7 Hidden Costs of Renting an Apartment is a post originally published on: Everything Finance - Everything Finance - Its all about Money!
Renting an apartment is often seen as a cheaper alternative to housing, especially for young adults who aren’t ready to commit to homeownership just yet.
Living on your own in an apartment for the first time can seem exciting, but it’s not all good news in terms of your finances once unexpected expenses start creeping in.
Whether you rent or buy, it’s important to have some emergency savings lined up to provide you with a financial cushion if any unpredicted expenses come up.
With that being said, it always helps to know what type of expenses you should prepare for, especially with your living situation.
If you’re considering renting an apartment in the near future, here are seven unexpected expenses you should account for.
1. Application & Admin Fees
Before making your final decision on an apartment that you like, you may go on a few showings and submit applications for consideration. Most of these applications aren’t free.
You can expect to pay around $20 to $75 per adult when you apply.
This fee usually covers expenses like a background check, but sometimes it doesn’t, and a leasing office may ask you to submit more money for this to be done.
If you are considering a handful of apartments, it’s best to narrow down your choice and only submit an application to your first pick so you don’t spend money on several different applications. Especially since these fees aren’t refundable.
2. A Higher Security Deposit
Once you’ve decided on an apartment and you’ve been approved, the next step is to determine whether you’d like to move forward with securing the unit for yourself and scheduling a move-in date.
During this time, you are often required to put a security deposit down and sign the lease to seal the deal. A security deposit is an amount of money you give your landlord to cover any wear and tear or damage that gets done to the apartment when you move out.
Your security helps give your landlord the assurance that most expenses needed to fix the unit up after you move will be covered without having to ask you for any additional money.
Even if you are the cleanest person ever, small things may have to be fixed up or redone in your unit after you move like painting the walls, cleaning the carpet, etc.
If your landlord doesn’t use all of your security deposit for maintenance and repairs, the remainder will be refunded to you along with an itemized bill of what was done and how much it cost.
Security deposits can reflect 1-3 months’ worth of rent, or any other figure that your landlord finds appropriate. There’s really no telling how much you might have to pay upfront until you ask.
I’ve personally had to pay security deposits for apartments I’ve had in the past ranging anywhere from $300 to $500, plus first and last months’ rent, which can be a lot of money to come up with on a whim. The security deposit usually reflects your rent, so it’s higher if your rent is higher.
Another important detail to keep in mind is that your landlord can attempt to raise the security deposit depending on your credit. If your credit or past rental history demonstrates that you could be a risk, your landlord might want to see more money up front.
The good news is certain management companies offer what’s called a Sure Deposit, which is completely non-refundable, but may be much cheaper than the refundable deposit. This helps keep your initial moving expenses low.
3. Moving Fees
Once you have the security deposit out of the way and have a move in date scheduled, you’ll have to consider various different moving fees.
Do you want to rent a truck to transport your items? Will you have movers help you or will you pay your friends to help if it’s cheaper? Also, ask yourself if you will need any materials or additional accommodations.
Since most moving truck companies charge for mileage plus an additional fee for simply renting the truck, this expense can add up quite a bit if you are moving far away or even out of state.
When I moved to my first apartment, it was about 30 miles away from where I was living, so my final price for the truck when I returned it wasn’t that bad – it only ended up being about $50 or $60. But a friend of mine who recently moved out of state for a new job had a truck rental that was easily over $1,000.
4. Storage and Garage Rentals
Some apartment complexes have storage and garage units on-site that tenants can rent for an additional fee.
Depending on where you live, having a garage for your car can be a nice benefit if your area has harsh winters. Some complexes may also offer covered parking for extra as well.
The storage unit can hold extra belongings and create more free space in your apartment.
However, if you haven’t factored these expenses into your monthly budget, they could increase your overall living expenses. You could also choose to go without these extras.
Looking for an apartment to live in? Watch out for these 7 hidden fees while searching!
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5. Renter’s Insurance
Renter’s insurance is extremely important because it helps protect your belongings if anything ever gets destroyed in your apartment.
Last year, a friend whose apartment caught on fire lost everything except for a few bags of clothes. She unfortunately didn’t have renter’s insurance, and it was a huge wakeup call for her.
A house fire, flood, or any other natural disaster can affect anyone’s home or apartment, so it’s best to be insured so you don’t have to deal with the negative effects those unfortunate events can have on your finances.
While renter’s insurance is an extra expense, it’s usually on the cheap side and shouldn’t cost you more than $20 per month. Some apartment complexes also require that you have proof of insurance prior to moving in.
6. Pet Fees
If you have a cat or dog and your apartment complex allows pets, be ready to pay a deposit for your animal.
Landlords view pets as an extra liability, so they will often charge a pet deposit of $250-350 (more or less). Some charge refundable and non-refundable deposits, and some may even tack on a monthly pet rent as well. You may be looking at spending close to $900 your first year in your apartment for all pet fees combined.
7. Increased Rent
Speaking of increasing rent, landlords hold the right to increase your rent rate every time you sign a new lease or choose to stay another year on a month-to-month lease. Most landlords will make you well aware of the increase, but it still ends up being more than you were previously paying.
If you are on a strict budget and a major fixed expense like your rent changes, it could be a big adjustment you have to make, so just keep that in mind.
It’s Best to Prepare for the Unexpected
Now that you know a little more about the unexpected expenses of renting an apartment, it’s best to prepare for these expenses by setting aside extra money when you can. Also consider if renting will truly save you more money than buying.
According to The Atlantic, young adults ages 25 to 34 believed that buying a home would be 25 percent cheaper than renting. Depending on rent rates in your area and your specific situation, this could be true or false for you.
Hidden costs are associated with both renting and buying. It’s important to weigh the pros and cons and take the time to determine what you would be most comfortable with in the long run.
Are there any other hidden costs you’ve found associated with renting an apartment? What surprised you when you rented? What kind of fees did you pay?