Are you about to rent for the first time? You’re not alone.
Over a third of American households were renting in 2015, marking the largest number of renters since the late 1960s, according to a recent Harvard University study. The study notes that demand in the rental market has risen across all age groups, income levels, and household types, with large increases among older renters and families with children.
So how do you enter a crowded rental market and find a decent apartment that you can afford?
First, estimate what your monthly income will be, and factor in savings, debt and recurring bills. Financial experts will often cite that around 28% to 35% of income can go to rent. Online calculators can assist with budget estimates.
Next, begin looking for affordable rentals via vetted sources such as websites catering to rental seekers including Zillow.com, Rent.com and StreetEasy.com.
Be aware that broker’ fees may be involved, which is often a big surprise for first time renters. Sometimes landlords will pay for the broker’ fee but in competitive rental markets like New York and San Francisco, broker fees will be an expected cost for apartment seekers.
The broker fee is based on a percentage of a year’s lease, typically around one month’s rent. It could be well worth it, since working with a reputable broker allows you to see multiple, legitimate properties at once. This is important because a recent New York University study identified as many as 29,000 fake Craigslist rental listings in 20 major cities over a five-month period.
It is possible to negotiate down a broker’s fee. Slower times, like the dead of winter, will see a drop in demand, so that may be a good time to bring down a broker’s fee. Because a broker’s fee could be as much as one month’s rent, don’t forget to account for that extra cost into how much you can afford.
Landlords will ask for a credit application to confirm your income and financial standing. Young college graduates, with student debt and little work experience, may be asked to have a parent or guardian co-sign a lease if the landlord considers the young renter to be a financial risk. There may also be a fee for a background check, which some landlords require.
While every landlord is different, common practice is to pay first and last month’s rent plus a security deposit at the signing of the lease.
When you’re ready to move into your new apartment, take photos of the empty space and document any damage you find. Make sure your roommates are on the lease and take care to note what the lease says about subletters. Keep all your rental documentation in a safe place.
Make sure you understand, too, what is and isn’t covered by your landlord’s insurance. More often than not, you will be on your own to replace stolen or damaged personal property. Many landlords require their tenants to have renter’s insurance. So it’s important to think about getting renters insurance to protect your belongings from damage or theft.
Information provided by Nationwide. Insurance terms, definitions and explanations are intended for informational purposes only and do not in any way replace or modify the definitions and information contained in individual insurance contracts, policies or declaration pages, which are controlling. Such terms and availability may vary by state and exclusions may apply.