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By Erin Burt, ©
2007, Kiplinger's, www.kiplinger.com
Ah, your first
apartment. It may be smaller than a closet with a next-door neighbor who
likes to blast Celine Dion into the wee hours of the morning, but hey, it's
a space to call your own. Whether you're moving away from college or out of
Mom and Dad's house this summer, getting your first real place can be a
liberating – and nerve-wracking – experience.
Trust us, there are worse situations you can find yourself in as a
first-time renter than tight spaces and annoying neighbors. Moving into your
own apartment may be one of the biggest financial steps you've taken thus
far in your life. In this rite of passage, you're committing to stay put for
a long time while shelling out a pretty penny on rent, utilities and
furniture. So, naturally, you want to do it right. We detail seven sins that
can threaten your financial soul – and your sanity – upon moving into your
own space. Avoid these missteps for a smoother transition, whether you're a
first-timer or even a seasoned renter.
1. Underestimating the cost
The first item of business when looking for a place to live: How much you
can afford to spend on housing? Tally your monthly expenses, and see how
much money you'll have left to spend on rent. Then, find out how much
apartments cost in your desired neighborhood by browsing newspaper
classified ads or online rental sites such as Rentnet.com or Craigslist.org.
This will help you determine if you can even afford to make the move, and
whether you'll need a roommate (or two) to split the costs.
But rent isn't the only cost for which you have to budget. Don't forget to
anticipate your "start-up" expenses when you first move in. For example, you
may need to pay an application fee for the apartment (say, $50), a security
deposit (usually equal to one-month's rent), your first month's rent, a
deposit to turn on the electricity (maybe $75), a deposit to turn on the gas
(another $75), fees to get your cable and telephone turned on, a deposit for
any pets you may have and maybe even a fee for a parking space. And let's
not forget the cost of furnishing your new pad and stocking it with life's
essentials (yes, you really do need soap). All in all, it can cost you
upwards of $4,000 in your first month at your new apartment, according to
research firm Twentysomething Inc.
One note of caution: Don't rely on your credit cards to fund your move-in
expenses. You don't want to start out your new life of independence by being
chained to ruthless interest payments. Once you get into debt, it's hard to
break away.
Once your start-up expenses are covered, don't forget to account for other
monthly expenses that come with your new space, including gas and
electricity bills and garbage and water fees. And if you're moving from
campus housing where your phone service, cable TV and Internet connection
were either free or cut-rate, remember to factor real-world prices into your
budget. Consider this, too, if you're moving into a place by yourself when
you're used to splitting costs among roommates or living free under Mom and
Dad's roof. Make it easy on yourself to keep track of your expenses by
setting up a budget.
2. Not getting your priorities straight
Before you embark on an apartment hunt, write down a list separating your
needs from your wants. Needs are those things without which you just can't
live. For example, my husband and I own just one car, so for us, proximity
to work or to public transportation is a need. Wants, however, are those
things that would be nice to have, but you could live without for the right
price. For example, you may want a gym or a first-floor unit, but they may
not be deal breakers.
Sorting out your needs and wants will help keep you from making a choice you
may regret later – say, snagging an apartment with a great city view but
having to suffer a grueling commute to work. Remember, your first place
isn't going to be perfect, so you need to know which things you can let
slide beforehand. Besides, you can always move up to a better apartment when
your lease is up.
3. Not seeing the apartment before moving in
It's a good idea to take a look at the place you plan to call home before
you arrive on moving day and discover your sofa won't fit through the front
door. If possible, this means you should inspect the actual apartment you'll
be moving in to, not a model. Bring a measuring tape and try to visualize
your furniture in the space. You should also take note of the number and
location of phone and cable jacks and electrical outlets.
Don't be afraid to put the apartment through its paces. Turn on the faucets
and flush the toilet to make sure the water is running properly (and that it
isn't brown). If the power is on, turn on the lights, oven, air conditioner
and other appliances to make sure they work. Tune in to the surroundings –
is there a lot of traffic or neighbor noise or any strange smells? Are the
building's hallways, common areas and parking lots clean and well-lit? Are
there enough washers and dryers in the laundry room? And don't forget to
check out your cell phone's reception from inside the apartment.
You also should inspect the space for damage and request that serious
problems be fixed before you move in your stuff. Then, on moving day, go
through the apartment with a pen and paper and a fine tooth comb. Write down
every defect, no matter how seemingly small, date and sign your list, make a
copy of it and give one to your landlord. You don't want to be held liable
for pre-existing damages.
