Tue June 24, 2014
First-Time Renters: 'Know What's Important To You' When Apartment Hunting
MICHEL MARTIN, HOST:
I am Michel Martin, and this is TELL ME MORE from NPR News. Now it's time for some money coaching. This is the part of the program where we talk about the economy and personal finance. Today we're going to spend some time on things you need to know if you are in transition. In a few minutes, we'll talk about the buffing up those job interview skills with the author of that classic career guide, "What Color Is Your Parachute?" But first, let's say you got that good first job. You're getting a place of your own - exciting. But there are some common pitfalls we'd like to help you avoid. Kiplinger's personal finance magazine recently wrote about this, the seven sins of first-time renters. We called Pat Esswein to tell us more. She's an associate editor there, and she's with us in our Washington, D.C. studios. Welcome. Thanks for joining us.
PAT ESSWEIN: Thank you for having me, Michel.
MARTIN: So let's just go about - let's just go down the list, as many as we can, of those seven - you didn't say deadly sins, but they kind of are financially - they could be financially deadly. The first thing she says is don't underestimate the cost. How much should you pay for rent?
ESSWEIN: You know, it's not how much you pay for rent. It's figuring out what the total rental cost is going to be for you. So you need to do some research, maybe starting a couple months in advance of finding a place. So you might have to pay an application fee. You might have to put a deposit - a security deposit of the - equivalent to a month's rent. You may have to ante up the first month's rent. In some places, you may have to ante up the last month's rent, as well as a pet deposit, parking fee, possibly deposits for utility service, like for gas and electric. So, you know, you could - you could pay $4,000 right up front.
MARTIN: So get the big picture, get the total picture.
MARTIN: The other thing that you say is another sin is not getting your priorities straight. What do you mean by that?
ESSWEIN: Well, you know, who wouldn't want to place with great amenities, like a party room, a gym, a pool, you know, on-site parking etc., etc.? But in order to get that for a cost you can afford, you might have to be pretty far out of the city. If your job is downtown, do you really want to have to put up with a grueling commute every day? So you have to know what's important to you.
MARTIN: And really focus on what's important. Is that the commute or is the party room or the pool or something of that...
MARTIN: You know, you also talk about the importance of reading the lease. Now, this might seem like a no-brainer. But I could see a scenario where if your parents have never rented or it was a long time ago and you - you know, they own their home, and that's all you know, you might not think about that. Why is that so important?
ESSWEIN: Well, a lease is a legally binding contract between you and the landlord. It's going to set up the rules that you have to live by and what your rights are and what the landlord's rights are. So it's really crucial to read it very carefully, understand what those rules and rights are. And if you don't understand something, ask so that you can have that explained to you.
MARTIN: Is there something that tends to trip people up? Like are there escalation clauses or something that might be in there that you might not know anything about? What's something - what should you be looking for?
ESSWEIN: Well, I think one thing that is often an issue for people just starting out is that they might want to bring in a roommate to share the rent and cost of utilities. But the lease may prohibit you from doing that or it may require that the landlord approve the new roommate. So that's known as subletting, and that's often covered in the lease. And if that's something you hope to do, you better know what the rules are.
MARTIN: Still talking about money. You say renters insurance is something that a lot of renters don't think about. Tell me why that's important.
ESSWEIN: Sure. The landlord is going to ensure the building. So he is covered if the place burns down or if there's a fire. But if you're renting in that building and you don't have renters insurance and you have water damage or there's a fire in your unit, if you don't have renters insurance, the cost to replace your stuff isn't going to be covered. So unless you have very deep pockets and you don't care, you need renters insurance. And that will typically cost you from about $12 to $21 a month. Something you should do if you have a car and have auto insurance, call up your auto insurance company to find out if you can get a discount on renters insurance.
MARTIN: Again - two things, I'm going to put these two things together. You say not seeing the apartment before moving in, you know, put the place through its paces and turn on the faucets and things of that sort and also not asking about utilities or forgetting to turn them on.
ESSWEIN: Right, the landlord may expect you to call up the gas company or the electric company and have that service turned on, so you want to do that. If that's the case, you want to do that about a week before you move in. Otherwise you could be taking sponge baths at the sink for a week. Well, if you're lucky.
MARTIN: If you're lucky and those faucets in fact work. And then finally you say, you know, forgetting basic items to make a home. Again this might seem like a no-brainer, but you could easily see where somebody who is just starting out might forget you need a bed, or something to sleep on.
ESSWEIN: Sure, you need something to sleep on; it might just be a mattress on the floor. You need a shower curtain in all likelihood, and you probably need a can opener. You can find lists of things you need to outfit an apartment at about.com.
MARTIN: There are lots of resources, Craigslist and people like that, neighborhood, you know, yard sales. A lot of neighborhoods have like, whole neighborhood-wide estate sales. But don't forget you need something to sleep on, something to eat on, hopefully something to sit on. Finally we were talking about this earlier - we only have about 50 seconds left. You mentioned a lot of people - this is not on your list, but bringing in a roommate can sometimes be a great thing. It could be a disaster. Is there anything you should really think about before you do that?
ESSWEIN: Well, you want to make sure that you interview a prospective roommate and be sure to interview more than one so that you can find a person that is the best fit in terms of personality and living habits. If you've been living in a dorm, you may have already had the experience of having to put up with something - someone you really don't like for a period of time. And you also want to make sure that they can actually pay their share of the rent.
MARTIN: That's key. Pat Esswein is an associate editor with Kiplinger's Personal Finance Magazine. We're talking about a piece published in the magazine called "The Seven Sins Of First-Time Renters." Pat, thanks so much for joining us.
ESSWEIN: You're welcome. Transcript provided by NPR, Copyright NPR.