Why do people rent instead of buy? Well, despite the puzzlement over this from long-term homeowners who can't understand why their renter pals are "throwing away money each month," there are plenty of good reasons. Maybe they're moving to a new city and aren't sure they'll stick around. Maybe they are suffering from sticker shock after checking out how much it costs to buy a home. Maybe they're saving up for a down payment to make homeownership a reality down the road. Maybe the finances for renting just generally work in their favor. And maybe they just like moving to a new place every few years (yes, these people exist).
But finding a great rental can sometimes be nearly as challenging as finding a dream home to buy. Contrary to myth, it isn't as easy as perusing some listings and taking your pick.
Just so you're prepared, here are the key things to know for renting a great apartment -- from figuring out how much rent you can afford to pay to the paperwork you'll need handy to what to look for on your lease.
How much rent can I afford?
You've heard about "rules" of the maximum monthly amount you should consider spending on a rental in relation to how much you earn -- and, depending on whom you ask, they run the gamut. But the best rule of thumb is to make sure your rent is no more than 30% of your net income (aka what you're paid after taxes). So if your monthly paycheck amounts to $3,000, multiply that by 30% and you should spend no more than $900 per month on rent.
How to find an apartment
- Are you planning to have a roommate? That can help you save money -- splitting a two-bedroom unit plus utilities will be cheaper than shouldering a one-bedroom alone -- but if so, you'll want to choose carefully. And you should probably pick a roommate before you start searching.
- Location: Is it near where you work and (if you lack a car) public transportation? Does it seem safe? Enter the address into My Local Crime to access any recent local crimes from vandalism to shootings.
- Amenities: Many rentals these days have amenities such as a gym, pool, parking, common room, Wi-Fi and/or cable at no added cost. Some even arrange regular social events for its residents, which can be a boon if you're new in town. So give some thought to what would enhance your living situation and shop accordingly.
Paperwork you'll need to rent an apartment
All apartment communities will require prospective residents to complete an application, says Doug Culkin, president and CEO of the National Apartment Association in Arlington, VA. Culkin recommends contacting the leasing office to see what it requires. Common items include the following:
- Driver's license
- Social Security card
- Vehicle registration and proof of insurance (often required if the building includes parking)
- Proof of income, such as a W-2 or pay stub
- Rental history -- addresses and names of former landlords
- An application fee, which will vary by community
You are also likely to need to give permission for a credit check and a criminal background check.
Review your rental lease
"Perhaps the most important step in the process is to actually read and understand the lease," says Culkin. (You'd be amazed at how many people don't.) After all, this legal document includes your rent, by when it should be paid, any rules you'll need to adhere to (e.g., whether or not pets are allowed), and the penalties you'll face for not following them (which could be as harsh as eviction).
Since the stakes are as high as homelessness if you ignore, or just aren't aware of, the restrictions you're living under, don't just sign this document without giving it a thorough read.
"Ask the property manager or the appropriate community employee to review the lease with you in person, line by line. This will give you the chance to point to any questions or concerns you might have identified during your own lease review," Culkin advises.
And while you're reviewing your lease, be sure to look into a rental insurance policy to safeguard your belongings.
-- -- -- -- --
Watch: Is It Smarter to Rent or Buy?