When most people look at renting an apartment or single-family home, they may only consider the monthly rental rate within their budget. However, there’s much more to think about. For instance, who covers the utilities? How much is the security deposit and application fees? And do you need renter’s insurance? These are all crucial aspects for renters to consider while looking at properties. Check out the video below where we go over the true cost of renting and how to budget for more than just the monthly rent.
Contents of This Article:
- What to Consider When Applying for Rentals
- Typical Rental Home Expenses
- Exploring the True Cost of Renting
- Tips and Considerations for New Renters
- Ask the Professionals at BMG
What to Consider When Applying for Rentals
When searching for a new rental home, you may start with a simple Google search, like “rental properties in Philadelphia.” Or, you can always contact your local property management company in Philadelphia to see if they have any properties available.
But from that point, there are several important factors to consider. After all, the perfect property won’t just fall into your lap. Instead, finding a property that fits your budget and needs takes time and research. So, let’s go over some considerations for prospective renters while applying for rental homes.
5 Factors for Renters to Consider
- Budget and Affordability- Before looking at properties, determine how much you can afford to spend on rent each month. A standard guideline is the 30% rule, which suggests spending no more than 30% of your monthly income on rent. However, the cost of renting goes beyond that. So, you’ll also want to consider costs like utilities and other rental expenses.
- Location- Consider the neighborhood you want to live in. Some areas cost more than others, and you may want to find a convenient location to save time and transportation costs. As such, look at the proximity to your workplace, public transportation, schools, shopping centers, and other amenities.
- Amenities and Services- Assess the amenities offered along with the rental, like parking, laundry facilities, gym access, and community spaces. While some amenities can enhance your living experience, they may come with additional costs.
- Type of Property- Look at different types of rental properties, like apartments, townhouses, or single-family homes. After all, each property type comes with varying price ranges, pros, and cons.
- Lease Terms– Before signing a lease agreement, read through it thoroughly. It’s crucial to understand the duration of the lease, rent increase policies, and any penalties for breaking the lease early. Ask your landlord or property manager if anything within the lease agreement is unclear. For instance, you may want to ask about the property’s history of rent increases to get a better idea of how your rent may change over time.
Typical Rental Home Expenses
When renting a home, there are various expenses beyond the monthly rent to be aware of. Forgetting costs like utilities, pet fees, or renter’s insurance can give you a tighter budget than anticipated. So, it’s essential to consider the total cost of renting while calculating your monthly expenses.
Of course, there’s the monthly rent amount, which may or may not include utilities. If your rental rate doesn’t include the cost of utilities, you’ll have to set them up and pay for them on top of your monthly rent. Utilities and services you need may include water, electricity, gas, internet, trash, and more. Generally, the total cost for utilities in a rental can range from $100 to $200 per month.
Aside from monthly utility expenses, there are other costs to consider while renting. For instance, you may be required to get renter’s insurance. While it’s another expense to worry about, it can be highly beneficial for renters in case of theft, damage, or other unforeseen events. Usually, you can expect to pay around $150 to $200 per year or approximately $12 to $20 monthly for renter’s insurance, depending on where you live.
If you plan on living with pets, you can expect to pay a pet deposit, pet fee, or pet rent, depending on your lease agreement. Additionally, you may be required to pay for a parking spot at your rental property. That said, reading through your lease agreement or asking your landlord or property manager which monthly expenses you’re responsible for is important.
While there are several monthly expenses to consider while living in a rental, additional costs may eat away at your budget–and sometimes, you can’t plan for them all. Next, we’ll review some of the hidden, true costs of renting.
Exploring the True Cost of Renting
When renting a property, it’s essential to look beyond the surface and consider the full scope of expenses involved. While the monthly rent is the most obvious to consider, numerous additional expenses come with the true cost of renting. These expenses, which are often overlooked, can significantly impact your budget and financial planning. So, let’s explore how the actual cost of renting compares to the typical rental home expenses you may already know about.
- Initial Expenses
- Property Maintenance
- Parking Fees
- Late Payment Fees
- Move-Out Expenses
- Certain Amenities
- Home Essentials
- Rent Increases
Initial Expenses
Before moving into a rental property, you already pay fees and deposits. For instance, first, you may have to pay application fees, which are charged for processing your rental application and conducting background and credit checks.