4. Failing to read the lease
A lease is a legally binding contract between you and the landlord, spelling
out each of your rights and the rules you must abide by while living in the
space. This means it's written in that kind of legal-speak that causes your
eyes to glaze over and your mind to go numb. But it's worth your while to
f-o-c-u-s and read it all the way through or you may find yourself on the
hook for different fees, penalties and restrictions after you've signed on
the line. Don't worry about digesting it all on the spot. In fact, you
should take it home to read through before you sign, advises consumer
advocate Clark Howard. "If you don't understand something, put question
marks next to the item and get an explanation," he says.
Every lease will include some basic information, such as the address of the
apartment, the length of the lease (say, six months or one year), the amount
of rent due, the amount of the security deposit and the signatures of the
landlord and all tenants. That's all pretty straightforward, but there are
additional clauses that could have a big impact on your wallet and your
lifestyle. Keep an eye out for penalties for late rent, policies for owning
pets, what utilities the landlord pays and which ones you're responsible
for, policies on painting or altering the apartment, protocol for what to do
if something breaks or needs repair, penalties for moving before your lease
term is up, policies on subletting and having roommates or even stipulations
for having roommates of the opposite sex. I once even had a lease that
specifically prohibited owning a piano or organ.
Also, make sure you know what happens to your lease agreement at the end of
the term. Usually, your contract will become a month-to-month arrangement,
but read the fine print ahead of time to be sure and to learn how much
notice is required before moving out.
5. Not asking about utilities or forgetting to turn them on
On occasion, eating takeout by candlelight may be romantic. But doing it
every night, storing your garbage on your balcony and taking cold showers
every morning is just plain sad. So before you move in, make sure you ask
your landlord specifically what utilities you're responsible for paying and
for turning on. Some apartment buildings, for example, will provide the
garbage and water service as part of your rent but leave you to arrange your
own gas and electric service. Others may require you to handle everything.
And don't forget the extras, such as a phone line, Internet service and
cable TV.
Once you know what you need, find out whom to call. Your landlord should be
able to provide you with the names and numbers of the local utility
companies. Call them at least one week before you move in and arrange to
have your service turned on the day before your arrival.
6. Going without renter's insurance
Unless you have enough money saved to replace everything you own in case of
theft, fire or other disaster, you need renter's insurance. Sure, your
landlord probably has insurance, but it only covers the building and the
infrastructure, not the stuff you keep in your own unit, says Doug Culkin,
executive vice president of the National Apartment Association. You may not
think you own much of anything of value, but once you tally up the cost of
all your clothes, furniture, computer, software, entertainment system,
microwave and CD collection, renter's insurance can add up to a real
bargain. Besides, some landlords may require renter's insurance before you
move in.
Expect to pay $150 to $250 a year, or $12 to $21 a month. You may pay more
or less depending on your neighborhood and level of coverage. You can get
quotes from several companies online at InsWeb.com or NetQuote.com, but
check with your auto insurer first to see if you can get a discount for
having more than one policy with the company.
7. Forgetting basic items to make a home
If you've never lived on your own before, you're bound to be short a few
essentials. For example, I didn't realize when I moved into my first place
that a shower curtain wasn't included. I also thought I had planned ahead by
packing a bunch of canned food to subsist on for a couple days before my
roommate (with the car) moved in, only to realize she was bringing the can
opener, too. Oh, and then there's the time I lived in an apartment for a
month without a couch – cozying up for a night of watching my favorite TV
show on a metal kitchen chair just wasn't the same. Hopefully, you've
already thought of the big stuff, like seating, bedding, a dresser, etc.
But you'll need some smaller basics, too. In addition to the aforementioned
shower curtain and can opener, don't forget to bring a waste basket (and
liners), lamps, dinnerware, bookshelves, a full-length mirror, cleaning
supplies, sponges, towels, bathroom rug, flashlight, vacuum, broom and
dustpan. Plus, invest in a small toolkit with a hammer, pliers and
screwdrivers so you can hang pictures and assemble your new furniture.
You might want to share the cost of outfitting your new place with your
roommates. One person can buy the DVD player, for example, while another
picks up a vacuum. This is better than splitting the cost of a single item
because then there's no question about who owns it when one person moves
out.
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