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Advice & More April 2015

Dollar Sense

Looking for a Rental Property During a Landlord’s Market

By Teresa Ambord

If water or fire damage your property, like furniture, clothes, electronics, etc., you will wish you had renter insurance. Also, if something happens, like you accidentally let the bathtub overflow and the water damages the property of a neighbor in an adjoining apartment, you’ll wish you had a personal umbrella policy to pay for their loss.

With the rate of foreclosure high in recent years, this means the rental market is tight. Many former homeowners have little choice but to find a rental. If it has been awhile since you rented, you might be surprised to learn it’s much harder than it used to be. Landlords can afford to be choosy and they can charge higher rents. And getting a long-term lease or even a lease for more than a year at a time may be a thing of the past.

When you do find a place you’d like to be, don’t sign anything without knowing exactly what is in the agreement.

Here’s some advice culled from a variety of sources.

  • Does the lease include an option to renew?  If so, is there a clause which escalates the rent in subsequent years? Assuming there is a rent escalation clause, how is the increase calculated? This is important because it allows you to anticipate to some extent what your added cost will be. It could be based on the cost of living, on a percentage of the first-year rent, or it could be a fixed dollar amount. Mike Akerly, a real estate broker in New York told brickunderground.com, “the important thing is to understand what the escalation is going to be in dollar terms.”

  • What, if any, grace period is there to pay the rent in case you miss the deadline? Know what the penalty will be if you are late. Akerly also warns renters to be aware of when the lease term is up and when they need to renew if they intend to stay. “The tighter the rental market, the more important it is to renew on a timely basis.” Also know what kind of notice is required if you need to break the lease.

  • Do you have the right insurance? Be aware, said Akerly, that your landlord’s insurance is… your landlord’s insurance, not yours. If water or fire damage your property, like furniture, clothes, electronics, etc., you will wish you had renter insurance. Also, if something happens, like you accidentally let the bathtub overflow and the water damages the property of a neighbor in an adjoining apartment, you’ll wish you had a personal umbrella policy to pay for their loss.

  • What utilities are you expected to pay? Make sure you know who pays the gas, electric, water, and… what about cable TV? Is it included?

  • What is the procedure when a repair is needed? Find out when and how to contact repair and maintenance people. Also, although landlords generally pay when new appliances are needed, that’s not always true. Better to find out and know what you are dealing with.

  • Are you permitted to make improvements or alterations? If so, be sure to get the agreement in writing. Otherwise if you paint a room hot pink and you didn’t have written permission, you’ll likely have to return the apartment to its original condition.

  • When it’s time for you to leave, when will your security deposit be returned? Some landlords will include in a lease that the security deposit will be returned “within a reasonable period of time.” Don’t leave that to chance, or your landlord may drag his feet. Ask to get in writing how many days after the apartment passes final inspection before you can expect your deposit back.

  • What, if any, furnishings are included in the lease? The lease should contain a list of all included furniture, and a confirmation that those items are indeed there, and their condition if there is anything questionable.

  • What is the condition of the apartment and any outside space that is yours to use? Examine the premises, and document anything unusual. For example, is there excessive wear on a bedroom carpet? I once moved into an apartment where the previous tenant had spilled hot wax on a bedroom carpet, creating a large, irreparable stain in a remote corner. The landlord was so friendly and welcoming that I did not call it to her attention. I assumed she’d seen it, but that was a mistake. When I moved out she claimed I’d done it and I had to fight for my security deposit. If I’d taken a picture of the stain upon moving in, or if I’d asked to do a move-in checklist with her, that wouldn’t have happened.

  • What is your responsibility at the end of the lease?  Your lease may include a requirement that you allow the apartment to be shown to prospective tenants before you move out. Be sure to look over the exact terms, like whether you’ll need to be available for open houses, who can have access, etc.

  • What if you cannot fulfill the lease time? Know before you move in if you are permitted to sublease the apartment, and if so, do you have to have written permission first?

 

Senior Homesharing

It’s not for everyone. But for someone who has an extra bedroom, does not or shouldn’t live alone, needs extra income, or all of the above and more – sharing your home might be a solution, for you, or an elderly parent.

When I was 20, I was a housemate for awhile to an elderly woman who was afraid to sleep in the house alone at night. She was still able to cook and take care of herself, but, left alone, she’d call her adult children all night long to say she heard scary noises. I went to college during the day and was free most evenings, and at night, I was always there. And the frightened calls to her kids stopped.

If you find an agreeable person, this can not only provide you with some extra income, but it also:

  • Extends your independence, delaying the time when an assisted living facility might become necessary.
  • Gives some help around the house. Just be sure to put this agreement in writing.
  • May make transportation possible if you can no longer drive.
  • Gives you the security of not being in a house alone at night.
  • Provides someone to talk to, someone who will know if all is not well with you.
  • Gives your family peace of mind that you are not alone.

Obviously you’ll need to choose your housemate carefully, so go slow and get help with the decision. Here are several things to consider before you let someone move in:

  • Require an application, in-person interviews with prospects, and visits to your home. Also ask for verifiable references from employers, family, and friends. Do a background check, possibly including fingerprinting, and a credit check.

  • Then if all goes well, negotiate a homeshare agreement. The agreement should include the rent and due date of the rent, rules about smoking and pets, hours when your housemate may have guests, possibly the share of housework or gardening the housemate will do. And perhaps the most important thing, the acceptable reasons for immediate termination of the arrangement, like failure to pay rent or perform agreed services.

Nolo.com, an online legal encyclopedia lists http://nationalsharedhousing.org/ as a place to start, to find an agreeable housemate.

 

Teresa Ambord is a former accountant and Enrolled Agent with the IRS. Now she writes full time from her home, mostly for business, and about family when the inspiration strikes.

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