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5 Renting Rules All College Grads Need To Know Right Now

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You’ve doffed your cap and gown, and now you’re ready for the next phase of your life. But before you can change the world, you’re going to need a home base.

“For many new grads, renting an apartment is their first personal financial application and obligation,” says Ryan Shear, managing partner of development at rental company PMG.

This means that in order to find a great apartment and know it’s in your budget, you should do some homework first. Here’s how to prepare your rental resume so you land on your feet in a sweet place.

1. Know how much rent you can afford

As a recent college grad, you are probably on a tight budget. If you sign a lease on an apartment that’s out of your price range, you could spend the next year scrambling to pay your bills.

To make sure that doesn’t happen, be sure you can afford the rent. As a general rule, your monthly take-home pay should be three times what you pay in rent each month.

Or at the high end, “take your [take-home] income and try to spend less than half of it on your housing,” says Isaiah Ram of Brixbid, a rental company platform. “This may mean getting a place that’s not as nice, but remember: You want to make sure you’re putting away money so you can invest in something with value later.”

“After years of college-style apartments that have probably seen better days—or even living with your parents while you were studying—that first rental all on your own can feel like your big chance at freedom,” says Anna Barker, a personal finance expert. “However, don’t think that means you need to have all the bells and whistles. Sure, getting an apartment in a complex with a pool sounds amazing, but it will cost you.”

Also keep in mind that you’ll have other expenses when you have your own abode, like Wi-Fi, electricity, renters insurance, and so forth. Plus, you’ve got to eat, and it would be nice to go to the movies now and then. So stick to your housing budget.

2. Check your background and gather your paperwork

Before you can sign a lease, the landlord or property management company will probably look into your background, including the following:

Before you start apartment hunting, order copies of your credit report from the three credit-reporting agencies—TransUnion, Experian, and Equifax—or check your score for free at Credit Karma. This will help you see where you rank on the scale of 850. Having a score of 690–719 is considered good, while 720-plus is excellent.

Gather copies of your recent pay stubs and ask former landlords or employers for reference letters. Using these documents to create a rental resume will help you stand out from the other applicants.

“If you can’t show the necessary income or have other blemishes like poor credit, you’ll likely need a qualified guarantor on the lease,” says Shear. This is someone who is responsible for your rent if you can’t make ends meet.

“It’s best to have that conversation now with a parent or someone else willing to backstop you financially,” adds Shear.

3. Pay close attention to your apartment’s location

Where you live will make a difference. Look for a rental close to your work and places you frequent, such as grocery stores. Research different neighborhoods, crime rates, and walkability factors before you decide on a spot. There are plenty of tools online that will give you the scoop once you punch in a ZIP code.

“Envision your daily routine,” advises Shear. “When picking an apartment, many new grads neglect the realities of their commute and social priorities. If you pick the biggest apartment in an inconvenient location, you may regret the lack of access to the places you visit outside your home.”

If you are moving to an unfamiliar location, visit the area first to get a feel for the neighborhood. You might want to visit during the week, on the weekend, and during the day and at night to get a sense of the vibe. If you can’t visit in person, research different areas online and look for a short-term lease.

“Location is going to be a big factor in determining how much a rental unit is going to cost, too,” says Brittany Hovsepian, owner of The Expert Home Buyers, a real estate investment company. “If a rental is located in a very nice neighborhood, or newer apartment complex, and in the heart of a bustling city, then it is going to cost more than something that may be farther from a city’s attractions, or in an older neighborhood or complex.”

4. Know the extra costs of renting

Before you move in, you might have to pay several fees, including the following:

  • Nonrefundable application fee
  • Refundable security deposit
  • Refundable or nonrefundable pet deposit
  • First month’s rent
  • Last month’s rent

“Most rental properties will require first and last months of rent and a security deposit, which is usually another month’s rent, so make sure you have some money saved for that,” says Artur Muller, founder of Amluxe Realty.

Make sure you know the cost of these fees and get a receipt for any fee you pay. When you are signing your lease, be on the lookout for additional monthly fees tacked on to your rent. For example, some property managers charge pet rent every month to pet owners, while other complexes charge a monthly fee for parking. Make sure you understand these fees before you sign your lease.

5. Read your rental lease closely

Last but possibly most important, read your lease. If you skim over it, you might miss something that could make your life miserable. Your lease should include the following:

  • Start and end dates
  • Monthly rent and any fees paid
  • Lease rules
  • Visitor and parking policies

“I’m still kicking myself over a major mistake I made in one of my first postcollege rentals. I didn’t read the fine print properly and ended up agreeing to have the apartment professionally repainted at the end of the lease,” says Barker. “That was a lesson well-learned, a few thousand dollars later.”

Make sure you read every word of your lease and understand what you’re signing up for. In particular, knowing what you’re responsible for will be critical to avoid unwelcome surprises when your landlord springs a bonus expense on you.

If you have any special circumstances, such as a pet, make sure it is listed in the lease agreement. Verbal agreements are extremely hard to prove.

If your lease is missing any information, or you think your landlord is including something illegal, ask your landlord to make changes to the lease or contact your local housing authority for help.

“Don’t forget: Another big factor is who you are renting from,” says Hovsepian. “There are benefits to renting from a larger company or apartment complex, but you will lose the ‘family feel’ that you have from renting from smaller operations. One big advantage that comes from renting from a smaller operator is you end up in contact with one or two people from the very first contact all the way through the time you decide to vacate the premises.”

That can be a reassuring situation for your first time spreading your wings and snagging your first home base on your own.

The post 5 Renting Rules All College Grads Need To Know Right Now appeared first on Real Estate News & Insights |®.

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