Financial To-Do List for Renting an Apartment

Quick Answer

These seven financial action items belong on your to-do list when you’re looking to rent an apartment:

  1. Budget for application fees
  2. Check your credit
  3. Determine if you need a cosigner
  4. Prepare for move-in expenses
  5. Update your budget
  6. Pad your emergency fund
  7. Look at your financial big picture
A woman holds her notebook while looking around her apartment that has moving boxes scattered around.

When you sign the lease for an apartment, you're making a commitment to pay your rent on time every month. Failing to make good on that promise could spell trouble for your finances. While eviction records don't show up on your credit report, they can pop up on future rental history reports. This could directly affect your ability to rent another apartment. Leaving unpaid rent and fees in your name could also come back to bite you if they get sold to a collection agency.

Before renting an apartment, you'll want to make sure you've taken the right financial steps. Let's go over them one by one.

Steps to Take to Prepare for Renting

1. Budget for Application Fees

Before you ever sign a lease, you may have to pay fees to the landlord. Some common ones to keep in mind are:

  • Rental application fee: The typical rental application fee is around $30 per person, according to listing site Apartments.com. This generally covers tenant screening costs, like running a background check and pulling your credit.
  • Security deposit: The average security deposit is the equivalent of one month's rent, according to apartment search engine Rent.com. That's on top of the first month's rent and any other application fees that may apply. Be sure to factor this number into your budget when apartment hunting.

2. Check Your Credit

  • Most landlords will run a credit check before approving your application.
    • A strong credit score and positive payment history suggest that you're a trustworthy tenant who'll pay their rent as promised.
    • The opposite is also true. Having a history of late payments or accounts in collections could make landlords hesitant to approve your application.
  • Aim to check your credit three to six months before looking for an apartment.
    • Your credit score is calculated using the information on your credit report.
    • Your credit report provides a snapshot of your credit history, payment record, open balances and more. Keep an eye out for errors that could be weighing down your score, such as accounts you don't recognize or balances that creditors have reported incorrectly. If you believe there's a mistake on your credit report, you can dispute it with the appropriate bureau.
  • If necessary, make moves to improve your credit before renting an apartment.
    • Keep up with your payments.
    • Reduce your credit card balances.
    • Avoid applying for new credit until your apartment application is approved. New credit applications trigger a hard inquiry, which can temporarily reduce your credit score.

3. Determine if You Need a Cosigner

  • If your credit could use some work but you don't have time to repair it, you might consider bringing on a cosigner. This is someone who vouches for you and agrees to pay your rent if you fail to do so.
    • Depending on your situation, it could make the difference between getting approved for an apartment or being declined.
  • A cosigner is usually a trusted friend or family member with good credit.
  • If you default on your rent, your cosigner will be legally responsible for paying it.
    • On the flip side, if you sign up for a rent payment service and pay your rent on time every month, it can strengthen both your credit and your cosigner's.

4. Prepare for Move-In Expenses

  • Furniture: The average cost of basic furnishings for a one-bedroom apartment is about $3,500, according to HomeAdvisor. How much you spend here will depend on your unique needs. Consider ballparking your expenses beforehand and adding them to your apartment budget.
  • Pet fees: If you've got a four-legged family member, some landlords may require you to pay extra. A pet deposit is like a security deposit—you pay an amount upfront that's typically used for pet-related cleaning and repairs after you move out. Any money that's left over is returned to you. A pet fee, on the other hand, is a one-time, nonrefundable fee charged to pet owners. Pet deposits and fees usually range anywhere from $200 to $500, according to Zillow.

Steps to Take Once You Move In

1. Update Your Budget

Once you're settled in your new apartment, you may have recurring expenses you didn't have before. These may include:

  • Utilities (electric and water bills)
  • Parking fees
  • Transportation costs if your new apartment requires you to commute
  • Renters insurance
  • Internet and cable
  • Groceries

2. Pad Your Emergency Fund

  • An emergency fund is exactly what it sounds like—a pool of cash designed to see you through financial surprises. That can include medical emergencies, job loss or any other bill that catches you off guard.
    • The rule of thumb is to set aside three to six months' worth of necessary expenses in a savings account you can easily access.
    • Saving an extra month or two of rent isn't a bad idea either. If money gets tight, it can help you keep up with your housing payment.

3. Look at Your Financial Big Picture

  • Every rental market is different, but you can expect your rent to increase at the end of each lease term. As of July 2022, rent prices for one-bedrooms had shot up over 25% from a year earlier, according to national Rent.com data. Rents for two-bedrooms increased about 26% for the same time period.
    • Whether you plan to rent short term or for an extended time, you'll want to factor potential rent increases into your annual budget.
  • Consider the pros and cons of renting:
    • Pros: Renting requires minimal, if any, maintenance costs. (That's what your landlord is for.) You also have the flexibility to break your lease and pack up if you see yourself moving in the near future.
    • Cons: When you make mortgage payments, you acquire more and more equity each month. Your home is an asset that can help grow your wealth should you choose to sell—not so when renting. Homeowners also benefit from certain tax breaks that renters can't claim.

How to Save on Apartment Costs

Here are some ways you can keep your costs down to make apartment living more affordable in the long run:

  • Review your budget and eliminate any unnecessary expenses.
  • Call your internet, cellphone and cable providers to negotiate lower bills.
  • Negotiate lower credit card interest rates.
  • See if you can get a better deal on your auto or renters insurance.
  • Dial down your energy usage.
  • Explore ways to reduce your water bill.
  • Consider getting a roommate to share the rent with you.
  • Negotiate lower rent, or barter by exchanging work for reduced rent. This can include everything from cleaning the property to working part-time for the apartment complex.
  • Sublet your apartment whenever you're away (if your lease allows it).
  • Use meal planning and other strategies to save on groceries.

The Bottom Line

Renting an apartment is a big financial decision. By signing your lease, you're agreeing to pay your rent as promised, month after month. There are also upfront financial commitments like security deposits and potential application fees. The checklist above can help you get your financial house in order beforehand.

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