Renting
What’s Wrong With Renting? (Spoiler Alert: Nothing)
We have something of a “cult of home ownership” here in the United States. Buying a home is seen not only as a common way to make sure you and your family have a nice place to live, but as a financial investment, a community obligation, and proof that you’re actually an adult and allowed to hang out with other grown-ups.
Home ownership has plenty of advantages, and for many people it’s a great way to go, but let’s be honest – it’s not magical, it’s not for everyone, and it’s not actually proof of anything. Yes, it’s one of the standard ways we measure community stability and personal reliability, and it’s to your credit that you qualified for financing (or managed to save up enough to pay cash). But there are plenty of weirdos who own homes and plenty of solid, productive members of society who don’t.
So let’s get it out of the way up front: there’s nothing wrong with renting. In many situations, it’s the most practical option.
GOALRY – UNIFIED FINANCE
It’s our conviction that most people are perfectly capable of taking more effective control of their personal and small business finances if only provided the right information, tools, and opportunities. This is true whether you’re renting or buying, alone or with a family, flipping or staying, moving across the street or across the country. We’re committed to making information and technology as usable and practical as possible, and accessible from any connected device, wherever you happen to be.
If we’re being completely honest, we’re actually pretty excited about everything that’s happening and what’s coming next. In the meantime, you’re here and we’re here and the possibilities are truly endless.
WHAT ABOUT BUYING RENTAL PROPERTY?
Let’s say you’re handy with normal home repairs and maintenance and hoping to get some outside income going. You notice some rental property for sale and figure this is your opportunity. Should you do it?
That depends. Being a successful landlord requires not only a certain skill set but a particular temperament as well. It helps if you communicate clearly and specifically and are relatively easy to get along with. At the same time, you have to be capable of drawing firm lines about what is and is not acceptable from tenants. In some cases, you may have to ignore sob stories, anger, or other strong (and sometimes very sincere) emotions if the undertaking is going to remain profitable.
As to determining the actual worth of rental property for sale, you’ll largely want to look at the same factors as if you were considering buying the property to live in. If it’s been rented before, you’ll obviously want to look at the property’s history generating revenue and how much expense and upkeep it’s historically required. If not, look at comparable properties in the area – again, very much like determining the worth of a home you’re considering purchasing to live in.
Meet Accury
Buying rental property means looking for what other people might need rather than yourself, but otherwise the checklists are very much the same. It probably goes without saying that if you’re seriously considering buying rental property, you don’t want to settle for an estimate – you want an accūRATE. You’ll want the precision it brings for determining your financing, deciding how much to invest in repairs and improvements, and what to charge tenants. It could also help you monitor the changing values of surrounding properties, whether for rent or for sale.
WHEN RENTING MAKES SENSE?
Let’s briefly consider some of the most common reasons renting might be a better idea than buying.
+ You’re not going to be in the area for long.
If you’re in another town attending college, putting in time at a new job before a schedule transfer a year or two down the road, or for any other reason not fairly certain you’ll be sticking around, renting offers great flexibility. If you do decide to stay, you can home shop at your leisure – you already have somewhere to live, after all.
Even if you’re not moving away, some people like the flexibility of moving into a larger or smaller unit as their family evolves or their lifestyle changes. The goal of most families a half-century ago was stability and predictability. Neither are currently common features of American life, and for some folks “stability” is much overrated. If that’s you, consider renting.
+ You’re not responsible for upkeep.
While tenants are generally responsible for normal things like changing light bulbs and repairing minor damage they’ve helped to cause, one of the best features of rental properties
Is that the big stuff is the responsibility of the landlord or manager. Broken hot water heater? Call maintenance. Air conditioning goes out during the hottest day of the summer? Pick up the phone. Carpet needs replacing? Water damage on the ceiling? Broken appliances? Inconvenient, perhaps, but not expensive – not for you, anyway.
If you’re in an apartment, you don’t even have to mow the lawn or shovel the driveway.
