Signing a lease for the first time is a huge step in the rental process. But, do you know what to watch out for before making this final commitment?
Whether it's your living location, budget, expenses, or the nitty-gritty details. It's essential to consider them all.
We've written this comprehensive guide of items to check before signing a lease.
1. Your budget will depend on your living location
Let's look at the reality of things. The average cost of rent all across the nation has been quickly increasing. Metro areas, especially, have seen their rent growth rates skyrocket.
So, when you're preparing to find a rental, you should first establish a budget. Start by learning the average cost of rent in the area of your search.
Keep in mind that larger cities will have higher rent costs. However, living in a city's suburbs may come with more recurring expenses. Some points to remember when figuring out a budget are the following.
▪️ Rent. If you live downtown, rent costs will definitely be higher. On top of that, it's common for rent to increase every year. Living in the suburbs means rent can be as much as 35% cheaper than living downtown.
▪️ Transportation. It's easy to forget that commuting costs can easily rack up. Car insurance, gas, and car payments can quickly eat up your budget if you need a car for your daily travels.
▪️ Grocery & food. Groceries and restaurant dining will be more expensive depending on where you live. Living in metro meccas tends to be more costly, so the cost of food will reflect that.
▪️ Utilities. The cost of utilities may be higher if you live in a more expensive city.
▪️ Work opportunities. Metro areas naturally have more work opportunities. You'll be paying more to live in the city, but there's a good chance it will be higher than if you were to work in the suburbs.
▪️ Healthcare. Healthcare costs regularly fluctuate depending on where you live. Rural areas have less competition and access to healthcare- resulting in higher prices. On the other hand, cities with super high costs of living will have more expensive healthcare too.
These are just some expenses to factor into your monthly budget. When picking a living location, don't forget to think about the big picture, not just the rent cost.
2. You can save money on rent in different ways
Rent doesn't always have to make such a huge dent in your funds. There are many opportunities to save some cash on your monthly rent.
Below are some ways you can save money while renting.
Referral programs or incentives
Many properties will offer tenant referral programs. These programs allow you, as an existing tenant, to recruit other people to sign a lease. If they become a new tenant, you're given a reward for filling that vacant spot.
The reward can be anything from a cash bonus to free access to amenities to a temporary discount on the rent cost.
Cash back programs
This is an up-and-coming service in the rental market. Rental cash back programs pair prospective tenants to a suitable rental property.
If a lease is successfully signed, the tenant receives cash back earnings. Lighthouse and its team of experts can do that for you! We help you find a home while allowing you to earn up to $1,000 in cash back.
Negotiating your lease
The art of negotiation can find its way in anything, even lease agreements. Depending on the rental market and time of year, you could be in a perfect position to negotiate the rent price.
You could negotiate longer leases or pay several months upfront for cheaper rent. Moving in during the slow months or giving up a parking spot are other items you could use to your advantage.
3. What utilities are included in the rent
It's pretty rare to see a rental unit that pays all the utilities. However, many landlords do include some utility expenses in the cost of the rent.
Different apartment complexes will offer their own set of utilities or amenity packages. It's common for apartments to include water, trash, and sewage costs in the monthly rent price.
Usually, electricity, gas, internet, and cable bills are not included in the lease. It's up to you, as a tenant, to set up an account and pay for these utilities.
Find out what utilities will be your responsibility and details involving their setup.
4. Lease lengths differ
Many don't know that depending on the length of your lease, your agreement type will change. You'll commonly hear rental and lease agreements being used synonymously.
However, lease agreements are always for those renting for more than a month (30 days). Leases have fixed end dates- usually ending a year from the move-in date (12 months long).
On the other hand, some landlords will offer leases that are either 4, 6, or 8 months long. Your location will most likely determine what lease lengths are available.
For example, school areas generally offer shorter leases. Since school is semestered, some leases will be 8 months long to accommodate students.
5. Realize the importance of having renters insurance
We've all heard the horror stories. People's homes get wrecked because of break-ins or wear-and-tear.
In case of damage, the renter's insurance policies will usually cover the following items.
▪️ Personal belongings. Items could be destroyed or go missing if your home is ever broken into. Most insurance policies will cover up to a certain dollar amount of the stolen items.
