5/7/2012 9:49 AM ET|
10 biggest mistakes renters make
A bad housing market has been good for landlords. If you're among the many now looking for an apartment, be aware of these potential pitfalls before you sign a lease.
One effect of the housing market's collapse has been to turn thousands of homeowners into renters. With owners losing homes to foreclosure or selling properties they can't afford, the homeownership rate has plunged; it now stands at 66.2%, lower than any time since 1997. But this has created a huge demand for rental apartments and houses. The rental vacancy rate fell to 9.5% for 2011, the lowest level since 2002.
Even so, all markets are local, with cities on the coasts generally seeing the lowest rental vacancy rates. At the bottom is New Haven, Conn., with a rate of 2.1%, according to Reis, a provider of commercial real estate data. Nationwide, that tight market drove up rental prices almost 2.5% last year.
But competition for apartments can trap renters into the scarcity mentality that helped fuel the housing bubble in the first place. "If I don't act now, I'll never find another place this good at this price," goes the thinking. And while you may have to look longer when rentals are less plentiful, it's still better to think about the long term. Though all state rental laws vary, and single-family home rentals can differ from large apartment complexes, in general, here are some costly mistakes to avoid when renting:
1. Signing a lease without reading it carefully
No matter how frenzied the market, don't rush into a rental agreement if something doesn't feel right. For example, does the fine print stipulate that you have to pay extra for utilities, water or parking, or were those costs sold as "included"?
Take the document home and have an attorney, or a friend or family member who has more renting experience than you, read it over. To ensure the lease doesn't violate your tenant rights, check out the Department of Housing and Urban Development's website, which provides a state-by-state list of what's legal. Eric Feinberg, a tenant lawyer in New York City, says, "I can't tell you how many people knew when they were signing that it felt wrong and how much more it cost them in the end."
2. Signing a lease that doesn't fit your life
Think you might want to sublet in the future? Do you have pets or frequent visitors? Think about your lifestyle and what you need in a rental. Some leases will charge you extra for guests who stay more than two days, forbid subletting or make the cost of repairs your responsibility, including problems that pre-date the term of the lease. These are details you'll want to go over carefully before signing, and if there are items on the rental agreement that you don't like, try negotiating with the owner to have them removed.
3. Not taking pictures when you move in
Almost everyone has a digital camera or cellphone these days. You should use yours to document the state of the property before you move in. You'll also want to note pre-existing damage on the landlord's move-in checklist. If the landlord doesn't have one, make your own list and send it to the landlord, signed and dated. And before signing a lease, get in writing any major repairs the landlord has promised to make.
Renter Laurel LaFlamme of Charleston, S.C., says her landlord promised to fix the backyard pool when she and her family moved in. Two years later, the pool is a murky breeding ground for mosquitoes and frogs and has made her backyard unusable.
4. Not checking out the neighborhood
Mitchell Weiss, a professor of finance at the University of Hartford in Connecticut who advises student renters, recommends that if you're serious about a rental, knock on the doors of a few neighbors to ask about the building's upkeep and neighborhood safety. You also can check into crime patterns with the local police department or on websites like CrimeReports. And come back to visit the property at night: That quiet street corner could look quite different after sundown.
5. Not getting renters insurance
A landlord's insurance policy doesn't cover the tenant's personal property. So if there's a flood, fire or water-line backup and your valuables are damaged, you're usually responsible for the costs unless the landlord was aware that a dangerous condition existed and failed to correct it. After you sign the lease, make getting a renters policy the first item on your to-do list. Policies are relatively inexpensive; premiums usually range from $100 to $300 per year.
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6. Paying too much in rent
Apartment evaluation site ApartmentRatings.com has tips on ways tenants can save money. Those include renting from individual landlords, who value long-term tenants and are less likely to raise rent quickly; searching in the middle of the month when there are fewer people out apartment-hunting; and signing the longest lease you can afford, because landlords often discount for long-term tenants.
7. Not taking action if your landlord breaks the law
When few apartments are available, some landlords believe they can get away with letting repairs go, allowing unsafe conditions to persist or increasing rent more than local regulations allow. Most often, landlords count on their tenants being ignorant of the law.
"Tenants give up rights and fail to assert rights all the time" because they don't know what they're entitled to, says tenant lawyer Feinberg. Don't be one of them. Local governments and nonprofits often provide booklets and online materials to educate you on the basics. There's also LawHelp.org, which has links to legal information on tenant rights in all 50 states. You can also check your phone directory for government agencies whose names mention housing, consumer affairs, or tenants.
