Moving out for the first time is one of life’s most exciting milestones. But, what should you know about renting an apartment for the first time? How to apply, what costs to expect, and how to budget for an apartment are all things you should think about. Here’s a quick guide.
Key Takeaways
– To rent an apartment, you’ll need to submit an application and usually undergo a credit check and background criminal check.
– You usually need at least fair credit to be approved, but you may be able to qualify with the help of a cosigner or a larger security deposit.
– Many apartments require you to have gross monthly income of three times the rent.
– To figure out how much rent you can afford, list all your other expenses, subtract those from your monthly gross income, and leave a little buffer for one-off expenses.
A Look at the Rental Process
Apartment complex owners typically hire office managers. Part of the office manager’s job is to find qualified renters to fill the apartments, and that usually involves checking an applicant’s income, credit, background, employment, criminal history, references, and more.
Many rental applications come with application fees of anywhere from $15 to $100. These can add up, so it’s helpful to do some research before applying to ensure you meet the renter requirements of a complex.
The Approval Process
Apartment complexes are privately-owned businesses, so each one typically has its own tenant approval process. However, the requirements tend to be pretty similar. You’ll usually need a reliable source of income, monthly gross income of at least three times the rent, renter’s insurance, and at least fair-to-good credit (a FICO score of 580 to 739).
You’ll also typically need to pass a criminal background and credit check.
If you get approved, you’ll be able to move forward with the next steps of getting the apartment. If you don’t, you can ask why to learn what you need to work on to get approved in the future. You can also try applying at another apartment building with more lenient requirements.
The best time to shop for an apartment can be between October and April when rental rates tend to be the lowest. However, it will depend on the weather where you live and how difficult it is to move in the winter.
Paperwork You Need to Rent an Apartment
Next, let’s talk paperwork. The first document you’re going to need to fill out when looking for an apartment is the rental application. It often requests information, such as:
– Personal identifying information (e.g. name, birth date, Social Security number, phone number, address, and driver’s license number)
– Residential history for the last two years
– Current employer
– Credit/financial account information (e.
When applying for an apartment, landlords typically require several documents to verify your rental application. These may include:
– Gross income per month
– Proposed occupants (people and pets)
– Vehicles
– Permission to run a credit check
– Permission to run a criminal background check
Additionally, you may need to submit documents such as:
– Proof of income (pay stubs, tax returns, bank statements)
– Government-issued IDs for each occupant
– Letters of reference
– Letters of employment
– Proof of past residences
– Vehicle registration
– Proof of car insurance
– Proof of renter’s insurance
While there’s no universal checklist, contacting the property directly can clarify specific requirements.
As a first-time renter, it’s crucial to prepare financially. Here are some financial tips to consider:
1. Figure Out How Much Rent You Can Afford
Renting requires ongoing financial commitment. Before starting your search, calculate your budget based on your gross income per month. A rule of thumb is to divide your gross income by three to find the maximum rent you can likely get approved for. For instance, if your gross income is $6,200, you may qualify for an apartment costing up to $2,067 per month.
2. Calculate Your Affordability
Beyond qualifying, you need to determine what you can afford. List all your regular monthly expenses including groceries, gas, car payments, phone bills, utilities, and personal spending. Subtract these from your net income to find out how much you have left for rent.
3. Sample Budget
Here’s an example of a budget to illustrate the calculation:
Net monthly income: $5,000
Groceries: $500
Gas: $200
Utilities: $300
Car payment: $600
Phone bill: $55
Miscellaneous: $400
Money left: $2,945
If your budget looks like this, you would have about $2,945 left each month after expenses, allowing for rent up to $2,067 per month, with an $878 cushion.
4. Plan for Upfront Rental Costs
Apart from the monthly rent, plan for upfront costs when renting an apartment. Ensure you have sufficient funds to cover these initial expenses.
When moving into an apartment, financial considerations are crucial. Typically, you will need to pay a security deposit, equivalent to one month’s rent, the first month’s rent, and the last month’s rent upfront. For instance, if your rent is $1,500 per month, you might need $4,500 upfront. The security deposit is held by the property manager and may be used for repairs when you move out before being refunded.
If you have a pet, additional pet deposit and/or pet rent may apply.
Don’t overlook other moving costs. You’ll need to move your belongings, which might involve renting a truck or hiring movers, and purchasing moving supplies like boxes and tape.
Furnishing your new apartment is another expense. You may need to budget for household items such as furniture, kitchenware, and cleaning supplies. Registering at a store and hosting an apartment-warming party can be a helpful strategy.
Utility deposits are often required to set up services like electricity, gas, water, and sewer. If you have little credit, you might need to pay a deposit to open an account. It’s advisable to call the companies in advance to understand these costs.
Your credit score is significant when applying for an apartment. Property managers will check it, so knowing your score beforehand is beneficial. You can obtain a free credit report annually from each of the three credit bureaus through AnnualCreditReport.com.
If your credit score is poor (580 or below) or you have no credit history, improving or building credit may be necessary before applying. However, a cosigner or increased deposit might help secure approval.Lastly, consider location-based savings carefully. Apartments closer to desirable areas, amenities, and high-traffic locations tend to be more expensive. While a less popular area might save you money, factor in the commute and ensure the area is safe and comfortable for you.
Get Renters Insurance
Speaking of keeping your belongings safe, property managers often require you to carry a renter’s insurance policy. Renters insurance typically covers:
– Personal property: Personal property such as electronics, clothing, and furniture can be protected against unexpected damage or loss. For example, if someone breaks into your apartment and steals your stuff, you could get a check from your insurer to help you replace it.
– Uninhabitable coverage: If you can’t live in your apartment due to a covered incident like a fire, renter’s insurance can cover the costs of a hotel room or other living accommodations.
– Liability: If you’re found liable for someone getting hurt or having their property damaged at your apartment, renters insurance can help to cover the costs of their medical bills or damaged property.
Whether renters insurance is required or not, it’s worth considering.
It can protect you and your belongings at a very affordable price—averaging just $14 to $30 per month, according to Progressive’s 2021 data.How Much Money Do You Need for Your First Apartment?
The amount of money you need for your first apartment varies depending on the requirements of the apartment complex you choose, your credit, if you have pets, and more. However, it typically includes:
– Upon approval, the costs can include an administration fee, a security deposit (often equal to a month of rent), your first month’s rent, your last month’s rent, and possibly a pet deposit, which has an average of about $300.
– Then, you may need funds for other expenses such as moving your belongings, furnishing the place, and setting up utilities.
What Is the 30% Rule?
The 30% rule refers to the rule of thumb that no more than 30% of your gross income should go to your rent. For example, if your rent is $2,000 per month, your gross income should be at least $6,000 per month. But it’s just a general guideline. You also need to look at other expenses that you have.
What Bills Will I Pay When Renting?
When renting an apartment, your bills will likely include rent, electricity, gas, water, sewer, cable, and internet.
The Bottom Line
Renting an apartment for the first time is exciting. Congratulations on this big step toward independence! To ensure a smooth transition, however, it’s important to spend some time getting prepared.
