount paid to the insurer.
The savings bond works much like the shorts check, the difference is that the amount to be advanced is invested in a savings bond from a bank or insurance company.
Another difference is that the values are readjusted based on inflation and, at the end of the contract, if the value does not need to be used to cover debts, the full value of the title is deposited in the tenant’s account.
If you’re still not convinced that you don’t need a guarantor to rent a property, then here’s another option for renting without a guarantor: the investment fund.
This option is still not widely practiced and requires a certain degree of knowledge on the part of the tenant and the real estate or landlord who is making the contract.
It basically works like this: the lessor and the lessee define a guarantee amount for the property to be rented. This amount is invested in financial market securities and can only be redeemed at the end of the contract or in cases of default or property renovation.
The advantage of this model of rental without guarantor is the possibility of making a return on the money that was invested. If the tenant has good knowledge of the stock market, it is possible to make investments that have high profitability and, thus, gain in the end.
Rent without guarantor: apps that help you rent properties in one click
There is one more option for those who are out there wondering: “do I need a guarantor to rent a property?”. This alternative goes by the name of applications for buying and renting real estate.
With the growth of startup companies in the real estate sector, the process of renting without a guarantor has become even easier and more practical.
These companies aim to streamline and offer more effective ways to connect landlords and tenants, all through a click or a tap on the mobile screen.
The apps and websites of these startups register real estate and owners willing to rent properties. Those interested in leasing, in turn, search based on their interest profile, such as location, price and size of the property.
The technology behind these applications cross this information (of who owns the property and who wants to rent) and offers the best option. Once this is done, the interested party gets in touch with the person responsible for the property (it can be directly with the owner or a broker) and the visit to the property is carried out, both personally and virtually.
If the tenant is interested in closing the contract, everything is done online, from sending the documents to signing the contract.
These startups are the ones who guarantee the lease, working as a kind of virtual guarantor.
Each one has its own rental policy, but, in general, all of them offer an “insurance” to the owner as a way to assume any expenses or debts with the property. All of this is, of course, after the tenant’s credit analysis is carried out.
Currently, some of the main startups operating in the rental real estate sector without guarantor are Quinto Andar, Loft, Luggo and Housi.
It’s worth downloading the app from these companies and doing your searches. See how you don’t need a guarantor to rent a property?