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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