5 Tips for Saving Money on Your Next Apartment

Buying a home is no longer a major aspirational purchase for young people in America. They're increasingly choosing to rent in order to live in urban centers and gain the flexibility that can't be found if you own a home.

However, renting a house or an apartment can be nearly as complicated as buying a home, and the financial impact of making a mistake in the process can be significant. But if you keep these five things in mind, you can get a great deal on your next apartment.

1. That Free Month Could Cost You

Over the past year, construction has started on large housing complexes (five or more units per building) that will add 343,000 residential units to the U.S. market. That's up from a peak annual pace of 304,000 annually before the recession and is the highest pace since the late 1980s. With increased supply comes apartment owners who are desperate to fill their units.

That's why apartment hunters often see sign-up perks like a free month's rent when signing a yearlong lease. But this can be a bonus that will cost you if you don't get a great monthly rate after the free month is over. Landlords are trying to make the first-year cost seem lower as a way to hook you into a higher-cost over the long term. Let's say, for example, regular rent for an apartment is $1,200 a month and they're offering a month free. The first year, the apartment would cost a total of $13,200, but the second year the cost would rise to $14,400.

Instead of taking the month free, negotiate the same annual cost but a lower monthly fee -- in this case, $1,100 a month. When you renew the second year, it's likely you'll be able to get the same rate instead of automatically being hooked into a $1,200-a-month cost. Apartment owners should be hesitant to raise rates on reliable renters, so starting from a lower base cost per month is a good idea, even if you forgo the free month's rent.

2. Security Deposits Shouldn't Be Overlooked

As a longtime renter, I've seen a number of different prices for security deposits, and seen some apartment owners who make a habit of taking as much of that deposit at the end of a lease as they can. So, document everything when you move in, and if you can negotiate a lower security deposit, it'll lower your risk when the lease ends.

The standard security deposit is a month's rent, but they can be much lower depending on the building and your rental history. Security deposits are supposed to be a way for an apartment or homeowner to recoup any damages that may occur while you're living in the unit, but some owners use the deposit as leverage when you move out. Any light fixture that's out of place, stain on the carpet, or crack in a window can be used to take money from renters.

That's why documenting any damage in writing is key when moving in, and taking pictures or videos will help you when moving out. Negotiating a lower security deposit lowers the amount an owner could easily charge you when you move out and can potentially save you a trip to court if erroneous charges are made.

3. Pros and Cons of a Condo vs. an Apartment Building

Renting from a condo or homeowner can have its advantages and disadvantages. They're often not as stable for long-term renters as, for example, an apartment building, and such landlords can choose not to renew leases for unpredictable reasons.

But they're also more dependent on keeping their property full. If you only own one rental property, a month without a renter is worse than giving up $100 or $200 a month on your asking price. So, savvy renters can use this to their advantage and negotiate lower rents from owners. Oftentimes, they need you more than you need them.

4. Competition Is Fierce; Use That to Your Advantage

More millennials are choosing to rent rather than buy, and rental vacancy rates are at their lowest level since 2000, but that doesn't mean there's no room to negotiate on an apartment, especially if you look in the right place. As I mentioned above, apartment-building is booming in the U.S., and new buildings are going to need to be filled around the country over the next few years.

If you're looking for a deal, look for buildings that are a little older than the brand-new high-rise with all the amenities. You can also look for condos rented directly by owners, as I mentioned above. And keep in mind that even new buildings will negotiate things like rental rates and parking prices. You're the one with the checkbook, so don't be afraid to ask for more from your rental.

5. Know the Rules Before You Move In

Finally, before you go drilling holes in walls and painting every wall in your new apartment, make sure you know the rules. Some apartments don't mind if you paint; some do. Some don't want you drilling holes in the wall to mount your TV; some will actually do it for you. Even rules about doormats or door decorations vary from building to building.

To avoid costly fines while you're living in a building or money being taken out of your security deposit when you move out, be sure to know the rules before you move in. It could save you thousands at the end of the day.

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Should agents feel threatened by comparison websites?

