Before you put pen to lease, do your homework.
There’s nothing quite like the freedom of your first apartment. Whether you’re on your own or renting with a roomie, having a key to your own place is a tangible sign of opening the door to adulthood and independence.
But prepare yourself, because with that freedom comes responsibility ― and, as is the case with many firsts, it can be a bit daunting. Suddenly, you’re in charge. You’re on the line to pay rent each month (and possibly utilities, too), not to mention the cost of food, clothes, your cell phone and other bills.
And then there’s the challenge of actually finding a rental to call home, which can be as difficult as buying your first house.
So before you sign a lease, it helps to know what you’re signing up for. Here are 9 tips to help you get started:
- Make a budget: No more flying by the seat of your pants. You need to know exactly how much money is coming in and going out each month. Be sure to include all necessary categories in your budget (yes, shopping, vacations and dinners out count). Don’t just set it and forget it; track your spending, check it against your budget each month and make necessary adjustments. If you prefer an electronic system, tools like Mint for Canada or, if you’re a BMO accountholder, “Manage My Finances” in BMO Online Banking — can help you keep track of your accounts, income and expenses.
- Decide how much rent you can afford: Based on your budget, determine how much rent you can afford. Some experts say your rent should be around 30 per cent of your net income (the money you take home after paying taxes). For example, if you take home $3,000 per month, your payment shouldn’t exceed $900. Remember, this amount should cover your rent, as well as other household expenses like utilities and tenant’s insurance. Remember that where you live will influence what you pay. While it may be fun to live in the heart of a city, you’ll often pay top dollar to rent a place ― and sacrifice space. When deciding on a location, consider things like how far you’re willing to live from family, friends and where you work (keep in mind, the farther away you are from work, the higher your transportation costs may be) — this may affect how much you’re willing and able to stretch your budget. Check out this article from Canada Mortgage and Housing Corporation for other tips on figuring out how much rent you can afford.
- Save enough for a deposit and other fees: When you sign a lease, landlords may ask for both a security deposit — money they can draw from should you cause any damage over the course of your rental — and the last month’s rent. Some landlords may also require fees for things like having a pet. Amounts will depend on your rental, so be sure to ask about all fees required during your search. Lastly, factor in any moving costs you may incur by asking these questions: Will you need a moving truck? Will you need to hire movers? Will you need to pay for off-site storage?
- Find a roommate, if necessary: Sharing your space with a roommate is an easy way to cut costs. Just make sure it’s someone you get along with. No amount of money saved will be worth the aggravation spent on a bad housemate. Ask friends and family, or try online sites like ca.easyroommate.com to help find a good match.
- Start an emergency savings fund: You can plan all you want, but somehow, unexpected expenses will pop up and you may need to dip into another source of cash. Get in the habit of socking away a set amount from each paycheck ― not enough that you’ll miss it, but enough that it will add up to a good safety net over time.
- Don’t be afraid to negotiate: Most rental costs have some wiggle room, so don’t take the price as set in stone. It doesn’t hurt to ask. Worst-case scenario is that the landlord will say no, and best case is you might save some money. Mint.com has some great tips on how to negotiate your rent.
- Sell yourself: When you find that perfect place, you might be up against some competition, so you’re going to need to act fast and sell yourself as a desirable tenant. Canada Mortgage and Housing Corporation shares several tips on how to make a memorable first impression before you meet your landlord.
- Have your references ready: The best personal references are often people who can verify both your employment stability and general character, such as your boss, a professor or even a church leader.
- Take “donations”: Once you find a rental, you’re going to need to fill your new abode and kitchen cupboards with furniture, dishes and accessories. Take all the hand-me-downs from family and friends you can find to start. Once you’re settled and you’ve saved some money, you can consider buying some additional furnishings. For ideas on how to save on home and apartment décor, check out this article from the Huffington Post or search sites like Pinterest.