Your Upfront Costs to Move In to a Rental
Sticker shock for moving into a rental is real, and you can avoid it by being prepared and knowing the numbers for your move in advance. Funds are typically due on the day of your lease signing, although these requirements can vary depending on the rental and the circumstances.
The following list outlines multiple scenarios you should be aware of and estimates costs for them, using the price point of $2,000 (for easy math; prices, of course, will vary). If you hire a broker, their fee is an additional cost, sometimes a percentage of the annual rent. The calculations here assume a broker fee equal to one month’s rent.
- First month’s rent and one-month security deposit: Some rentals require these two payments to move in. For example, $2,000 + $2,000 = $4,000.
- First month’s rent, one and a half months’ security deposit, and broker’s fee: In some cases, you may need to pay a higher security deposit and the broker’s fee. For example, $2,000 + $3,000 + $2,000 = $7,000.
- First month’s rent, one-month security deposit, and broker’s fee: This scenario combines the initial rent, security deposit, and broker’s fee. For example, $2,000 + $2,000 + $2,000 = $6,000.
- First month’s rent, one-month security deposit, and last month’s rent: Certain rentals may ask for the first and last months’ rents as well as a security deposit. For example, $2,000 + $2,000 + $2,000 = $6,000.
- First month’s rent, one-month security deposit, last month’s rent, and broker’s fee: In some cases, you may need to cover all these expenses, For example, $2,000 + $2,000 + $2,000 + $2,000 = $8,000.
Standard Documents for Your Rental Application
Although the documents you need for your rental application may vary, some are standard requirements. Providing all the requested documents can help improve your chances of having your application approved. Here’s a list of the most commonly required documents for rental approval.
- Rental application form: No surprise here: Supporting documentation doesn’t do you any good if you don’t submit the actual application paperwork! The application typically requests your full name, current address, previous address, reason for moving, date of birth, Social Security number, salary, and employer name. It may also ask for your consent to request your credit report.
- Pay stubs: The landlord uses your pay stubs to verify your income can meet the rental payment obligations. Your pay stub will also display your year-to-date income, which should match the salary you’ve already stated. This verification is a standard procedure in the rental application process to determine your financial stability and ability to make on-time payments.
- Employment verification letter or offer letter: Some landlords require you to provide a letter of employment confirming your salary and hire date. If you’re applying for a rental and haven’t started your employment, you need to submit a letter indicating the job offer.
- Bank statement: Most landlords require you to submit your current bank. They confirm direct deposits from your employer as part of the due diligence process.
- Investment statement: Sometimes a landlord asks you to send a copy of your most recent investment account statement to confirm your assets. If your regular income seems insufficient, showing additional assets may help you get approved.
- Tax return: Landlords use your previous year’s tax return to verify your previous income. In some situations, the landlord asks for two years of tax returns to confirm consistent and reliable income.
- Landlord reference letter: A landlord reference letter is required for most rental applications, especially if you’re moving from another rental. If this application is for your first rental, a letter from a professor, employer, or colleague who can verify your trustworthiness should be sufficient.
- Photo ID: Any rental you apply for will require identification. Acceptable forms of identification include a driver’s license, state-issued photo ID, passport, and Social Security card or birth certificate.
- Social Security number: The landlord uses your Social Security number to request your credit report. You’ve likely provided this info as part of your application form.
- Personal reference letter: Occasionally, landlords may request a personal reference letter to assess your suitability as a tenant. Lining someone up to provide a reference just in case is always a good idea.
Understanding the Benefits of Hiring a Rental Agent
Should you work with a rental agent? In short, yes. Rental agents offer invaluable insights into your prospective neighborhood, serving as experts who enhance your search experience. Most importantly, they grant you access to many desired properties. With connections to numerous landlords, their primary role is guiding you through the process, making it smoother for you and the property owner.
That experience and access don’t come free, however. Rental agents are compensated through commissions, paid mainly by you (the renter) and occasionally by the landlord. When you decide to work with an agent, discuss their fee structure and when payments are expected. Commissions for rentals are often calculated as a percentage of the first year’s rent or equivalent to one month’s rent.
A Few Important Items in Your Rental’s Lease
As a new renter, you may feel overwhelmed by some of the language and the terms in your lease agreement. Before you sign on the dotted line, you should clearly understand the terms and your responsibilities. This list covers some of the most important items.
- Rent payment: Most leases will include
- A due date for the rent.
- The amount of rent due for each month.
- Any late fees.
- The different methods the rent can be paid.
If the lease does not indicate these details, the landlord will include that language in the lease rider.
- Lease terms: As the tenant, you must understand the terms and conditions of your lease before signing it. If you don’t understand something, get clarification before signing.
When you sign the lease agreement, you’re legally bound to its terms, so make sure you understand what you’re signing before the lease is fully executed.
- Length of your lease: The length of your lease agreement is the time between the start and end date (including those two dates, obviously). During this period, both you and the landlord are bound to the terms and conditions.
- Utilities: Verifying what utilities are included in the rent before signing your lease is a good practice. Some rentals include some or all utilities, and some don’t. You don’t want surprises or additional expenses, so make sure that you know what your utility obligations are before moving in.
- Security deposit: The security deposit is what you pay to ensure the rental is returned in the same or similar condition that you moved into, minus standard wear and tear. Standard wear and tear can include lightly scratched floors and worn carpet, faded paint, and small nail holes from hanging pictures. In other words, the property should have working appliances, including smoke detectors; doors on hinges; floors free of holes; operating windows; and no major debris like furniture you don’t want. Additionally, you should leave it in broom-swept condition. After you move, the security deposit is typically returned within 15–60 days, depending on your state’s regulations.
- Occupants: Your lease should include all occupants expected to live at the property. It should also discuss what’s permissible regarding guests and the length of their stays; ensure you act within these terms. If you move someone in without prior notice, you may violate the lease.
- Alterations: Your lease should explicitly state that alterations require approval in advance. That means before you make any changes or upgrades to the rental, you need to get permission from the owner or property manager.
- Pets: Most properties require pet approval. Your lease will specify whether (and sometimes which) pets are allowed, and you’re accountable for following these guidelines.
- Renter’s insurance: Most rentals require you to have insurance before moving in, and your lease will indicate whether your place is one of them. Speak to the property owner or property manager about renter’s insurance.