Renting an apartment for the first time is an exciting step into adulthood but it's a big commitment financially so you want to make sure you do your homework and make a choice that's right for you — and your budget.
First, you have to time it right when you're looking at apartments — you don't want to start too early or too late.
If you're in college, you should start at least nine months in advance, since you're negotiating for next year. But if you have graduated from college and are looking for an apartment to move into soon, you should start looking about six weeks in advance of when you want to move in.
However, it's never too early (or too late) to prepare yourself for renting your first apartment. You should be doing your research, figuring out what you can afford and start to save money for the move months in advance.
Jimmy He, a junior at Northwestern University, started to search for his first place off-campus nine months in advance in order to move in this fall in Evanston.
"Even before we were on campus, we were looking at houses, talking to landlords," He said.
When He and his roommates finally found the perfect match, a house shared by six, they had to sign on immediately to not lose out on the opportunity.
"We knew that if we didn't sign this lease as soon as possible and agreed to the landlord's terms, they were going to get someone else willing to pay the fees and the price they're charging," He said. "It was definitely hyper-competitive and it made it difficult because for us first-time renters, we really didn't have a lot of say in different prices and fees."
How much rent can you afford?
Indeed, once you start looking at apartments, things can move fast. So, one of the first things you need to do before you even start looking at apartments is figure out how much you can afford to spend on rent.
It's often surprising to college students to find out how much rent is — especially in a big city like New York. But real estate has been going crazy these days, so rents have been soaring even higher than usual.
The average monthly rent in the U.S. jumped nearly 16% to $1,849 in May, a fresh record for a 15th month in a row, according to Realtor.com. And, for those of you interested in moving to New York City after graduation, the average rent there just hit a mind-blowing $5,000 a month, according to a report from Miller Samuel and Douglas Elliman.
So, how do you know how much you can afford?
Define your budget
You can't start searching for an apartment without first setting up a budget. It's a simple equation: You need to separate your needs versus your wants, explains Lauryn Williams, a certified financial planner, a four-time Olympian and founder of Worth Winning, a digital platform that provides financial advice for young professionals. Everything essential, such as costs for food, utilities and services such as Wi-Fi, fits in the first category. Everything else, like streaming services, goes into the second one. A common way to break that down is the 50-30-20 rule, where 50% of your income goes to needs, 30% goes to wants and 20% goes to savings. Rent falls within the needs category, but you have to leave room for all the other essentials.
Williams explains that the monthly rent shouldn't be more than 30% of your income.
"So if you make 1,000 bucks a month, your rate should be $300," Williams said.
When Elijah DuPonty found out in March that he was accepted into the master's program in museum studies at New York University, he started to save about a quarter of his paycheck every day to move to New York City from Youngstown, Ohio.
"I knew from my personal budget that I could afford between $800 and $1,000 a month," DuPonty said.
Where to look for an apartment
There are a ton of websites with apartment listings, including Zillow, Trulia, Realtor.com, Apartments.com, Craigslist and Zumper. Plus, there are city-specific sites like Zillow-owned StreetEasy, which has listings specific to New York City. So, find what works for you. But, be careful, especially with "roommate wanted" listings that you vet the source and make sure it is legit.
It's also a great idea to put the word out among family and friends that you are looking for an apartment in a specific neighborhood or city. Networking isn't just for jobs! It can also help you land your next apartment.
Get your priorities straight
It's important to make a list of all your priorities when searching for an apartment. Does it need to be near your job or in a neighborhood full of restaurants, bars and nightlife? Are you OK living in a tiny apartment? Or, do you need a little more space?
As the social chair of the swim club at Northwestern, He was looking for a place to host social events.
"Having a house, especially with a yard and a basement, allows us a lot more access and opportunities to have social events and gatherings," He said.
More from College Voices:
Setting up a budget right out of college is easy—and smart
Quick tips to help college students start saving money
I want to move to New York after college graduation. Can I afford it?
Vicki V Negron, a Brooklyn rental broker at The Corcoran Group, advises those looking to rent in New York City to have a broad search that includes four or five neighborhoods that fit what you're looking for. Consider if they have public transportation and services like grocery shopping, coffee shops, bars and restaurants, dry cleaners, and parks.
"What you don't want to do is land in a community that doesn't feed you, that doesn't feed your spirit because feeding your spirit motivates you to work better," Negron said.
What are you willing to compromise on?
You might not be able to afford everything you want, so it's important to know what you're willing to compromise on before beginning your search.
Having an apartment that is close to your job or great restaurants may initially be important to you but it will often cost more money than something farther away. So, you have to ask yourself: Is it worth the extra cost? Can you afford the extra cost? Or, do you realistically need to look at something farther away that is more affordable?
While DuPonty was willing to extend his budget to get an apartment closer to NYU, he opted out when he found out a friend was looking to sublet a room in Washington Heights, in Manhattan, which would mean a longer commute, but no fees to join a lease.
And, sometimes you have to compromise on amenities.
"I also did look for apartments with laundry, but the apartment I will be living in does not," DuPonty said. "But there's a laundromat across the street."
Having roommates can help cut costs — not just on the rent but on sharing utilities such as Wi-Fi, plus groceries and other household supplies. But, living with other people is a lot different than living alone or with family. You need to choose a roommate who you can trust — not only to pay their share of the rent and other expenses but to be respectful.
"I think the biggest thing with considering roommates is having a list of your expectations and having a list of their expectations and having good communication about that from the very beginning," Williams said.