Many buyers make a decision about a property agent based on word of mouth recommendation or how well they get on with them, but a new website aims to provide data on UK agents so buyers can compare and rely on cold, hard facts.

Comparison websites are common for all kinds of products, financial services and the like, but there are few that seek to compare the performance of estate agents.

But now Estateagent4me.co.uk has been launched, which features data on sales success compared with listings, average time to sell, how close the final price is to the asking price, the total number of properties listed and fees charged by each agent. The data is based on around 95% of UK house sales. The service is free and it offers anyone instructing an agent through the site £250 off conveyancing fees.

Managing Director, Ben Thompson, says the service has been launched to make buyers better equipped when selling a house. With the average UK house price today at around £210,000, selling a home is a major financial decision, and it pays to select the best agent.

People sell houses far less frequently today than they did in the past, and are unlikely to know how well agents perform in their area without being provided with helpful data and facts. That is especially true for sellers who live overseas.

Just looking at sales prices achieved, by simply picking an agent who achieves 3% more for an average sale price, for example, secures an additional £6,300, so the potential gains can be considerable.

It seems that the new venture has had a positive reaction from customers, who say it was an obvious thing to do. Estateagent4me.co.uk is not aiming to expand internationally and has no plans to add customer reviews on agents.

There is much debate at the moment at about whether a high street agent is better than an online agent, but Estateagent4me.co.uk says it does not take sides on the issue – it simply provides the data and lets people make their own decision.

“People carry out proper research when buying electrical goods or booking holidays for example, and these represent much smaller financial decisions than selling a house, so it makes complete sense to take a few minutes to be certain you have picked the best agent for your circumstances,” he says.

“Paying a low fee may well be right for some sellers of houses, however many others may well be prepared to pay a higher fee in a bid to secure a higher asking price on their house. By collaborating with the industry and accentuating the positives, we hope that all parties concerned will win, especially customers.”

But how is the service likely to affect agents and the sector in general? Should agents feel threatened? Not a bit of it, Mr Thompson says.

“Our service deliberately accentuates the positives, in terms of agent performance. Estateagent4me shows the top 50% of performers. Initial indications are that feedback re the new service is strong and that agents are keen to show themselves in the best light. We have had positive dialogue with agents that show in the top 50% and also those that don’t. High street agents have been around for many years and remain as strong as ever today, so they are clearly doing a good job.”

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What Tenants Say About Rental Risks

The buy-to-let market is booming at present so it's hardly surprising that increasing numbers are opting to become landlords in order to experience the benefits that come with it. 

With reports stating returns of £112 billion for British landlords over the course of the last year due to the growth of the private rental sector, it isn't difficult to see why. 

Being a landlord brings with it considerable responsibility though, so it is important to know your market and be fully aware of what is going to keep your tenants happy and ultimately ensure they continue renting your property. 

With this in mind, the infographic below from CIA Insurance details the results of a survey of tenants from across the UK. Questioned on their thoughts about renting, their personal experience with both property and landlord and where they believe the risks of renting to lie, the results give a clear view of tenant's experiences, both good and bad. 

It also acts as a great guide for a prospective landlord so you can be fully aware of the areas needed to focus on, what makes a tenant happy and how important it is to be approachable, easily accessible and complete any required work in as orderly a fashion as possible.

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Are online estate agents any good?

In the past 15 years, there has been a revolution in how we buy and sell our homes. It began with the arrival of property portals such as Rightmove, the online shop windows that 98 per cent of us now turn to when we are thinking about moving. And this year a new breed of exclusively online estate agents is disrupting the property market and challenging traditional agencies with high-quality 24-hour services at a reduced cost.

Potential vendors are turning increasingly to online estate agents as they establish a reputation for offering what clients want. Online agents now carry out more than 5 per cent of all property sales in the UK, according to one estimate.

Property consultant Kate Faulkner says: “Unlike the previous internet boom, we’ve got people coming to the market who are proper estate agents as opposed to just sites that you sell on directly. These sites are offering a service rather than you having to do everything yourself.”

