Deciding to live in an apartment is not just about paying monthly rent.
There are many other financial matters to consider, with each step in the process having its own cost – from finding the right place to paying a security deposit, from hiring movers to paying bills and other monthly expenses after moving in.
Therefore, you should prepare yourself in advance and develop wise money habits early on.
What Expenses Can You Expect as a Renter?
Expenses for moving vary depending on a huge number of things, such as the distance of the apartment from your current place (higher moving fees for greater distances), additional deposit if you have pets, and so on. In general, you can expect to initially dish out cash for some of the following:
- Application fees
- Security deposit
- Utilities deposit
- Pet deposit
- Rent for the first month
- Moving services
- Moving insurance
- Storage rentals
There are other expenses involved, too, such as transportation or gas while you’re scouting for the right place; packing supplies like boxes, tapes, and marker pens; drinks and snacks for your friends who are there to help; and other seemingly small things, the amount of which can add up.
Then there is, of course, the monthly expenses once you’ve moved in, including rent, the utility bills, and your transportation to and from work. To prepare yourself for your big move, you may want to consider the following tips:
In all cases, it pays to be mindful of how you handle your money, more so if you are thinking of getting a new place. Whether you’re doing so for the first time or you’re moving from one apartment to another, it requires preparation financially.
Prepare Money for Advanced Rent
Landlords ask tenants to pay rent in advance; in general, this may be one month’s worth of stay. This safeguards them from those who move out after the lease without paying the last month’s rent. You should include this in your list to save up for.
Start Saving for the Security Deposit
A security deposit is the money you give to the landlord, held in trust, before you move in. There are two major reasons why landlords require it:
- Security against tenants who fail to pay. This means that if you stop paying rent, your landlord will still be financially protected.
- Security against damage. In case you cause damage to the property, your landlord will be able to use your deposit to pay for repairs. This is far less complicated than having to take the issue to court.
In a good way, your security deposit will prompt you to be more careful of the property and in following the terms and conditions of your lease. Also, because it is refundable in some states like California, you can have your money back after you leave provided the place is as good as when you moved in.
A relatively big amount is needed for a security deposit. It depends on which state you will be moving into but, in general, the total is equivalent to one or two month rent. You can search for the maximum security deposit allowed by the state government so you can prepare for it.
Be Prepared for Application Fees and Other Expenses
Landlords often do background checks and/or credit checks before they allow someone to live in their apartment. Many of them will charge this to the prospective tenant in the form of an application fee, which is usually non-refundable regardless of whether or not their application gets approved.
You may want to check the laws in the state you’re moving in, since these differ from place to place. In California, for instance, landlords can only charge for the cost of the credit and/or background checks.
Save Up for Extra Fees for Pets
If you have pets, then you should look for an apartment that allows them and don’t forget to consider the additional cost this would entail. Landlords often charge extra for animals to give them added financial security against pet-related damage.
Keep a Good Credit Score
Having a good credit score is advantageous in many cases, such as when you’re buying a car or a house, and it is also a good thing when you’re planning to rent. As mentioned earlier, landlords do credit checks and if you have a bad record, then it is less likely that your application will be approved. In any case, keeping your credit score high often means you don’t have to look for someone to stand as your co-signer.
Looking for a Place
Remember that once you move in, you will be stuck in that new place for several months until your contract expires. You will be saving yourself headaches and potential financial pitfalls by taking your time in searching for a place and not jump in on the first one you see.
Before looking for an apartment, decide first how big a space you would need as well as your budget. Also consider if you have or plan to have a roommate who will share the rent and utility bills. This will help you in narrowing down your options.
Location is also an important factor when searching for a place. Apartments closer to universities or big establishments usually charge higher than those in the suburbs, but driving a good distance back and forth everyday will also cost you gas, car maintenance, and time. As such, you should compare the cost of rent in a nearby apartment against the cost of rent plus transportation to and from an apartment that is some distance away.
Some apartments are in high demand, especially those in really good locations, so some rush in when there is a vacancy. While this decision is up to you, it usually pays to look around first before making a final decision. There are websites like Apartment Guide that can help you make your initial search. They provide listings of available rental places in specific locations, and you can filter your search based on your budget, the number of beds, and so on. From there, you can make your inquiries and perhaps make a site visit.