Additionally, you have to consider the security deposit, a refundable amount held by the landlord to cover potential damages beyond normal wear and tear. Then, as mentioned before, you may also have pet fees or a pet deposit, which some landlords charge in case a pet causes damage to the property.
Property Maintenance
While landlords are generally responsible for ensuring a habitable property and taking care of repairs, tenants still have maintenance responsibilities. For instance, you’ll want to buy cleaning supplies and consider the costs associated with regular upkeep and minor repairs. Additionally, you may encounter unforeseen expenses if appliances or systems malfunction due to misuse or other issues.
Parking Fees
As mentioned before, landlords may charge a separate fee for a designated parking spot or garage access. Parking fees are usually charged separately from the monthly rent and can be pricey, depending on the area in which you live.
For instance, in Philadelphia, parking costs can be quite high, ranging from $150 to $200 or more per month. Since this can be a significant expense on top of utilities and your monthly rent, it’s crucial to budget correctly.
Late Payment Fees
If you miss the due date for your monthly rent payment, you’ll likely be charged a late fee, depending on how late you are. Each property manager and lease agreement has different terms and conditions, so it’s important to understand the consequences of late rent payments.
If you cannot pay rent on time, it’s best to inform your landlord or property manager before it’s due. After all, they may give you a few extra days to make the payment without penalty as long as they know beforehand.
Move-Out Expenses
Don’t forget about the costs of moving out of a rental. While it may not seem like much, it’s important to consider the cost of a U-haul, moving boxes, a moving company, and cleaning supplies to ensure you leave the property in good shape.
Certain Amenities
Sometimes, landlords or property managers will charge a monthly fee to use certain amenities at a rental property. For instance, if there’s a gym, pool, or other community space, you can expect to pay an additional fee to use them. Additionally, some landlords charge extra fees for appliances or furniture if the rental is unfurnished.
Home Essentials
Paying your monthly rent for an apartment is one thing, while actually paying to live in it is another. So, don’t forget to budget for essential costs that may not be directly related to renting. For example, you’ll need to buy groceries, cleaning supplies, toiletries, and furniture for your rental property. These expenses can add up quickly, so budgeting for them before moving into a new rental property is crucial.
Rent Increases
When you initially move into a rental property, you probably only consider the monthly rate your property manager puts on the application. However, you’ll want to think about potential hikes in rent over time, which can impact your long-term budget.
If you renew your lease after the initial term ends, your landlord may increase the rate. So, inquire about past rent increases and ask if there will be any in the future so you can budget properly.
Tips and Considerations for New Renters
If you’re new to renting or planning on moving to a new area, you’ll want to learn how the rental process works. Additionally, you’ll want to learn how to correctly budget for your monthly expenses and which ones you’re responsible for. As such, here are some tips and considerations for new renters.
- Understand Financial Responsibilities- Before signing a lease agreement, it’s crucial to fully understand the terms and conditions. Know the monthly rent amount, due date, security deposit, and any additional fees associated with renting the property.
- Budget Wisely- Create a detailed budget that accounts for all your monthly expenses, including rent, utilities, groceries, transportation, insurance, and any other costs.
- Consider a Roommate- If the cost of living is high in your area, consider asking a roommate to share rent and other expenses. Splitting bills with another person can significantly reduce your financial burden.
- Communicate With Your Landlord- Maintain regular, open communication with your landlord. If you have any questions or concerns about the property or monthly bills, address them promptly.
- Emergency Fund- Build an emergency fund to cover unexpected expenses, like sudden repairs or medical emergencies. This can give you a bit of a cushion and provide financial stability in times of need.
Ask the Professionals at BMG
When moving into a new rental property, it’s important to understand the full cost of renting. If you only consider the monthly rental rate, you’ll likely end up budgeting incorrectly, leaving you in an unfavorable financial situation. So, talk to your landlord or property manager to fully understand which expenses you’re responsible for in your rental.
Bay Property Management Group offers comprehensive management services around Baltimore, Philadelphia, Northern Virginia, and Washington, DC. If you have questions or need help finding a rental in these areas, contact us or check out our current listings today!
On the other hand, if you’re a rental owner in or around the above areas, we’re here to help! We can take care of the entire rental process, starting with property marketing, followed by tenant screening, maintenance, move-in/move-out reports, and more. Contact BMG today to learn more about our services and how we can help your rental business succeed.
