Things to know before renting
Fact-checked with HomeInsurance.com
Homeownership is a major milestone for many, but there are times when renting is a more practical decision. Renting is typically less expensive and saves you from the headaches of homeownership, such as property taxes and maintenance costs.
There are things to know when renting an apartment to ensure the process goes smoothly. If you’re new to renting, read on for tips before renting an apartment.
What is renting?
Renting is an agreement between a person (or several) and a homeowner to pay to live in the owner’s home, apartment or condo. Typically, you’ll need to sign a lease or rental agreement with rules about when your rent payment is due, who is allowed to live in the rental, what changes you can make to the dwelling and a variety of other conditions.
The owner will ask you to pay a security deposit upfront that the owner will hold until you move out. The deposit is meant to cover unpaid utility bills, any damage you left behind that needs to be fixed and unpaid rent. The remainder of your security deposit will be returned to you. Besides the security deposit, some landlords will ask you to pay rent in advance, typically the first month and last month.
Who should rent
Renting is ideal for individuals getting started in life. High school or college grads are good examples. Anyone who feels their situation is temporary would also benefit from renting. Some examples include someone who plans on relocating for their career or wanting to test out a city before settling and buying a home.
Renting is much cheaper than buying in larger cities such as New York City, Los Angeles or Seattle, for example. A starter home in Los Angeles may cost $1 million or more, but you may be able to rent an apartment for $1,500 per month in the same area.
Pros and cons of renting
Renting has some pros and cons. In some situations, it might be ideal, but in others it could make things more difficult.
|Flexibility in amount of time you stay||No tax benefits|
|Temporary if you know you’ll be moving or want to experience an area before buying.||Your landlord may not renew your lease|
|Easier to move out||You’ll need to pay for any damages you cause|
|Typically less expensive than home costs||Rent could go up|
|No property taxes to pay||Pets are typically not allowed or cost more money|
|No maintenance costs||You won’t be able to make changes, such as painting walls without permission|
Considerations before renting
If you’re new to renting, there are some things to know when renting an apartment or dwelling. You’re going to have to sign a rental agreement or lease that legally locks you in for a set period of time, so enter into the agreement seriously. Consider these five tips when renting an apartment:
1. Review your financial picture
When looking at rentals, take into account that you’ll need to put down a large lump sum before you move in. You’ll typically need to pay the monthly rental cost times three — the first and last month’s rent and an additional month as a security deposit. If you’re planning to bring in roommates to cover the rental cost, will you be prepared to pay the rent on your own if your roommates move out or are unable to pay the rent?
2. Decide how long you plan to rent
How long would you like to rent? Most leases are for one year or longer. If you were hoping to find a rental for a few months, you may have trouble finding a space. In that case, moving in as a roommate may be a better option.
3. Look into the rental’s pet policy (and other restrictions)
If you have pets, smoke or work late shifts, ask the owner or leasing agent about any restrictions. Many rentals don’t allow pets or smoking. Noise restrictions may come into play if you come home from work at three in the morning and want to listen to music or watch TV loudly.
4. Watch your surroundings
When looking at an apartment rental, be observant about the neighborhood and your neighbors. Don’t be afraid to ask about who lives next door or upstairs. Once you sign a lease and move in, it will be difficult to get out of your lease if your neighbors are conflictive or you live next to a loud school.
5. Don’t skip renters insurance
In addition to your utility bills, factor in the cost of renters insurance.
Insurance expert Laura Adams says,
“A standard renters policy protects your personal belongings, up to policy limits, from theft or damage from a covered disaster, such as fire, lightning, storms. It also gives you liability coverage if you get involved in a lawsuit for medical injuries or property damage that you or family members accidentally cause at your rental or away from home.
A renters policy also pays up to certain limits for hotels and meals if you’re temporarily unable to live in your rental after a covered disaster. You might think that all this coverage would be expensive. Fortunately, it only costs an average of $188 a year nationwide, which is a bargain that no renter should overlook.”
If you plan on having roommates, each renter should have their own policy — coverage is limited to the policy owner and family members living in the rental. Fortunately, cheap renters insurance is easy to find.
How to get the right renters insurance
As mentioned, renters insurance is designed to protect your belongings in case there’s a problem such as a fire or break-in.
Laura Adams explains,
“If you rent a house, condo, townhome, or apartment, you should have renters insurance. It gives you many of the same protections as homeowners insurance, except that you don’t insure the physical dwelling, which is your landlord’s responsibility.”
Rental insurance isn’t expensive. Get quotes from a few insurance companies to get the best deal. If you already have car insurance, you may get the best price on renters insurance from your vehicle insurance company.
When pricing out a policy, take into account any high-value items, such as jewelry or electronics. You may need to purchase an extra rider to cover the additional value of certain goods. Also consider the amount of the deductible. The deductible is the amount you have to pay yourself before the insurance company pays the rest of your claim. The higher the deductible, the lower your renter’s insurance premiums. However, don’t set the deductible higher than you can afford in case of an emergency.
- There are many occasions when renting is better than buying, such as when you plan on relocating in the near future or you’d like to save more money to buy a house.
- Although there are many positives, your rent may increase or your landlord may ask you to move out once your lease is up.
- Don’t overlook having renter’s insurance. It’s inexpensive and in case of a fire, flood or theft, your rental policy will cover your belongings.
Renting an apartment or home gives you more flexibility and freedom than purchasing one. But it’s important to do your research before you rent and understand what you’re signing up for. Make sure you can afford the rental — there are costs besides the monthly rent payment, such as paying a security deposit, utilities and renters insurance. Don’t expect a landlord to reimburse you for any of your belongings if they’re damaged or lost from a fire, natural disaster or theft. You’ll need renter’s insurance to cover your items if a problem arises.