The common response of, “Why buy when you can own!?” is pretty common, especially when you are talking to a real estate agent. Of course, there are huge benefits that come with owning a home as opposed to renting, but there are equal benefits to renting under certain circumstances.
If you have: Job security for the foreseeable future that is unlikely to relocate you, Money to close, will and ability to make repairs as necessary as well as maintain the home, ability to obtain financing (or pay cash), then owning may be a great decision for you. If any of these do not apply to you, then renting may very well be a choice that is more suitable for you.
If you have never rented before, below is a glimpse of what you can expect. Please note, that absolutely everything in Real Estate is negotiable and these examples are not set in stone, only very prevalent in today’s market.
First things first, consult a Real Estate Agent. We are not just sales people. A contractual representation agreement enables a fiduciary duty from the agent to you. This means, your interest comes before anything else and any advice provided should be with your interest in mind, not our commission. Finding your own representation will be key, calling the agent that is listing the property will limit their ability to serve you fully and or the landlord depending on the representation agreement’s in place. You should look for an agent you are confident in, not only in their experience and expertise, but also their dedication to you as a client. Once you pick one, they can help you find and get into the home that is right for you.
Income requirements: Generally, a landlord will want to see a gross income (Income before taxes and with holdings) of 3x the rental amount.
Credit Requirements: This can be less critical than purchasing a home, but still very important to a landlord. If you’re over 600 you’ll most likely be fine. Lower than that, you may be asked for additional deposits, this will really be based on the landlord. Knowing what your credit looks like ahead of time can be a huge factor. If you do not regularly monitor your credit, www.myfreecreditreport.com or Credit Karma are both free and simple to set up to not only know your score but also any derogatory marks that the landlord will see when reviewing the application.
Move in Costs: For single family residents like free standing homes, town homes or duplex’s, typically request a deposit equal to the one months rent. Pets can range from $300-500 per pet and may also include a monthly pet fee in addition to rent. Apartments can be much less in initial deposit and total move in.
Application: There will also typically be an application fee that can range from $25-100 per person and most landlords will require application for any resident over 18, even if they are not listed on the lease agreement. Applications will consist of income verification, prior rental history if applicable, credit and criminal back ground.
Which brings us to a critical point that will apply to some, not all: If you know that you may have issues on anything the landlord will see when reviewing your application (or any other resident) such as credit, rental history, income or criminal back ground, discuss them with your agent. If you’ve been evicted, have any prior felonies or drug related criminal charges, bankruptcy’s, broken leases, repositions etc. The best thing you can do is draft a letter of explanation to potential landlords. Keep it as short, and as informative as necessary. You want to explain your circumstances without losing their attention.
Leave it at that. A landlord takes a risk with any tenant, in hopes of obtaining a return on their investment. If you, on paper, look like a risk you want to try to show it’s a minimal risk. This information should be used by your agent to pre-screen landlords. Most landlords won’t approve an applicant with out an actual application, but most will tell you they won’t accept certain conditions and that will save you a wasted, non-refundable application fee. If applications are $50 each and there are 4 applicants. You’re agent simply asking, “I have clients that have viewed the home and would like to submit an application to rent, but applicant A has X,X &X issues that have been addressed, would you be willing to consider?” Can very likely save you $200.00 if the answer is, “absolutely not.”
Once an application is approved, a lease will be generated by either your agent with you or by the landlord’s agent for you to review. Your agent should be able to spot anything that may be revisable as well as explain what everything means. If acceptable, with both yours and landlords signatures, you will have an effective lease contract with a move in date. Deposits are due immediately following lease agreement. First month’s will be due prior to receiving key’s and then the home is yours during the term of the lease.
Important for all Renters:
Depending on who you talk to, the benefits of owning property vs renting can easily be swayed one way or the other. The bottom line is you. What you want and what you need. If you’re looking for a real estate agent to buy, sell or rent a home, Contact me, I would love to interview for the position of your agent!
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