+ The amenities
Many apartment complexes have their own fitness centers, swimming pools, playgrounds, and other nice add-ons which are reserved for tenant use. While the quality may not be what you’d get for a high dollar membership at the club across town, they’re neither. You don’t pay extra for them and they’re right there on site.
+ Sometimes it’s more cost effective
In many times and places, you’ll find that you can buy a home for a monthly payment far less than you’d pay to rent a comparable apartment or house. Other times, however, the roles are flipped. Even if the monthly payment is similar, home ownership comes with property taxes, repair costs, homeowner’s insurance, the possibility of losing value, and – depending on your mortgage – fluctuating payments. Utilities in a home are generally higher than in most apartments and there are more of them (you don’t normally pay for trash pickup in an apartment, for example)
+ You’re working on improving your credit
Buying a home is a major financial commitment. If you take out a standard 30-year mortgage, a single percentage point difference in your interest rate can mean tens of thousands of dollars over the life of the loan. Maybe it makes more sense to take a few years to focus on paying down debt and improving that credit score before looking into home ownership.
+ Location, location, location
If it’s important to you to live near work, or to stay in walking distance of downtown or some other area of town you frequent, or have other reasons you’d like to be in a very specific location, it may be impractical to purchase or build a home in such a limited area. The right apartment, however, can mean that getting to work, meeting friends for coffee, or visiting that art studio you love is as easy as heading downstairs and crossing the street.
Of course, the problem with choice locations is that other people probably want to live there, too. You may have to bide your time and be ready to move on any apartments for rent which become available.
THINGS TO CONSIDER WHEN RENTING AN APARTMENT
Most of us do a pretty good job figuring out what part of town we’d like to live in and how many bedrooms we’ll probably need. Here are some less obvious – but equally important – things to think about before you begin looking at apartments.
+ Know what you can (and can’t) afford
Hopefully you maintain a regular monthly budget and know pretty closely how much you make each month and where it usually goes. If not, it’s time to start – BEFORE you begin apartment shopping. The good news is that it’s easier than ever before to keep an effective budget. Check out the tools and education posts over at Budgetry, our sister site.
You don’t want to fall in love with a place before realizing you can’t realistically afford it. Most apartment managers and leasing agents are fairly realistic about average utilities and such, so don’t hesitate to ask. They’ll appreciate your desire to make sure you can afford to pay them if they decide to rent you an apartment.
+ Check the cell phone reception
It’s difficult to remember life before cell phones, yet it never occurs to most of us to try out our reception when considering a new place. Most of the time it will be fine, but there are dead spots and iffy areas scattered pretty much everywhere, and they’re not the same from carrier to carrier. Given how few of us even think about installing a landline anymore, do you really want to sign that lease only to discover you have to drive half-a-mile to have reliable phone service for the next twelve months?
+ Check water pressure, temperature and A/C
Test out water pressure and temperature and ask the leasing agent to turn on the A/C or heat. Much like cell phone reception, these are things we use every day and take for granted most of the time. Chances are everything will be just fine. But if it turns out the shower is really just a glorified dribble or that it takes 15 minutes to get warm water from the kitchen sink, that could get old pretty quick if you decide to move in.
While you’re at it, bring along something to plug in and test various outlets. Most reputable complexes would never dream of neglecting something this obvious, but not all rental properties are managed well and not all tenants use every outlet. If there are appliances included, and it’s possible, check them out as well.
+ Make sure you know the various policies of the complex
These are usually covered during the long, boring, “going over the contract” phase when we just want to sign and start loading up boxes. If you have pets, however, you’d better pay particular attention to those rules and possible penalties. If you like music or playing your movies loudly, make sure you know how they handle noise complaints.
Where most of us really get careless, however, is in considering these policies in regards to our future neighbors. So you’re not a loud person, you don’t have pets, and you don’t work weird hours. What if the guy above you is and does? How are potential problems like this handled? Is it up to you to go knock on someone’s door, or are you left with no middle ground between ignoring the problem or calling the police when that dog barks. All. Night. Long?
