Are You Ready for the Realities of Renting?

Planning on renting a house or apartment? Here are a few questions to ask yourself before you begin tearing through the listings. If you do a little homework before signing your lease, you can make certain you’re choosing the right dwelling for you.

Short-Term or Long-Timer?

Your circumstances will dictate the length of your lease. If you’ve just accepted a job in a new city, it’s likely you will rent for at least a year while you learn about the area. Consider a series of short-term rentals in different neighborhoods to help you choose the perfect place to settle for the long run.

Perhaps your renting schedule will depend on the length of time it takes you to save enough cash for a down payment on a home or condo. In that case, you could look into rent-to-own properties or month-to-month leases. Perhaps you’re getting married next spring, but need a place to stay in the meantime. In this case, a sublet arrangement could work well.

If you’re not sure you’ll be living in the same place next year, stop before agreeing to a 12-month lease. Should you break your contract in the third month, your landlord could sue you for nine months rent. Conversely, let prospective landlords know if you plan to stick around for a while; they might be willing to give you a discount or sign-on bonus in exchange for a longer lease.

Money Matters

Before apartment hunting, get out your calculator and take into account the status of your finances. According to Apartment Magazine, rent should not exceed 25-30% your gross income. You’ll need funds for the application fee, first and possibly last month’s rent, plus the security deposit. If you use a real estate broker, you will pay about 15% of one year’s rent to your broker as commission. Even if you don’t personally acquire a broker, beware that some rental ads are placed by brokers and you’ll be expected to cough up the fee. Be clear on the terms before you even look at the apartment.

Many landlords will put your security deposit into an interest-bearing account. However, if you leave the unit in a dismal state or break your lease, it’s unlikely you’ll receive the full amount of your deposit upon vacating the unit. Also, be prepared to pay for utilities. Find out upfront if cable television, phone, parking, laundry facilities, and other monthly incidentals are included in the rent. If not, ask how much each item costs per month on average and work those expenses into your budget.

A Helping Financial Hand

If you have a job but little or no savings, it’s possible to take out a loan to pay the bulk of the upfront renting costs. If you choose this option, beware of high interest rates. Pay off your debts as fast as you can, or you’ll end up losing more money in the long run.

Did you know that most landlords will want to check your credit before accepting your rental application? If your credit is nonexistent or bad, you could have a hard time finding a place to live because you’d be considered a high-risk tenant. Many individuals have someone such as a guardian or close friend co-sign either the lease or a loan if they have an iffy credit history, are first-time renters, or have questionable backgrounds such as criminal records.

Location, Location, Location

Take into consideration how you’ll feel in your new environment. It’s not just the interior of your home you should consider. The outdoor surroundings and neighborhood will also influence how much you like living there.

Do you love being near the action? If so, a home in the suburbs or in farm country might feel like a prison. Are you more comfortable in a quiet, family-friendly neighborhood? An apartment above a rollicking bar or restaurant is probably a bad idea.

Make sure that you don’t move so far away from your job that it’ll take a lifetime to commute. On the other hand, you might want to avoid living next to a busy and noisy train station just because it’s convenient to downtown. Weigh all your options and envision your everyday routines, such as getting to work, grocery shopping, getting exercise, socializing or picking up your children. Be certain that this rental will fit your lifestyle.

Solo Living vs. Cohabitation

If you’re low on funds, you might be tempted to move in with a significant other, friends, or even strangers. Be picky about your roommates. Cohabitation has destroyed many friendships and relationships. If you’re planning to get a roomie just to lighten your financial burden, seriously consider looking for a more economical dwelling that you can afford on your own.

If you prefer to live with a roommate, be honest about what you expect from her and ask her to be clear about what she anticipates it will be like to live with you. The last thing you want to discover after signing a lease is that your roommate drives you nuts with her late-night parties, fifty-minute showers or unwillingness to clean up after herself.

House or Apartment?

What type of housing accommodations would best suit your current and future needs? If you’re single, you might prefer a small, comfortable apartment. If you’re married or planning to live with a number of other people, renting a house might be a better option.

From a maintenance perspective, it’s usually easier to live in an apartment than a house. Apartments tend to be smaller, which means less area to keep clean. If you rent a home, you’ll often be expected to perform some outside duties, such as shoveling snow, raking leaves, or even performing small repairs. Apartments are also cheaper to heat and cool than larger homes. However, apartments typically offer less privacy and you’ll probably hear noise from the tenants above, below and next to you.

Wish List

Keep a list of all the amenities you’d like in an apartment or house, such as two-story, access to a community pool or gym or off-street parking. Determine whether these are simply wants (you can live without them) or needs (the place is worthless to you without them) and proceed accordingly. One caveat, though – if you’re in a bind and need somewhere to live, it won’t pay to be too picky.

If you have a Fluffy or a Fido and are unwilling to part with your furry friend, you’ll need to find a pet-friendly place. You may even be able to negotiate with a landlord who’s uncomfortable with pets in his unit by agreeing to pay a higher rent or a pet security deposit.

Take an initial walkthrough of the apartment or home so both you and your landlord know the state of the property before you occupy it. Document any damage so that your security deposit won’t be docked for those repairs once you move out. If there are any major problems, firmly insist that they be fixed ahead of your move.

Cover Your Assets

When you begin looking at potential residences, make sure you’re ready to snag the apartment or house on the spot. Bring along financial information. Include a recent bank statement, a paycheck stub and tax records. Don’t forget personal identification, like your social security card and driver’s license. The landlord will probably insist on certified funds, so it’s unlikely you will be asked to provide a monetary deposit right then and there. Of course, you can bring your check book, a credit card or a money order just in case.

Final Touches

Always read the rental contract thoroughly before signing; once you put your John or Jane Hancock on the paper, you’ll have a tough time backing out.

Before you even move in to the unit, be sure to purchase renters insurance. It’s a very low-cost investment that could save you ten-of-thousands of dollars in damage in the case of flood, fire or robbery.

Never forget that you’re really just “borrowing” an apartment or house when you rent, so treat your dwelling with care.