Be prepared for extra costs
Even if you find places that fit your budget and preferences, it's important to account for extra costs that come with renting an apartment.
You might be asked to pay first and last month's rent upfront, plus a security deposit in case there is any damage while you are renting the apartment. And, sometimes there is a broker's fee or other one-time costs. Then, there are monthly fees that might be in addition to rent for things like parking or an in-house gym. All of these can add up to a lot of money, which is why you should be prepared — and start saving for your apartment as soon as possible.
In his sophomore year at Northwestern University, Savir Maskara was caught by surprise when signing the lease for an off-campus house that required a nonrefundable $600 fee per person.
"I was not super psyched about that, but there was nothing I could do," Maskara said.
Williams recommends looking online at the place that you're considering renting for the average cost of moving in or asking directly when doing apartment tours, especially to find out if there are any extra fees to use the building's amenities and services.
"I usually recommend that people save 50 bucks a month to prepare for upcoming moving expenses and make sure that you're not really struggling at the time, because sometimes landlords require the first month of rent and security deposit," Williams said.
You should account for the utilities, Williams said. It's important to break down how much each one is. If a place is offering $600 of rent with nothing included, the real cost may wind up being $900 when you factor in things like gas, water, electricity and internet. Watch out!
You should also consider one-time costs such as buying furniture and hiring movers.
"It would help to be proactive before you get that job in that city to know how much it is to buy a mattress, all this stuff, you're gonna have to get an idea of what that all costs and start to save for that," said Doug Boneparth, a financial advisor and president of Bone Fide Wealth.
It might be tempting to go with all new furniture, but you can save a lot of money if you get it second hand. Local Facebook groups and Marketplace are good places to find deals. Also check if there are any social media accounts in your city that show where to pick up furniture left on the curbside. There are some good finds out there — and for free! And, once again, put the word out with family and friends — you never know when an aunt is getting rid of a couch or a cousin is moving in with someone and now has two sets of pots and pans — and is looking to get rid of one. You'll get free stuff and you'll be doing them a favor by helping them get unwanted items out of their house.
If you are buying anything new, try to wait for a sale. Stores in your area might have them around holidays like Presidents Day, Memorial Day, Fourth of July and Labor Day.
Filling up the requirements
Before signing on for an apartment you will also have to consider filling up the requirements that often involve a minimum credit score or monthly income.
It's never a bad idea to start building credit in college. And there are ways to do it. Get a credit card and start using it responsibly (paying the balance each month) or start using payments apps such as Karma and Experian that report to credit bureaus.
Williams also recommends adding additional details about you when applying for the lease if you don't meet their traditional requirements.
"You can say 'I'm a student, but here's my scholarship letter or here's the grant letter. Here's a budget I made for how I'm going to properly allocate my student loans and make sure that my rent is paid on time each month,'" Williams said. "Showing them that you have a plan will make you more likely to be approved for that place."
If you don't make a lot of money, have a bad credit score or don't have a long credit history, which most college students don't, you might be asked to get a guarantor to co-sign for your lease — meaning, someone (such as a parent) who will be responsible for paying the rent if you can't. There are also companies that provide this service, but you have to account for an extra cost when planning to rent a place — it can be around 10% of your annual rent.
Understand your lease
After (finally) finding a place, it's normal to feel rushed to sign the lease as soon as possible. But it's important to take your time to understand all the terms and conditions that you're agreeing upon.
The first point is to understand the length of time that you want to be attached to that apartment. Also, what are the options if you want to renew your lease? Or how much time in advance do you need to give them if you decide to move out?
Williams says it's important to take into consideration every possible situation. Even the worst-case scenarios, such as any penalties for breaking your lease early. If you hate your school or job and decide to leave in the middle, what is the cost to get out of the lease? Or if you don't get along with your roommates and you want to leave, what are your options? A lease to rent an apartment is a contract and there are very specific legal terms you are agreeing to when you sign it.
Find out as much as you can so there are no surprises — and keep a little cushion of money for unexpected expenses that might come up. And, don't count on getting your security deposit back. If you're banking on that money and the landlord says you dented the wall and he has to repaint — that means you're not getting some or all of that money back when you move out. So, just don't expect to have it returned — that way you can be pleasantly surprised if you do!
It's important to make a budget to get familiar with your income, what your rent and other bills are, and how much you have left over to spend (while also tucking some away for savings). It can be a spreadsheet or it can just be some numbers you jotted down on a piece of paper or typed in a note on your phone. What's important is that you make a budget and stick to it, so you have the peace of mind that you know your rent and other bills will be paid every month on time. A late payment might affect not only your first time renting an apartment, but also future applications for other places.
It's a lot of responsibility but getting your first apartment is an amazing experience, where you really learn how to manage your own life. And, while having roommates may be a necessity, the social connection and going through this together can be really nice.
"Even though this can be a daunting and stressful situation, it could also be a lot of fun," Negron said.
″College Voices″ is a guide written by college students to help the class of 2022 learn about big money issues they will face in life — from student loans to budgeting and getting their first apartment — and make smart money decisions. And, even if you're still in school, you can start using this guide right now so you are financially savvy when you graduate and start your adult life on a great financial track. Érica Carnevalli is a graduate student in NYU's business and economic reporting program. She's a summer intern for CNBC's investigative unit and will be continuing her internship into fall 2022. The guide is edited by Cindy Perman.
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