You should also consider recommendations from friends and family members. They may know of someone who is letting a place but does not advertise.
Interview the Landlord
Having an interview with the landlord will allow you to, in a way, assess your life when you move in. You will be able to see how meticulous they are in terms of safety, security, and maintenance and if they are transparent and compliant with government regulations.
It would be good to check the landlord’s responsibilities as outlined by the local government. The California Department of Consumer Affairs, for instance, lists down the Landlords’ And Tenants’ Responsibilities For Habitability And Repairs: Legal Guide LT-8. It says that the landlord is responsible for: keeping utilities in working order like the electrical system, gas, and heating; that stairs, floors, railings, and roofing are in good repair; that there are proper trash receptacles; and so on. These are some of the things you can ask or talk about during the interview.
Also, in the same way that the landlord checks your background, it is recommended that you also check their public records. You can also talk to neighbors or other tenants apart from keenly observing how the property as a whole is maintained.
By knowing these, you don’t have to take the risk of, say, having to be rushed to the hospital and missing work if you accidentally fall down a badly maintained staircase or having your things destroyed because of a leaking roof or a busted pipe.
Read and Understand the Rental Contract
Do not just take a cursory glance at the contract when you sign; read and understand everything, including the fine print because you don’t want to be faced with sudden charges that you are not initially aware of.
First, check what type of contract it is. Rental agreements and leases are often used interchangeably, but the former are short-term contracts that are renewed monthly, while the latter are long term stays, such as half a year, one year, or longer. Either way, both are binding contracts that are meant for the protection of both tenant and landlord.
It also helps to be familiar with the kinds of leases in your area. In New York City, for instance, there is the Blumberg lease and the Real Estate of New York lease. NewYork.com deems that both are fair for landlord and tenant, but it helps for you to know about them. If, on the other hand, the lease is neither of the two, or if revisions have been made, then you should read really carefully what it says before you sign.
Among other things, know for certain what your security deposit will be used for and what type of damages it covers. Find out what the landlord is responsible for maintaining, such as pest control, flooding, broken appliances, and so on, and these should be specified in the contract. You should also find out if you will be able to sublet.
Moreover, you need to make sure of any last minute changes before you place your signature on the document because you don’t want surprises. For instance, you might find that in the first one, the landlord covers heating but in the changed one, it is not included.
Another important point: if your counterpart signatory is an LLC company that is unfamiliar, check them out first.
Get a Renters Insurance
Contrary to what many renters think, a landlord’s insurance coverage does not include their tenants’ computers, furniture, appliances, gadgets, jewelry, and other valuables. Therefore, it’s wise to get an insurance policy of your own.
A renter’s insurance is akin to a homeowner’s insurance in that it covers your personal property in cases of theft, vandalism, fire, storms, or even flooding but does not include coverage for the building or structure.
It is relatively affordable. For example, insurance provider State Farm says it’s less than a dollar a day. Meanwhile, Nationwide, according to Forbes, says that the average renters insurance is $20 per month and the National Association of Insurance Commission says that the average policy is $184 per year or a bit more than $15 monthly.
Given that this amount covers your belongings that could total to thousands of dollars, it would be worth having it.
Moving is a very stressful event in most renters’ lives, so it’s wise to condition yourself for it, not only mentally and emotionally but also financially.
Prepare in Advance
Once you’ve decided to move, then you should start sorting and packing little by little. This can save you from a lot of pressure as the big day draws closer.
First, start to accumulate containers for your stuff. You can choose to buy moving boxes but if you want to save a bit of cash, you can try asking your local grocery for big boxes that they would otherwise just throw away, or you can buy them for cheap. You can also ask your friends or family to set aside boxes for you, say, if they buy a new computer.
You can then start sorting out your stuff. Start separating the following:
- The things that you hardly use. Pack those first.
- Those that you often and still need to use. Pack these last.
- Those that you can get rid of. You can sell these at a consignment store, give them away to friends or relatives, or donate them to charity.
You can also consider renting reusable plastic containers instead of using cardboard boxes.
Think Twice About Storage
You might be considering renting a storage space for the things you don’t plan to bring to your new apartment. You should think carefully about this, though; after all, you will be dishing out cash for the storage space even though the things you keep there might have diminished or no value once you get back to them.
