Heads Up: 5 Things You Should Know Before You Rent Your First Apartment
The experts weigh in.
Published May 17, 2019 7:00 AM
If you’re reading this story, there’s a good chance you’re on the hunt for your first apartment. Congratulations! Moving into your first grown-up home is a big, exciting milestone. Not only can you do whatever you want whenever you want, but you also have the power to design your space to your liking. It’s a thrilling life step, but it also comes along with a whole lot of paperwork, research, and inevitable, last-minute problems.
So, before you scour the web for design inspiration, you have to visit a handful of listings, get all the necessary paperwork in order, and read all the fine print on your lease. To be honest, the whole thing can be insanely stressful.
But don’t panic! We’re here to help. We talked to two real estate agents from Compass about practical tips every first-time renter should know. That way, you can breeze through the formalities and get onto the fun stuff. Ready?
Know when the price is right
You don’t have to be on the real estate hunt to understand how important it is to set a reasonable budget for your space. After all, being unable to pay your rent can affect your credit or lead to eviction. But how much should you set aside for your apartment?
According to Nanci Isaacs, senior real estate specialist at Compass, it all depends on your salary. “There are many schools of thought on this topic. It’s really on a case-by-case basis,” explains Isaacs says. “The golden rule is your monthly rent should be a third of your annual income.”
For example, if your first job pays $35,000 per year after taxes, divide that by three, and then divide that by 12 to arrive at your ideal monthly rent budget. When you do the math, you’ll learn that you should budget roughly $970 a month toward rent. Keep in mind this number is only for your rent, not utilities, water, or internet.
Call in reinforcements
Just because you found a place that’s well within your budget doesn’t mean you’re in the financial clear. For example, if you’re looking for an apartment in New York City, you need to make 40 times your monthly rent. Otherwise, you’ll have to have a guarantor co-sign your lease.
Essentially, it’s someone who promises payment of the lease should rent not be paid. In addition to people who don’t make 40 times the monthly rent, a guarantor is often applied to those with poor credit history, lack of job or renting history, as well as recent graduates and non-US citizens.
Though guarantor doesn’t have to be your parents, they will have to have your financial back. Plus, they will likely have to submit their own credit report and other important paperwork.
Let’s face it: Finding your first adult apartment can be intimidating, especially when you’re living on your own. While a realtor can help make sure you have all the necessary paperwork—and can answer can pertinent questions along the way—it’s not always the most time- or cost-efficient option.
“Nine times out of 10, you’ll find a ‘For Lease by Owner’ apartment faster than working with a real estate agent will find a place that meets your criteria,” Isaacs says. If you’re moving into a new city or want to dodge those pricey broker fees, it may be in your best interest to do your own research.
Assemble your paperwork
Ready to apply for an apartment? You’re going to need a lot more than a single application. In addition to the application the building or realtor supplies you, Compass Los Angeles’s Melissa Macfadyen says you should submit contact information for current as well as previous employers and landlords. The broker associate also recommends a credit report with a FICO score from one of the three bureaus: Equifax, Experian, and TransUnion.
“Renters should always be prepared with copies of at least two or three months of bank statements and pay stubs as well as a valid, government-issued photo ID,” Isaacs adds. “And, if recently hired, a copy of an offer letter from the HR department or employer.”
It seems easy enough if you’re a full-time employee, but what are you supposed to do if you’re a freelancer or an entrepreneur? “You will need to provide tax returns and bank statements as proof of income,” Macfadyen recommends. “ If this is not satisfactory, you will probably need a co-signer.”
Read your lease—and stick to it
If you’re signing a lease for an apartment, congratulations: You found an affordable home, determined if you needed a guarantor, filled out all the paperwork, and voilà: Move-in day is right around the corner.
While there’s light at the end of the tunnel, that doesn’t mean you should slack off now. In reality, reviewing your lease is one of the most important parts of the whole process. “Read your lease or rental agreement before you sign it and ask questions,” says Macfadyen. “All real estate transactions should be in writing, and this is true of rental agreements.”
The broker adds it’s important to receive a copy of the agreement and have any amendments recorded in the contract. “Don’t assume things will change once you live there because they won’t,” Macfayden says. “The biggest mistake is probably adding somebody to the household who’s not on the lease, adding a pet when the lease says no pets, or smoking when the lease says no smoking. These are grounds for eviction.”
Before you do anything to your space—like paint your walls—check with your landlord first. And, of course, get it in writing. Now, it’s time to start decorating.