In 2013, there were 43 million families living in the private rental sector in the US. Four years later, this figure is likely to be much higher. Home ownership is something we all aspire to, but whereas owning a home was within reach for our parents, it is now an impossible dream for many young adults.
The global economic crash saw millions wiped off the value of property. Lenders foreclosed on tens of thousands of homes in the wake of the recession, pushing millions of people into the rental sector. Today, many of those families are still there, saddled with debt and unable to afford a mortgage. The economy has largely recovered and unemployment is low, but many young people have huge student debt burdens and they simply can’t afford to save enough money for a mortgage down payment.
Of course, it’s not all bad news. Living in rental housing has its upsides. Buying a home means that you are tied to one place, but if you rent your home, you are free to move on with barely a month’s notice. In the early stages of your career, this is no bad thing. It isn’t so great if you have kids, but for a young couple or single person, the freedom of renting is liberating.
However, there are very few perks to renting an apartment if you end up in the wrong one. For every positive experience in the private rental sector, there are ten horror stories of damp basements, nightmare landlords, and cockroach infestations. You can’t always avoid these problems, but knowing what to look out for does minimize the likelihood you will end up making a bad choice.
What’s Your Budget?
Before you start looking for a rental apartment, get down to basics by drawing up a budget. You need to know how much you can afford to spend on monthly rental payments, so pull together your bank statements, details of student loan repayments, and any other debts you have. Work out how much you spend on commuting to work, everyday expenses, and any other regular payments.
Create a list of income and expenditure, and see how much you have left at the end of the month. This should give you a good idea of how much you can afford to spend on rent. A good rule of thumb is that rental payments should be no more than 30% of your monthly income, so if you earn $2,500 a month, look for an apartment that costs around $750 a month. Of course, this might not be viable if you live in an expensive city or your earnings are low, but use this as a guideline.
Ideally, you need to have enough money left over to pay for out of pocket expenses and build a savings account. If you are living on the breadline each month, it will be very hard to cover emergencies or unexpected bills, which is how people end up in debt.
Once you know how much you can afford to spend on rental payments, start your search for a rental apartment.
Apartment Shares
Most people prefer living alone or with a partner, but shared accommodation is an option if your budget is very low. Shared apartments are common in cities, especially among young people. You rent a room in an apartment and share the communal living space, typically a kitchen and living room. You may also have to share a bathroom.
Apartment shares can be fun, especially if you have moved to a new city and you don’t know a soul, but it is important to find the right mix of people. For example, an introvert will find it tough living with a group of party animals and vice versa.
You may be interviewed by your potential housemates if you apply to rent a room in a shared apartment. This is as much for your benefit as theirs, as personality clashes make or break this type of arrangement. Don’t be too disheartened if you don’t make the cut. It just means you weren’t a good fit for the group dynamic. There are other apartments out there, so keep looking.
Choose the Right Neighborhood
Many people are limited to where they can live because of their job. However, it is worth looking at apartments farther away to if it means paying less rent. Yes, you will have to pay extra travel costs, but more often than not, you can still save money.
City center apartments are often a lot more expensive than rentals in the suburbs. But, if you want the amenities of city life or transport is an issue, be prepared to compromise on other things if the location is critical.
Look at different neighborhoods and pay attention to crime statistics. It’s pointless renting a beautiful apartment in a cheap neighborhood if your neighbors are all drug dealers and you get mugged (or worse) each time you come home from a late shift. Visit a prospective rental apartment at different times of the day. Just because a neighborhood seems nice and quiet at 11 AM, don’t assume it stays that way in the evening.
Red Flags
Once you have a short-list of possible apartments, make appointments to go and view them. Keep your sensible head on and don’t be swayed by sales patter and nice furnishings. Anyone can dress a room to look pretty, but nice curtains and cute cushions can sometimes hide a lot of nasty issues.
- Damp – Watch out for the signs of damp. Does the apartment smell fusty when you first walk in? Damp smells, so use your nose and see if you can detect the telltale odor of rotting wood and mildew. Look for flaking paintwork and drywall. If there is black mold growing along the edge of ceilings or the place feels cold and clammy, it probably has a damp problem. Basement apartments are more at risk, but be vigilant.
- Pests – Cockroaches are a huge problem in cities and are incredibly difficult to eradicate. You will not see cockroaches in the day but look for signs of pest droppings. Small cyclical droppings or dark speckles on the floor or in cupboards are a bad sign. Look for signs of mice, rats and other pests, too. Check inside cupboards and if there is a bed provided, inspect the mattress for any signs of bed bugs. If the apartment is in a southern state, ask the landlord how often he schedules a Lake Norman pest control company to fumigate the place, as the last thing you want is to be dealing with a major infestation when you move in.
- Noise – Noise is never good. Train tracks a few meters from the bedroom window or neighbors in love with the sound of their amplifier will make your life a misery. Be alert to noise around the apartment, and if you can hear the upstairs tenant walking around in bare feet, look for a different apartment.
- Bad neighbors – You may not be able to spot bad neighbors until it’s too late, but crime scene tape over the door and suspicious brown stains in the stairwell are not a good sign. Conduct an internet search for any news stories pertaining to the apartment block to make sure your new neighbors are not well acquainted with the local law sheriff department. If possible, introduce yourself and say you are thinking of renting the apartment. Use the opportunity to get a sense of what these people are like – and look for drum kits and any other antisocial hobbies.
- Creepy landlords – In a perfect world, you won’t have to deal with your landlord much, but if he or she lives in the property or nearby, you may bump into them fairly often. Most property owners are very professional. They collect the rent, fix problems, and stay out of your way most of the time. However, a small minority are creeps. Be vigilant for this type of landlord, and if you get any bad vibes, look for a different apartment. Red flags include lecherous behavior, inappropriate messages before and after meeting, and saying or doing anything that makes you feel in any way uncomfortable.
Be Patient
Don’t rush into taking the first apartment you see. Yes, you may be desperate for somewhere to live, but most leases are six months at a minimum, and six months is a long time to harbor regrets when living in noisy, pest infested apartment and dodging the unwelcome advances of an amorous landlord. Take your time and be patient. Sooner or later, the right apartment will come along.
Plan for the Future
Once you do find the right apartment, sign a lease and move in. For now, you can relax, but it doesn’t hurt to have one eye on the future. Have a ten-year plan and work towards owning your own home. Set aside as much spare cash as you can afford and start saving for a mortgage down payment.