Daniel Attia, managing director of online agency YOPA, echoes this view. He says: “We wanted to provide the same service as traditional estate agents while drastically cutting the cost to consumers.” Set up by estate agents with more than 30 years’ experience of sales and negotiation between them, YOPA says it offers the newest way to sell your home, giving the vendor complete control of the transaction while offering round-the-clock advice and support.

It takes less than 10 minutes to add a property to the YOPA website. Within 72 hours it is given maximum exposure by being added to all three main property portals: Rightmove, Zoopla and Prime Location. Vendors can then manage every aspect of the sale, from setting viewing times to chatting with prospective buyers through the integrated messaging service and receiving updates on the easy-to-use YOPA account dashboard. YOPA says this allows vendors to arrange viewings at convenient times and show prospective buyers around themselves, which is popular as the majority of us prefer to deal with would-be buyers direct.

It proved particularly convenient for Ricky Dew, 49, who sold his house at Westcliff-on-Sea in Essex this spring. He says: “It meant I was able to arrange viewings at times that suited me, which was great because I work long hours as a driver.”

Dew, who was looking for a bigger house for him, his partner and son, decided to try YOPA’s service after spending a frustrating year attempting to sell through a local estate agent and receiving no offers at all.

He says: “I found the people at YOPA very friendly and easy to deal with — and placing the details with them was simple and quick.”

Dew was contacted by potential buyers within days of placing his property with YOPA on March 12, and secured an acceptable offer of £230,000 just over a month later. Dew said he was delighted with the level of support he received: "I was able to contact the agents at YOPA around the clock. They were keeping me updated and were available for advice all through the sales process.”

The YOPA team of estate agents can be contacted on the phone from 8am to 8pm, seven days a week or 24 hours a day through the website. Their service begins with a free valuation of the property, although they emphasise that the vendor can change their recommended price at any time. They also check buyers’ ID before viewings, validate every offer to ensure it is authentic, and then negotiate, accept or decline it on the vendor’s behalf.

Once the offer is accepted, YOPA handles the “fiddly bits” – drawing up a memorandum of sale and monitoring conveyancing through to exchange and completion. The huge advantage of online estate agents, in addition to the convenience and control that they bring, is the lower cost. Traditionally, estate agents who are selling a home charge the vendor a percentage of the property price, which can be one to three per cent.

Lloyds Bank estimates that estate agents in London charge £10,402 on average. Online estate agents work differently, charging a set fee with no hidden extras. YOPA offers a choice of three levels of service — Essential, Value and Premium — that cost from £510 to £870 including VAT – and give vendors the option of adding extras such as professional photographs, floor plans and 360-degree virtual tours, or a premium listing on the property portals to catch buyers’ eyes.

The main difference is that vendors have to conduct viewings themselves — but many have readily come to the conclusion that it is an inconvenience well worth a saving of £9,000. YOPA’s set fee means that the higher the property price, the greater the potential saving. Dew was happy to save £2,975 in estate agent fees on his sale.

Alison Reynolds, 57, placed her home in Wandsworth, south-west London, with YOPA on March 30. On April 9, less than a fortnight later, she accepted an offer of £615,000, making an even bigger saving on her higher- priced property. “I have saved £11,825 by using the online service rather than a local agent,” she says. “But at the same time, I found YOPA’s customer service just as good, if not better.”

Reynolds was delighted to receive such a speedy offer. “I needed to sell my home quickly as I am moving abroad. I was astonished how fast it all happened. The offer was made by one of the first people to view it. There was around a week of negotiations, which YOPA took care of for me, and I was very happy with the end result.”

The sale of Reynolds’ home is heading towards completion and she says that she is still benefiting from YOPA’s service. “We have been able to arrange a convenient completion date that suits everyone involved,” she says, “and YOPA is monitoring the conveyancing to make sure it is all going smoothly. I can now get on with organising my move, knowing exactly when it is going to happen.”

She concludes: “I would recommend anyone thinking of selling a property to try YOPA out.”

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