Whether you’re a new grad, a retiree looking to downsize, or you’ve decided it’s time to ditch the roommates, renting for the first time is a rite of passage. You’re about to experience the highs and lows of apartment hunting. You’ll laugh, you’ll cry, and you’ll experience true joy when you finally get the keys to your first place. Welcome to the club of America’s renters.
Renting for the first time can be especially tricky, so it’s vital that you prepare for any and all obstacles you may encounter along the way.
This is less intimidating than it seems, as there are a ton of strategies and tools you can use to help you budget and figure out how much monthly rent you can afford to pay.
First, tally all the costs of renting an apartment, not just the month’s rent:
Laundry fees (Is there a coin-operated laundry on site? Or a washer and dryer in unit?)
Once you’ve figured out the complete monthly cost of renting an apartment, you do some quick math to figure out how much you can afford.
The 50/30/20 budgeting method is a tried and true way to figure out how much rent you can afford. If you follow this budgeting method, then you’ll ideally spend 50% of your monthly income on necessities like rent, food, and transportation, 30% of your monthly income on entertainment, and then saving the remaining 20% of your monthly income.
This is the ideal, but life can throw you some curveballs that can greatly impact your ability to budget. (Student loans are way too real.) If you need help getting started or a handle on your spending, you can use any number of budgeting apps that can automate and regulate spending and bill pay. They can also help you reduce spending so you can afford a bigger or fancier apartment with a bigger budget.
ProTip: Rent concessions can help you afford monthly rent. When a landlord offers a rent concession, they usually offer you one or two month’s rent for free. Look for listings that offer discounts on rent or ask a member of the leasing team during your in-person or virtual tour if they are offering rent concessions at the time.
When you fill out a rental application, one of the requirements is usually consenting to a credit check and a background check. Sometimes property owners will ask for your previous pay stubs, tax returns, or bank statements to figure out if you can afford rent!
These factors help your potential landlord figure out if you’re the right fit, but also help them assess risk if they accept you as a renter. It’s important to be prepared prior to filling out an application by knowing your credit score. If it’s too low, you can help tell your landlord ahead of time or acquire a co-signer to help you get approved to rent your first home.
You can figure out your credit score by requesting a free annual credit report. This report will give you a full credit history. Or you can usually access free credit reports from your credit card company or through FICO.
ProTip: A credit score ranges from 300 to 850. Anything above 700 is considered a good or healthy credit score for renting an apartment. Once you’ve rented your first apartment, don’t forget to report rent payments to credit bureaus in order to build good credit.
Okay, so you’ve calculated how much you can afford to pay in rent, and also figured out your credit score. Good work, first-time renter. Now, it’s time to find your new apartment.
Here is a step-by-step guide to apartment hunting:
Before you start your search, consider writing down a list of your priorities when selecting a new place to live. This will act as your essential checklist when you’re trying to figure out where to live.
Remember that you’re likely to not get everything on your list, but be sure to figure out what is a must-have vs. a nice-to-have factor. For example, some renters might be willing to live farther away from work for a washer and dryer in the unit and a parking spot.
In some states and places like New York City, you might have to partner with a broker to find an apartment. Figure out if you would like to visit apartment buildings directly or hire someone else to do your search for you.
Figure out if you want to tour in-person or virtually. Lots of renters have started to rent apartments site-unseen, especially if they’re moving to a new city and can’t afford to go see a place before the move!
Don’t forget to ask for Rhino. When you’re touring a potential apartment, ask the leasing team if they offer security deposit insurance through Rhino to save money at move-in.
Stay sharp and recognize red flags to avoid getting scammed as you search for a new home. As we now do more and more online, it can be easy to surrender sensitive information like your social security number to bad actors.
This seems simple enough! You’ve found the dream apartment, and you’re ready to fill out a rental application. However, there are a number of factors to consider as you embark on the journey of applying and getting approved for an apartment.
One such consideration are the fees associated with applying for an apartment:
The property manager may require the security deposit upfront before approval.
Something else to think about: Filling out the application might be easy, but getting approved might be a bigger challenge. Landlords can ask for the following when you’re applying for an apartment:
Letter of employment
Your social security number
Permission to run a background check
Permission to run a soft credit check
If you need to use a co-signer, get a roommate, or get a guarantor, landlords can also ask them to submit the same amount of paperwork. If you do get a co-signer or guarantor, be sure that they have a strong credit score and clear background, and they can help you get more readily approved!
Once your rental application is accepted, you’ll receive a lease to sign. Keep in mind that your lease is legally binding, meaning once you’ve signed, you’re locked in.
Your lease agreement can outline the following:
Monthly rent you’re required to pay
How and when your landlord can increase rent (This is especially important to know for rent-stabilized apartments.)
Length of commitment (A month-to-month lease or one-year lease)
How you pay your rent, including whether or not you can use a credit card
Fees and rules for keeping your pets
How you can change or decorate your apartment, including regulations for paint colors and hanging photos
Whether or not your landlord requires renters insurance
How and when the landlord is required to return or use the security deposit
Legal requirements for guarantors or co-signers
Confused by the legalese? It’s always a good idea to refer to a family member or ask a friend if they can help you translate. You can also ask the property manager or landlord for more information.
Renting an apartment can cost renters a lot of money upfront, and many of these fees are required to secure your new place. These costs can add up, which means you may have to save up before you get your keys.
Landlords can ask for the following upfront payments when you sign your lease:
First month’s rent and last month’s rent (only in some states)
Keycard or remote fee
These fees can cost renters thousands and that’s before you’ve hired movers! The cost of moving a one-bedroom under 100 miles can cost a renter anywhere from $400-$1600, not including these upfront fees.
When you’re negotiating and signing your rental agreement, it’s best to look for ways to save money. When you’re touring an apartment, ask your property manager if they use Rhino Security Deposit Insurance. Instead of paying a security deposit upfront, renters can pay as low as $4 per month for insurance, which protects the apartment from damage or unpaid rent the same as a cash deposit would. This means you’ll have more money for brand new furniture.
Already found the place, but haven’t signed the lease yet? Check and see if Rhino is available for your future apartment. Get a free quote today.