Renting your first home might be one of the most important decisions you make, especially if you plan to polish your credit and purchase a house or condominium later on. By renting a home you love at a price you can afford, you can gradually improve your creditworthiness and risk profile with landlords and lenders. When leasing a house, pay attention to specific things like the local rental market, important lease provisions, security deposits and home rental budgeting.
How Do I Determine My Home Rental Budget?
To determine your ideal home rental budget, you should list all your expenses, prioritize them and narrow down costs that are absolutely important – such as rent, food and healthcare. In essence, your budget represents your financial roadmap, the plan that will help you live within your means. You can set how much you want to spend on rent either as a percentage or a numerical threshold, depending on your monthly net income. For example, if your take-home pay is $5,000 each month, you could say rent shouldn't be more than 20% of the net earnings, or $1,000 ($5,000 multiplied by 20%). Setting a rent limit will help you focus and not disperse your search efforts in neighborhoods that are above your income level or don't fit with your social and cultural preferences.
How do I Become Familiar with the Local Rental Market?
Harley V., an experienced realtor I've known for years, says that you should never jump on the first rental place you find. I couldn't agree more. Do some research, familiarize yourself with the local rental market, and compare and contrast homes and neighborhoods before settling on a property. To boost your odds of finding a perfect house at a perfect price, use search engines like Yahoo! Home and along with your local newspaper and CraigList.
What Is Essential in a Home Rental Budget?
To strike a happy medium in your home rental budget, and avert the kind of financial shutdown you might experience if you rent a house that is way above your means, you should pay attention to the must-haves and the nice-to-haves. Take a piece of paper, draw two columns, indicate in one column the essential things you want, and put in the other column those elements that optionally can increase your happiness and comfort – that is, the nice-to-haves.
Must-haves may run the gamut from good public school system and neighborhood safety to parking, proximity to public transportation hubs, and major highways. Nice-to-haves can include things like a swimming pool, a nice view and closeness to your favorite restaurant.
Should I Do an Online Property Search?
Absolutely, start your property search online to save money and time. You also can canvass the offices of local real estate agents, especially those with proficiency in the particular type of house you want. Most property brokerages, such as Realtor.com and Century21.com, have online databases you can use to figure out what's available in your target neighborhood, rent price levels, security deposit requirements, and general municipal amenities like recreation parks, museums, public libraries and theaters. A friend of mine, who has been a successful real estate broker for years, says that sites like Zillow can add tremendous value during the rental home search process.
Don't tolerate discrimination when searching for a rental home. The law prohibits a landlord from discriminating against you on the basis of disability, family status, color and national origin, among others. If you think that a property owner has not been forthcoming with you in the lease process, contact the U.S. Department of Housing and Urban Development and your state's housing authorities.
What Should I Watch For in a Lease Agreement?
Pay attention to key terms and conditions in the lease agreement, especially with respect to rental payments. For example, your landlord cannot raise the rent during the lease period, but you also must make your rental payments on time and in full. Before you move out, make sure to notify the property owner, say, at least three months in advance. In some cases, the lease agreement would indicate whether a shorter notice is acceptable. In all cases, I recommend you find another tenant before leaving, but make sure he or she has impeccable credit or, at least, are as creditworthy as you. Is Personal Rental Search Better?
Besides online search, physical visits and onsite investigations can help in your search process. Take a day off, drop the kids at your parents' house, and take some time to barnstorm a few houses or homes you have seen online, just to get a feeling of the neighborhood and determine whether this is a place you can live and prosper in, or whether the locale is worth ignoring immediately – and permanently. Be mindful, though, that some homeowners sign contracts with real estate agents, who then become the only people who can show you around – in other words, they are the only ones to give you an exclusive tour of the area and home. By visiting the area, you can evaluate tangible things like safety, cops' presence on the streets, traffic intensity, nearby restaurants and amusement locations. You also can gauge intangible – I would say the more amorphous – things like how you feel in the city, whether you think your children will like it, and whether this is a place you loved at first sight or just felt uneasy about right away.
What Kind of Questions Should I Ask?
My real estate broker buddy recommends that you ask a lot of questions when searching for a rental home. Don't let a real estate agent over-market the house to you and eventually coax you into signing the rental agreement as soon as possible. Take your time and write down important questions to ask. Enquire about things like utilities; safety; onsite amenities; and, most importantly, terms, amount and conditions of the security deposit. There's no limit or scope on things to enquire about; anything that comes to mind is fair game. The last thing you want is to feel the financial or emotional pain about something – let's say a noisy neighbor – that you have discovered during the search process but failed to bring to the landlord's attention before signing the lease agreement.
What Will the Landlord's Expectations Be?
If a house catches your attention, contact the landlord directly or go through the real estate agent representing the property owner. A standard rental application form includes things like:
- Landlord's information
- Rental home location and structural information
- Monthly rent amount
- Applicant's data
- Work history
- Financial situation
- Background information, such as prior evictions or illegal activities
- Applicant's signature
To make your rental home search a success, create a short list of questions whose answers can guide you in your enquiries, not only with potential landlords but also with real estate agents, loved ones, and everyone whose help you have enlisted in the search process. Questions to pose include how much you want to pay for rent, what the landlord would require of you, whether you should search online and/or in real-life, and how to distinguish what is essential from what would be nice to have.