The best landlords know the law and follow it. Those who don't shouldn't be able to count on your ignorance.
8. Passing up possible tax benefits
When landlords pay local property taxes, they usually pass on part or all of the cost to their tenants in the form of higher rent. But they also benefit from the road, school and sanitation improvements that those taxes pay for. Some states -- California, Missouri and Maryland, for example -- have tried to correct this by providing a tax credit to renters. Contact your state tax department to see if yours does, too.
9. Eliminating rental prospects based on square footage alone
A great layout can make an apartment with less square footage feel bigger than one with more, says New York City real estate agent Brad Malow. He recently showed a 750-square-foot apartment that felt tiny because it included a long hallway that served no function, while a smaller 600-square-foot unit seemed spacious because it had an open layout. "Renters miss opportunities because they merely are looking at numbers on a page," Malow says.
10. Not taking your roommate to appointments
Finding a place can consume hours, days or even weeks, and it's tempting to save time by splitting up visits to prospective apartments with your roommate or significant other. But in group or couple situations, Malow says it's a waste of time not to have all parties at the initial appointment. In a hot rental market, by the time you get the second person to look at the apartment, it's already gone.
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1. Trying to rent a property that you can't afford--and if your rent will eat up over 1/3 of your income, you can't afford it.
2. Not reporting problems early on. If there's a leak, it only gets worse when you put off notifying the landlord.
3. Not doing routine maintenance--like changing furnace filters. That can damage the furnace and increase your heating bill.
4. Not maintaining the yard--like you agreed to do in the lease. The landlord doesn't like getting violation letters from the POA.
5. Trying to hide extra tenants.
6. Trying to hide a pet--particularly one that's a dangerous breed.
7. Not paying the rent on time or paying with a bad check. If you have a problem, discuss it with the landlord.
8. Not giving the landlord notice as required in the lease when you decide to vacate the premises.
9. Attaching permanent items--such as an antenna to the roof--and trying to take it with you--thus damaging the roof. Enjoy the house! Put your pictures on the walls. But if you attach anything permanently, it stays when you leave.
10. Not cleaning the house before you leave. You want your full deposit back, don't you?
As a landloard. My favorite tenant is the one who reads the rules, lease, all the goverment information supplied on fire, water and mold. Talks it over with me before renting.
My favorite tenant also lets me know when rent will be late, if repirs need to be made and makes it easy to get into the unit to repaire.
My very favorite tenant does not try to solve a problem with out talking to me first. I love those tenants they save me so much time and money.
RENTERS- if someone is willing to rent you there home. then TAKE CARE OF IT as if it were your own and you will have a wonderful Landlor.
OWNER/ LANDORDS- If something breaks on the property that you are renting then you need to fix before you start demanding your rent. NOBODY WANTS TO LIVE IN A DUMP.
finding the right renter is one of the biggest time consuming task one could encounter . of a house i own. I went through one hundred twelve people only two were had good quailtys for renting a home...
get this ! one application said " i am being evicted from my appartment ,when can i move in " ha ha i just could not belive what i was hearing ...i truely believe there are more bad renters out there than one would realy know ,espicialy the ones that like to trash a house at the expence of the landlord..
MrsM67. I also live in Arizona. I am a renter. It is AGAINST the law for your landlord to provide airconditioning if you had it when you moved it. Swamp cooler whatever you had. Contact your city officials first.
I'm 2fast4u: HOW DARE YOU! We have been married 27 years. First in the military. No sense to buy a home we transferred to much.
Now we're with the federal govnt. Once again we transfer every several years the longest in once place was 5 years. We rent.
NOT ALL RENTERS ARE BAD. We pay our rent on time if not early. We take care of the house as if was our own. My husband does small repairs if need be. We know the renter's rules/landlord's rules inside & out.
We have never put holes in the wall. We have never let people live with us that weren't on the lease. We have never skipped out on a lease. God I could go on & on. IT IS NOT WORTH MY HUSBAND'S CAREER!
Could the problem have been you were a bad landlord?! Location of your rentals?! Hmmmmmm.
As a landlord, I do a walkthru with each & every applicant, and ALL points of the lease are covered. I specifically request immediate notification of any repairs needed, but sometimes renters are slow to notify and the damage gets even worse. I would like my renters to enjoy the apts. and treat them as their own, however some people are irresponsible and just don't care.
As far as I am concerned, the biggest mistake a renter can make is renting for the long term. Buying a house, even if the price stays stagnant or depreciates a little, is much more cost effective. Look at it this way: would you ever rent a car for longer than a few days?
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