Renting vs. Home Ownership
One of the most important decisions you can make is whether to buy or rent a property. There are times when it makes more sense to rent. When that’s the case, REALTOR® can help sort through the lifestyle and financial considerations involved and help you make the right choice for your needs.
Some factors you may want to consider in your decision to rent versus buy:
Frequent Job Relocation
If the nature of your job means that you relocate often, or you are likely to relocate sometime within the next few years, renting may be the ideal solution for you.
Home Maintenance and Repairs
If you don’t have time for ongoing maintenance and repairs, renting is a better option, as the landlord or management company is responsible for the property.
When Renting Costs Less
One of the most obvious cases for renting instead of buying a home is when renting simply costs less. Renting can also give you time to get to know an area and become comfortable there before choosing to buy.
What paperwork will I need?
Application Form
The first step in the process, once you have identified an apartment, is to fill out an application form. Most management companies have their own forms that need to be used. If you are renting in a co-op or condo, you may find that you have to complete two applications: one for the individual owner and one for the board package.
Letter of Employment
This must be on official company letterhead. The letter must state your position, length of employment or start date, and your annual income. The letter must be signed by a person who may be contacted to verify the information provided. In some instances, this information can be confirmed via telephone call only instead of written confirmation. Please note that a signed job offer and acceptance letter is usually not sufficient.
Landlord Letter of Reference
If you have an accountant or attorney, you might be asked to put their numbers down as a reference. Think of other people who could be references in case you need them and have their contact information handy. Not all landlords will require actual letters of reference.
Credit Reports
As a rule, credit reports are run on every applicant and guarantor. The fees for credit reporting/application processing range from $25-$250 depending on the company or service used.
The information contained in your credit report will be weighed very heavily in the approval process. So what is considered inadequate? A few old late payments are usually okay. A high revolving balance is not good. Past due payments that are still outstanding are bad. Delinquencies and collections are very bad. If you suspect that your credit is not good, be sure to advise your agent. This will allow your agent to properly prepare you and the landlord for the process.
Different landlords have different ways of dealing with credit issues. Some will allow you to increase the security deposit or to use a guarantor. Others may reject the application entirely.
What is a Guarantor?
A guarantor, also called a co-signer, is someone who is willing to guarantee your lease. The guarantor is responsible for all terms of a lease in its entirety.
Do I need a Guarantor?
If you do not meet the landlord’s financial or credit requirements, a guarantor may be your solution. Students or individuals with no income or credit history, or anyone who does not meet the standard income requirements, will usually need a guarantor. When bad credit is the issue, whether or not a guarantor is allowed will depend on how bad the credit report is, and on how strict the management company or landlord may be. Sometimes a combination of guarantor and extra security is needed. If you think you might need a guarantor, advise your agent immediately so that together you can prepare most efficiently.
Who can be a Guarantor?
A guarantor does not have to be a relative. Prepare your potential guarantor by speaking with them and advising them of what they will be asked for. You might have to act quickly, and their cooperation may be critical for your approval. A guarantor needs to fill out an application form and provide the required documents.
What Fees and Commissions can I expect?
Fees are typically as follows:
- Payment to landlord of first month’s rent and security deposit
- Application fees, including any credit check fees
- Building fees: these usually include move-in fees and deposits
- Broker commission (subject to the terms of the listing agreement with the landlord)
Why Use A REALTOR® To Rent
We know the market and understand the rental process. We can assist our rental clients with exclusive listings, daily showings, hands-on management, and in-depth knowledge of contracts and leases. We can negotiate on your behalf and guide you through the complexity and range of considerations you’ll face in today’s rental marketplace.