Choosing to rent an apartment rather than buying one comes with a list of advantages. You’re not responsible for pricey appliances or home repairs, and you don’t have to fork over a five- or six-figure down payment. But whether you’re a first-time renter or a seasoned pro, there are still plenty of pitfalls that can cost you money. It’s best to be aware of the risks and hidden costs you might otherwise overlook, so here are seven financial mistakes to avoid when you move into your next apartment!
1. Not Taking Pictures and Videos When You Move In
That ding in the bedroom door? The bathroom cabinet that hangs a bit wonky? Stains on the carpet?
In a perfect world, your apartment would be…well…perfect. But in reality, many rentals are already seasoned, and your landlord may not be completely aware of the actual state of the apartment when you move in. This can lead to them claiming that you’re responsible for damage to the space, even if it was already damaged when you moved in.
To protect yourself, do a careful walkthrough of every room before you unpack a single box. Take photos and/or videos of any damage or anything that doesn’t work properly. If the discussion then arrives at the point of deducting the cost of these repairs from your security deposit when you move out, you’ll have the evidence to prove that you’re leaving the apartment in the same condition you found it.
2. Opting Out of Renter’s Insurance
Renter’s insurance is a low-cost way to protect you, your guests, and your belongings from unforeseen events. Personal property coverage can reimburse you for stolen items in the event of a robbery. Liability coverage can help with medical bills if a guest is injured while in your apartment. And if there’s a fire or another issue that keeps you out of your unit, you may also be able to get reimbursement for additional living expenses, like time in a hotel and meals at restaurants.
The specifics will depend on your coverage and where you live, but these policies are very affordable and can save you money in the long run. In Atlanta and Houston, the average monthly cost is only $22. Chicago could be even more affordable, with an average cost of $12/month.
3. Not Negotiating Rent—Especially Upon Renewal
Your ability to negotiate lower rent will depend on the competition for the apartment and the current market conditions. If apartments are going like hotcakes, you may not have much wiggle room.
But that situation may look a bit different at renewal time. Getting a new renter to replace you costs time and money. So, if you’ve been a good tenant and want to stay put, you may be able to negotiate to keep your rent from going up much—or at all—upon renewal. And your chances of locking in a favorable rate may look even better if you’re willing to commit to a longer lease term.
4. Neglecting to Check Utility Costs
Rent is only one part of the financial equation. What about your utilities?
In some apartments, certain utilities may be included in the rent. Water and trash are often “baked in” to the rent cost. Some landlords may also bundle internet or electricity as well. Make sure you know what you are responsible for and what your landlord is responsible for.
You should also check with a neighbor in the building to ask them about their average utility bill before you sign the lease. That pre-war brownstone apartment in Boston may be lovely, but does it cost a fortune to heat every winter?
5. Ignoring Neighborhood Costs
Where you live affects more than the costs inside your apartment. A pricey neighborhood will add to your daily cost of living. If the only grocery store nearby is Whole Foods, you’ll either pay a premium for your groceries or have to travel a long distance to find a cheaper store.
You may think you can save by moving further away from downtown. While you might find cheaper rent, you may also have higher commute costs. The added distance could add to your insurance premiums, plus you’ll go through more gas.
Look at your cost of living from a whole-life perspective—not just the cost of the rent.
6. Signing the Lease Sight-Unseen
The pictures look gorgeous, and the rent is reasonable. Why not sign fast, before someone else gets the chance?
You’ll never know exactly what you’re getting until you tour a space. Some people may use undersized furniture, wide-angle lenses, and even photoshop to make spaces look bigger, brighter, or more desirable. Plus, it’s always advisable to err on the side of caution and be aware of rental scams and how you can avoid them. Signing without a visit could lead to outright fraud from unscrupulous scammers who will take your deposit and run.
If you don’t tour the space before you sign on the dotted line, you may end up trapped in an apartment you hate. Or you may find that your bed or couch doesn’t fit the rooms—an expensive error that will require you to buy new furniture.
7. Skimming the Lease
A lease is a legal contract. You are bound by the terms, whether you read it or not. So read it! Find out who pays for extras like lawn care, snow removal, and apartment fees. What are the terms for breaking the lease? Can you sublet if something comes up?
If you don’t know the details in advance, you could end up paying steep penalties for violating the lease terms. Or you could get charged for services that shouldn’t be your responsibility. Know the details to protect yourself.
As long as you are aware of the costs and risks and are mindful of your finances, renting could be a very good option to manage your budget and save money in the end. So we hope this article has helped you realize some of the things you should pay attention to in order to not make any financial mistakes as a renter.