+ Get a feel for your potential new neighbors
Don’t be afraid to ask about surrounding units. They may offer some information or they may not, but it doesn’t hurt to ask – and it communicates up front that you’re not likely to simply endure unreasonable noise or other problems.
If the chance to speak to current members of the complex come up, go for it. You probably don’t want to just start knocking on doors and striking up conversations, but if someone happens to be outside or pops in to the rental office while you’re there, ask them their opinions about a few things related to living there. While they’re unlikely to say anything too negative while the leasing agent is standing there, most of us love sharing our opinion and offering our insights. You might be surprised what you’ll learn.
+ Visit the complex at night
This is actually good (and unofficial) advice whether you’re considering buying or renting. It’s not about looking for anything in particular, but many places look and feel quite different after dark. If most of your neighbors are at work or school during the day when you’re shopping, that quiet neighborhood or cute apartment complex may prove even more charming when populated. Or, it may reveal itself to be quite the nightmare or rowdiness and weird smells.
+ READ THE LEASE.
Ask questions about anything that’s not clear. Don’t assume anything. There may be upfront costs or penalties for late rental payments or other violations. Rules about visitors after certain hours or who stay for more than a certain number of days. Parking requirements or other special information that you won’t need 90% of the time but when you do, you REALLY do.
Most of all, pay attention to potential rent increases. Most leases lock in your monthly rent for the length of the contract, but what happens after that? Are there limits to how much it can go up? Any breaks for renewing? If money is tight, are there opportunities to knock a few bucks off your monthly payment in exchange for helping out on weekends or doing a few menial tasks none of the employees want to handle? It doesn’t hurt to ask.
The commitment of renting is quite the same as buying a home, but that doesn’t mean you want to be locked in to a mistake for twelve months or longer. Watch this space for some re-imagined tools for finding the right apartments for rent or other opportunities and evaluating location, utilities, convenience, and quality – all as easily as checking out the latest zany parody videos or posting political memes on social media.
+ What About Renting Homes, Rooms, or Other Accommodations?
Depending on where you live, apartments may not be the only places for rent worth considering. Most of the same questions apply, however, whether you’re looking at garage apartments, rooms for rent, or something less traditional like full studio apartments for rent.
You still want to start with your budget. Just because someone will rent to you and a particular rate or you meet someone else’s rule of thumb for the percentage of your income you can spend on housing (figures of 25% to 33% are common) doesn’t guarantee that amount makes sense for you. Do the math and be realistic about it. Your checkbook may not share your optimism.
You’ll want to check out the various policies and expectations, particularly in regards to pets and noise. It’s still a good idea to drive by at different hours to see what’s changed, and it’s no less frustrating to have spotty cell coverage in the most lavish of studios for rent as it is an dingy one-bedroom across town. If you’re considering renting from an individual (as opposed to a management company) it’s particularly important to get a feel for their expectations, personality, and any other quirks which might impact your arrangements over time. You don’t have to be friends or anything, but if they creep you out or seem unlikely to accept your seventeen friends staying over for weeks at a time, better to know that up front.
Make sure it’s spelled out what you are and aren’t responsible for in terms of utilities, appliances, and upkeep. What was fine in your last apartment may not be as acceptable in Mrs. Gruncheon’s extra room or Uncle Mel’s duplex. Are you allowed to paint inside if you so choose? How about hanging up a few shelves and pictures? And do your snakes count as actual pets?
The details of the lease are in some ways even more important when renting a home or a room than they are with apartments for rent. While there are probably local laws establishing general guidelines, owners have great flexibility with what sorts of terms they can put into writing, and even more flexibility with the things they don’t. Make sure you understand their expectations and that they’re receptive to your lifestyle and needs. Otherwise, however much right you may have to live where you want, it might be worth looking at other options.
It’s essential to arm yourself with knowledge before buying a home in which you plan to live. It’s in many ways even more important to take advantage of the available technology and resources if you’re buying rental property in hopes of turning a profit.
Where would you like to start?