For example, you may be planning to store your furniture because they won’t fit in your new place, or you have a whole lot of clothes and pocket books that you don’t intend to use any more. Why not sell them instead? Not only will you earn some extra cash, you will also be able to save the money that you would otherwise pay the storage company.
Prices for storage depend on the size and location. According to Spare Foot, the average monthly price for a 5 foot x 5 foot storage is around $40.33 in Dallas, Texas, $62.90 in New York, and $64.87 in Los Angeles, California. A 10 foot x 20 foot storage has an average monthly price of $142.99, $377.40, and $310.25, respectively.
See if the things that you plan to store are worth the amount you have pay in, say, a year or two, when you will be able to retrieve them. If not, you may want to think of disposing them by selling or donating to charity.
Find a Reliable Mover
The mover you hire will be handling your personal stuff, so you want to find one that is reliable, careful, has a good reputation, and charges fairly. But no matter how professional or fair they are, hiring them will still cost you, so you need to save up for the expenses.
In order to prepare for the cost, you can do the following:
- Do your research
When looking for a moving company, don’t hire one just because their estimate is low. Make a list of several companies and check their reputation – make sure that they’re legitimate and recommended by others. As you find out more about them, narrow down your list and get more than one estimate.
- Learn about estimates
You should also distinguish between binding estimates, which means you pay what they quote, and non-binding estimates, which is a maximum price they might charge, unless there are major changes like additional boxes.
- Ask about value protection
Find out about their insurance and value protection. There is a no-cost plan but you get minimal protection from this – the mover will pay $0.60 for every pound of item that gets damaged during the move. For instance, if you have a plasma TV that weighs 38 pounds, the mover will pay you only $22.80 if its gets broken.
Instead, you can opt to pay for a comprehensive plan. It will mean additional expense but at least you know that the mover will have to repair or replace any item of extraordinary value that gets damaged during the move. You should check their limitations for this option.
- Ask about additional charges
You should also find out about any additional fees to avoid any surprise charges down the road. There might be costs for extra services, like disassembling your furniture, disconnecting and reconnecting your appliances, moving up or down staircases or elevators, expedited service, and others.
Read the bill of lading carefully before signing and make sure to ask questions when something is not clear.
Alternatively, you can move your things yourself or you can get a friend to help you. This will save you dollars for professional services.
Living In Your New Place
The exciting part of moving is when you finally get your stuff in your new place and start living there. You have to pay even closer attention to your budget and look beyond the present.
Pay Rent and Utilities on Time
Late payments will not only be troublesome for you, it will also tarnish your records as well as incur interest or penalties. It is, therefore, best to set aside money each time you get your paycheck. For example, if your rent is $1,200 per month, you should save $300 from your weekly pay or $600 if you get your income every two weeks. In the same way, set aside some funds for paying your utility bills.
One good practice is to have an emergency fund set aside early on, to avoid missing out on your payment deadlines. Use this only when there’s a real need and replenish it as soon as possible.
Moving to a new apartment does not mean that you will live there for the rest of your life. You may want to find a bigger or smaller place after your contract expires or, perhaps, have a house in the future. Either way, you would need money to begin the process over or pay the down payment for your very own real estate property. Therefore, saving as much as you can is the best and wisest move you can make.
Don’t spend unnecessarily and try to live a comfortable but frugal life. There are many ways to shave off some expenses, like air drying your clothes instead of using the drying machine, turning down the heater, and unplugging appliances that are not in use. You can also work out in your apartment instead of paying for a gym membership, ride a bike to nearby places, commute when you can, cook more and dine out less, and so on.
You should also think twice before getting subscriptions such as cable TV. If you hardly watch anyway, you may want to skip that and get a streaming service like Hulu or Amazon Prime instead.
Also, take care of the apartment so you will be able to get your security deposit back.
Earn Extra or Cut the Rental Cost
You can also start earning some extra money to add to your savings. Take a part-time or freelancing job, start your own little business, invest in index funds, or, if your contract allows it, sublet a room. You may also want to consider having a roommate to slash your rent and utility expenses in half.
In a nutshell, the best money habits for renters involve being mindful of contracts, deals and other expenses as well as making a conscious effort to save. Practicing these will make your time in your apartment more enjoyable and your future, more secure.