What Is the True Cost of Renting a Home?
The cost of renting a home isn’t only the monthly payments to your landlord. Before you move in, there are several fees that you may have to pay. It’s better to understand the rental costs of owning a home to avoid any surprises on your leasing bill.
Before your landlord hands over the keys to your new home, you may need to pay some one-time charges.
- Application fee. Your landlord may run a credit check to be sure that you are a good (tenant) risk. The application fee covers the cost of credit screening. Landlords assume that your past behavior is a good indicator of your future as a tenant. Having good credit tells them that you’re likely to pay your rent on time and in full. Bad credit history will give them concern. Some landlords may waive a credit check (and application fee) for other evidence that strongly indicates you can pay the rent. They may ask for your pay stub or a job verification letter, for example.
- Security deposit. This is collateral in case you damage the home or break your lease early. If neither of these situations applies, the landlord must return your security deposit to you when you end your lease.
- First month’s rent. Landlords usually collect the rent for the upcoming month by the first of the said month. You must pay this fee before moving in, or else your landlord can choose not to give you the keys.
- Last month’s rent. Some landlords collect this fee in advance. Read the lease carefully to know if it is the final month’s rent or an additional security deposit.
- Pet fee. This is an additional fee paid to cover remediation from pet damage.
- Move-in fee. Your landlord may charge this to cover costs associated with updating personalized features for you as a new tenant. These may include costs for updating mailboxes and directories, changing locks, or reprogramming codes for individual access to shared amenities.
Recurring Costs of Renting a Home
Once you move into the home, the costs change from one-time to recurring. They are usually due around the same day of every month. It’s easy to set a reminder on your calendar to pay them.
- Utilities. Utilities like electricity, cable, and internet must be paid monthly. Your water, gas, sewage, and trash bills are utilities as well. Depending on your lease, you could be responsible for none, some, or all of your utilities.
- Renters insurance. Many landlords, especially commercial properties, require tenants to carry a minimum amount of renter’s insurance. Rental insurance may be very affordable, depending on your situation.
- Parking fee. In places where parking is difficult (and thus expensive), landlords may charge a premium for parking spots.
- Maintenance fees. Depending on the language in your lease, you could be responsible for regular maintenance to the home. These include snow removal and mowing the lawn mowing.
- Appliance rental. Some commercial landlords offer washing machines and dryers as add-ons to your lease for a fee.
- Possible rent increases. At the end of your lease, your landlord may choose to raise the price of your rental. As a month-to-month tenant, this may be done with as little as 30 days’ notice.
Knowing what to expect for your rental costs means that you can be proactive in managing your financial situation. The cost of renting a home can balloon very quickly due to your rental cost. Being aware of them can help you proactively manage your short-term and long-term personal finances.