At some point in your life, you are likely to rent your place of residence. You may rent when you first move out of your parent’s home and can’t affored to buy a house or later in life when you want to avoid the activities required to maintain your own home. An estimated 35 percent of U.S. Households live in rental units. As a tenant, you pay for your right to live in a residence owned by someone else.
An apartment is the most common type of rental housing. Apartments range from modern, luxury units to simple one or two bedroom units in quiet neighborhoods. If you need more room or have a couple of kids, you should look into renting a house. You will be getting more space, that will be costing more, and you will probably have more responsibilities for maintaining the property. Now if you need less space, you can rent an efficiency, a room in a house, over a garage, or in a basement. You can look for available rental units in newspapers, real estate and rental offices and ask your friends if they know about availalble units.
Advantages of Renting
The three main advantages of renting are mobility, fewer responsibilities, and lower initial costs.
Renting offers mobility when a location change is necessary or desirable. Different factors make relocation necessary, like a new job, a rent increase, the need for a larger apartment, or the desire to live in a different community. It is alot easier to move when you are renting than when you own a house.
Renters have fewer responsibilities than homeowners, because they usually don’t have to worry about major repairs and maintenance. However, you will have to do minor repairs and cleaning. Renters also have fewer financial concerns.
Their main housing costs are rent and utilities, while the homeowners pay property taxes and for the upkeep.
Lower Initial Costs
It is less expensive to take possession of a rental unit than to buy a house. While the tenant usually pays a couple of hundred dollars security deposit, a new home owner is likely to have initial costs of several thousand dollars.
Disadvantages of Renting
Renting offers few financial benefits, imposes a restricted lifestyle, and entails legal concerns.
Fewer Financial Benefits
Renters don’t enjoy the financial advantages that homeowners do. They can’t receive tax deductions for mortgage interest and property taxes, plus don’t benefit from the increased value of real estate. Furthermore, they are subject to rent increases over which they have little control.
Renters are generally limited in the types of activities they can pursue in their place of residence. Noise from the stereo system or parties may be monitored closely by the landlord. Plus, tenants are often subject to restrictions regarding pets.
Most tenants sign a lease, a legal document that defines the conditions of a rental agreement. This document provides the following information:
1. A description of the property, including the address.
2. The name and address of the owner/landlord (the lessor).
3. The name of the tenant (the lessee).
4. The effective date of the lease.
5. The length of the lease.
6. The amount of the security deposit.
7. The amount and due date of the monthly rent.
8. The location at which the rent must be paid.
9. The amount and date due of charges for late payments.
10. A list of the utilities, appliances, furniture, or other facilities that are included in the rental amount.
11. The restrictions regarding certain activities (pets, remodeling).
12. The charges for damages or for moving out of the rental unit later (or earlier) than the lease expiration date.
13. The conditions under which the landlord may enter the apartment or rental unit.
A lease provides protection to both the landlord and the tenant. The tenant is protected from rent increases during the lease term unless the lease contains a provision allowing an increase. In most states, the tenant can’t be locked out or evicted without a court hearing. However, the lease gives the landlord the right to take legal action against the tenant for nonpayment of rent or destruction of property.
Cost of Renting
A security deposit is usually required when you sign a lease. The security deposit is usually one month’s rent. This is an amount of money the landlord holds to cover the cost of damages done to the rental unit during the lease period.
Some state and local governments require that the landlord pay you interest on your security deposit. After you vacate the rental unit, your security deposit should be refunded within a resonable time. Many states require it to be returned within 30 days of the end of the lease. If money is deducted from your security deposit, you have the right to an itemized list of the cost of repairs.
As a renter, you will incur other living expenses besides monthly rent. You will have to pay electric, water, heat and telephone, plus cable if you decide to get it installed. Make sure you calculate those costs into your rent, to see how much your total housing cost a month will be.
If you move into a rental unit, you want to look into getting renter’s insurance. Renter’s insurance is one of the most overlooked expenses of people who live in apartments. Damage or theft of personal property (clothing, furniture, stereo equipment, jewelry) is usually not covered by the landlord’s insurance policy. Make sure you get the coverage you need and get different quotes from different insurance companies.
Both renting and owning property have advantages and disadvantages. You should decide what is best for, your life situation, life style and financial situation.