▪️ Loss due to random disasters. If you experience a burst pipe or kitchen fire, your renter's policy will cover the cost of those damages.
▪️ Liability. A person getting injured in your home means the possibility of you getting sued. Having renter's insurance can protect you during these times. They usually cover around $100,000 in liability coverage.
Something awesome about renters insurance is that it is very cost-effective. The average cost of one is about $168 per year. If you're looking for a flexible insurance plan, Lighthouse can easily set a policy up for you.
6. You should know about upfront, ongoing and hidden rent charges
Surprisingly, the entire rental process comes with way more expenses than anticipated.
Upfront or hidden rent charges are often forgotten and come to us as a surprise. Be financially prepared for them so that you don't find yourself in a pinch.
1. Rent Application Fees. Many property management companies will regularly charge a fee to apply for a rental. The cost of these applications is usually affordable (around $40). The good news is that Lighthouse entirely covers this expense for you!
2. Advances on Rent. On top of paying your first month of rent, you'll also have to pay your last month of rent in full.
3. Security Deposit. Most rentals will make you pay a security deposit fee when you sign a lease. They usually equate to 1-3 months’ worth of rent. You will receive that money back at the end of your tenancy if your unit has no damages.
4. Pet Fees or Pet Deposit. Moving in with your pet can come with some extra costs. Landlords will usually charge pet fees or a pet deposit to cover the cost of pet wear and tear.
1. Rent. This one is kind of obvious. You'll have to fully pay your rent every month through a money deposit, cash, or cheque to your landlord.
2. Renters insurance. As mentioned earlier, many landlords require their tenants to have renters insurance.
3. Utilities. Whichever utilities aren't covered in the rent cost becomes your monthly bill to pay. Frequent utilities paid by the tenant are electricity, gas, internet, or cable.
4. Parking spot. If you want to claim a parking spot in your rental building, you will most likely have to pay for it. Parking spot costs vary according to location but average at around $75 a month.
5. Storage space. Similar to parking spots, you have to pay for storage units if you're looking for extra space. Prices vary by location and the size of the storage space.
6. Laundry. Many rental complexes won't offer in-unit laundry. However, they'll have coin-based laundry machines available in their buildings.
1. Breakage fees. Thinking about breaking your lease? Before you do, check to see how much the breakage fees are. They're usually flat fees that can cost as much as three months’ worth of rent.
2. Move-in charges. There are some cases where landlords charge a move-in fee. This covers the expenses associated with preparing the rental unit for you.
3. Move-out charges. On the other hand, there are scenarios where landlords charge move-out charges. This non-refundable fee pays for any repairs or cleaning the landlord may have to do once you move out.
4. Moving costs. Moving expenses can add up quickly. Depending on where you live or how many items you own, you may have to hire a moving truck or a moving company.
5. Tenant repairs. Typically, if you live in an apartment building, landlords will take care of the cost of repairs. However, sometimes you will have to take care of repair costs if you break or damage something.
7. Check if roommates, guests, or subletting are allowed
Before signing any lease, it's essential to read over the rules and guidelines. What kind of rules does your lease have for having guests over or subletting?
Any building that has more than 4 rental units automatically allows any tenant to sublet. However, private landlords may prohibit subletting. If you choose to rent privately and want to sublet the unit in the future, make sure it's allowed.
Similarly, adding or changing roommates may not be allowed. Some leases only allow tenants to be changed once the existing lease is over.
No matter what your situation may be, you want to make sure you cover all your bases. Clear up any of these questions or concerns before signing your lease.
8. Pay close attention to the unit during in-person viewings
You can find out a lot about a unit or the building when you view it. Look to see if the unit is clean, pest-free, and sanitary.
If a building has pests, such as cockroaches roaming its hallways, that's a red flag. Chances are that the apartment units have the same issues.
Other points to look for are if all appliances, light fixtures, and outlets work. You can also check if the drain is clogged or if the unit has any visible damages.
You shouldn't limit your viewing to only checking the building or rental unit though.
You must get a feel for the surrounding neighborhood as well. Do you feel safe? Does this location fit your lifestyle? How long will your commute be? These are general questions that will help you pick your perfect rental home.