Common Pitfalls When Searching for a Rental Property
Prospective tenants face many challenges when navigating a competitive, often difficult to comprehend rental market. By planning ahead and setting your expectations, you will likely be able to avoid the most frustrating aspects of searching for a new home.
At the beginning of your search for a new rental, it is important to do a little research on your own before contacting a broker or landlord directly. It’s up to you to have a general sense of what you can afford, typical rent prices in different areas, and how much it will cost with certain, desired amenities. Knowing typical prices in your desired areas will also help you identify ‘too good to be true’ listings. The price could be low because of the quality of the building (rundown, bed bugs, etc.) or a possible nuisance in the neighborhood such as major new construction near the building.
There are a multitude of sites that have been created to empower prospective tenants with as much information as possible — make sure you do your research!
You Don’t Have the Necessary Paperwork Together
Before you start the search for your dream home, you need to make sure you have the necessary documents on hand. If you find the perfect place, but are not prepared, you risk losing it if you need to take three days to get everything in order.
Items you should have on hand before starting your search:
- Letter of employment stating length of work and salary (if self-employed, a letter from an accountant will work)
- First two pages of last year’s tax return
- Two pay stubs
- Two bank deposits
- Copy of your photo ID
- Reference letter from previous landlord
You Haven’t Considered the Need for a Guarantor
Landlords in large cities typically require renters to make an average of 40 times the rent to qualify for an apartment without a guarantor. This means for a $2,000/mo. rental, you will need to make at least $80,000 a year. For anyone who does not make 40 times the monthly rent, you will likely need a guarantor.
A guarantor is someone who signs a legal agreement taking responsibility to cover the rent in the event the lessee is unable to pay. Usually this is someone who is related to the prospective tenant.
Asking a parent or relative to be your guarantor can be an uncomfortable process. If you want to avoid asking a family member or friend to be your guarantor, a rental co-sign service such as Insurent or The Guarantors may be able to help you. The service will act as your guarantor for a fee, which is lower than a broker fee in many cases.
Having Poor Credit
Finding a rental in a large city with a low credit score will likely prove to be difficult. A credit score of 620–659 is considered fair, and usually adequate to secure a property. Even if your salary is 40 times the rental price, you still may need to have a guarantor if your credit score is low. If you do in fact have a low credit score and are working with a broker, it’s best to let them know from the onset of your relationship — they may be able to identify certain landlords who are more forgiving of lower credit scores.
Not Having All of Your Financial Ducks in a Row
In peak months (typically May through September), rentals can be scooped up within hours of hitting the market. If you do not have immediate access to your first month’s rent and security deposit, you run the risk of the losing the rental to someone else who is more fully prepared.
Following these tips (along with completing a RealApp) will help you to be as prepared and realistic as possible about your search for a new home.
-The Realster Team