There’s no doubt about it – the rental market is hot. Cities across the U.S. are citing tremendous jumps in rental prices, as more renters see the advantages compared to buying. In Denver rents have gone up 13% over a 12-month period, and even smaller cities are seeing higher rental prices. For example, the cost of rent in Tampa has climbed 7.9% over the last year.
Why the surge?
The high demand for urban living combined with the reduced number of available units have turned the rental market into a really difficult sea to navigate. Rising rents and competitive rental environments have become common in most major metros in the country. Additionally, people are seeing that renting offers them more flexibility, greater access to amenities, a less stressful lifestyle, and in many cases lower overall costs. Hence the increasing number of rental households.
With that being said, renting can be an intimidating prospect and a significant investment, so how do first-time renters navigate the situation?
What to Know Before You Rent
Before you even make an initial visit to a potential rental apartment, it’s important to have a clear, realistic idea of your finances, what you can afford, and your must-have list.
Access your credit history before beginning your search
Many landlords require a credit check on potential renters, so knowing what you bring to the table can help you better understand your options. Give yourself plenty of time from accessing your credit report to beginning the rental process, so you can work to remedy any issues you may have. You may also find your credit report has errors, which you should start correcting as soon as they’re spotted.
Determine a budget
Knowing what you can afford is crucial in today’s competitive market, especially with rents being at an all-time high: $1,162 in August, 2015. Most financial professionals recommend spending no more than 30% of your gross income on rent.
What are your must-haves?
Other considerations include location, amenities, and other specific preferences. If your number one priority is an amazing location, it’s likely you’ll be paying a premium and possibly making sacrifices in other areas, so keep this in mind. Whereas Chicago’s average asking rent, for example, sits somewhere around $1,600 per month, apartments in the Loop’s Lakeshore East – where Lake Michigan meets the Chicago River – can cost as much as $3,500, or more.
You’ve Found the One…Now What?
Once you’ve found the apartment that meets your needs and wants, it’s time to make the commitment.
When you’re completing a rental application, you can often expect to pay a fee, particularly in larger and more in-demand markets.
If you’re accepted as a renter, you’ll sign a lease. A lease is incredibly important, and should be gone over thoroughly. Look for information about deposits, pet fees, and your responsibilities as a renter. Determine whether you’ll be handling the cost of any or all utilities, whether you are permitted to personalize or customize your home in any way, and inquire about the process of requesting maintenance and paying the rent (cash, money order, check, online payment, etc.).
You should also determine what happens if you accidentally damage your new home, what happens if you’re required to move out before your lease terms are up, and what the move-out process entails for renters.
Once the legal and technical elements are covered you can begin the process of moving in.
One of the essential aspects of moving into a new apartment that’s frequently forgotten by first-time and experienced renters alike is renters insurance. Costing as little as 43 cents/day, rental insurance could save you thousands. If a disaster were to occur at your new home, such as fire or flooding, renters insurance can provide financial protection for your possessions. The landlord’s insurance in such cases only covers the building itself and the common grounds; your personal belongings – including furniture, clothing, electronic equipment, and jewelry – usually fall under your responsibility.
It’s also valuable in case of a break-in where your new flat-screen TV gets stolen, or if an injury occurs at your new home. Plus, above all else, renters insurance gives you a sense of security and peace of mind that can make living in your new apartment that much more enjoyable.
Are you a first time renter embarking on a new journey? If so, let us know about other questions you may have regarding this exciting process. We’ll be more than happy to help.