Millennial Guide to Renting

Jordan Woods

Your credit report will be one of the first things that a landlord will evaluate. Once per year, you can access your credit report from each of the three major bureaus (Equifax, Transunion, and Experian) for free at annualcreditreport.com. Get yours and bring it with you when you meet with landlords.

Your Options and Future Plans

Renting a home gives you the flexibility to downsize or upsize more easily, offers the security of a fixed monthly rent, eliminates maintenance or repair bills, and gets rid of the burden of having to pay real estate taxes.

For many of these reasons, renting a home is often the first step on the journey to owning one. When you own a home, you have a viable asset in your financial portfolio that increases in value by 3-4% per year, on average. To this end, there are things you can do while renting to prepare to buy. First, it’s important to know how much money you’ll need for a down payment on a new home. You can open a savings account to save towards the down payment you’ve calculated.

For those who aren’t ready to own a home, pursuing a rent-to-own-home is an alternative. In rent-to own-homes, the renter typically pays a one-time fee upfront, called option, that gives them the opportunity of buying by some agreed upon date before the rental lease runs out. In some cases, your monthly rent is applied towards your future purchase price. If you decide to purchase the home, you will still need to secure a mortgage or other financing. Be wary of the type of rent-to-own agreement enter into, as some contracts, such as lease-purchase contracts, might require that you buy the home once the lease is up. Lease-option agreements do not require this. Because rent-to-own agreements are a little more complicated, it’s important to find a real estate attorney who can help you sort through your rights and obligations in a given contract.

The Tenant-Landlord Relationship

Your Lease

Ensure you clearly understand every provision in your lease, as it will become legally binding once you sign it. On the same token, it’s okay to negotiate! Negotiating the monthly rent, the policy on pets, and anything else in the lease is perfectly acceptable, be sure to do so fairly and respectfully.

Your Rights

You have the right to live in a viable, livable house. Running water, proper electrical wiring, a sound structural foundation, these are all things that you have the right to as a tenant.

If these conditions are not maintained, talk with your landlord before considering further actions, such as withholding rent or deducting the cost of repairs from your next rent payment.

On top of maintenance concerns, local laws might require your landlord to provide things like deadbolt locks or other measures to ensure safety, so be sure to look into this as well.

Maintaining Proper Communication

Whatever terms you do agree on, even after the lease has been signed, make sure you document and keep everything writing. This is the best way to avoid future arguments or misunderstandings with your landlord. For example, if your landlord sent you an email agreeing to fix a leaky faucet, be sure to save and bookmark that email. Additional questions you should ask and have documented include:

  • How much notice the landlord must give you before entering the home
  • How quickly you will get your security deposit back after the lease ends
  • Under what grounds is eviction legal
  • What you’re allowed to change in or on the house

 

Resources for Renters

Many federal and local programs aim to assist people with finding affordable housing to keeping up with their utility bills. The Department of Housing and Urban Development (HUD) is a great place to start when looking into these programs.

 

Financial Counseling

Setting up a monthly budget to balance rent against other expenses can be helpful. The key is to team with a trusted resource who has your best interest at heart. A national nonprofit such as GreenPath Financial Wellness provides direct access to certified housing counselors. Learn more here: https://www.greenpath.com/renters/

Challenges Keeping Up with Rent? Resources to Help Manage Through Hardships

GreenPath has a handy guide that offers six steps to take for those experiencing financial hardships related to rental payments. Check it out here: https://www.greenpath.com/6-steps-renters-guide/

Last But Not Least…

GET RENTER’S INSURANCE

Your landlord’s insurance does not cover any loss or theft that you might experience, if anyone sues you for injuries suffered in the house rent. For less than $30 per month (typically), you can give yourself further protection from unforeseen circumstances.

Renting a house is a great way to prepare for homeownership or to keep your options open when it comes to future living arrangements. By preparing to be approved for a home rental and having a well-informed plan to deal with all that comes with it, you are set up to enjoy all of the freedoms that come with renting a home.

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