Rent is on the rise in the United States – the average apartment costs a whopping $1,098 per month. However, there are various expenses on top of rent that individuals must consider, including application fees and security deposits. Although the initial move-in costs vary by location, you’ll need to carefully work the expenses into your budget and ensure that you can afford the new pad. You can use our platform as an expenditure tracker [ew2] tool and as a resource to compare your actual spending to your budgeted amounts. Our collection of tools can help you gauge your financial situation and ultimately decide whether or not you can afford a particular apartment.
The Initial Cost of Renting an Apartment
It’s not uncommon to spend a few grand even before you move into your apartment. And after getting the keys, you’ll need to furnish the new crib, which will set you back even further. Let’s take an in-depth look at all the initials of cost of renting an apartment:
Application Fee
As the name implies, the application fee is what you pay to apply for the apartment. Application fees typically range from $35 – $75 and cover the costs of a background and credit check. If you feel that an application fee seems unusually high, you should check your state laws to see if there’s a maximum amount that landlords can charge to screen tenants. For example, California Civil Code §1950.6 sets the maximum application fee amount at $53.33 per applicant. It’s also essential to remember that most application fees are non-refundable. Therefore, you should ensure that you meet the landlord’s requirements, so you’re not out the money.
Administrative Fee
Many apartment complexes charge an “administrative fee,” which costs a couple of hundred dollars. Why exactly do they charge this fee? This fee enables you to “reserve” the apartment. At the same time, the landlord screens your application and verifies that you’re eligible to rent the apartment. Moreover, it compensates the landlord for the time it takes to run the background and credit check, call references and confirm your rental history. Most administrative fees are non-refundable, but some landlords apply the funds towards your deposit. However, if the landlord denies your application, it doesn’t hurt to ask for the administrative fee back (if you’re lucky, you might receive a partial refund).
Security Deposit
Virtually every landlord charges a security deposit before renting out a unit. This deposit is either one- or two month’s rent and is refundable, depending on your apartment’s condition when your lease ends. Many states have laws that dictate the maximum security deposit a landlord can charge. For example, a security deposit in Iowa cannot exceed two months’ rent.
Don’t forget to check out your apartment carefully once you get the keys. Record a video of yourself walking through the apartment, inspecting every detail. You’ll also want to take a video to document the apartment’s condition at the end of the lease. It’s not unheard of for landlords to falsify damage to keep your deposit. Recording a video could save you hundreds if not thousands of dollars if your landlord wrongly accuses you of damage.
Pet Deposit
Do you have a fur baby moving in with you? If so, you can expect to pay a pet deposit somewhere in the range of $200 – $400. A pet deposit is refundable as long as your landlord doesn’t incur any expenses to fix or clean damaged caused by the pet. However, it’s important to pay close attention to the verbiage – a pet “deposit” is not the same as a pet “fee.” Apartment complexes typically charge a pet deposit or a fee – not both. A pet fee is non-refundable and is similar to an administrative fee. This fee may include the cost to verify your pet’s vaccine records or take extra steps to clean the apartment when you move. You’ll also have to pay a non-refundable pet rent monthly, typically between $20 – $50 per pet.
Renters’ Insurance
Landlords require tenants to have renters’ insurance to cover the costs of unexpected damage or theft that occurs in the apartment. Fortunately, rental insurance companies don’t need you to pay an application fee. Many apartments partner with an insurance company and offer you that company’s insurance when applying for the unit. However, you can get renters’ insurance on your own and typically save money while you’re at it. Most renters’ insurance policies offer $100,000 in coverage and cost approximately $20 per month. Thus, you should include $20 as an initial move-in cost because landlords require you to have insurance before you can get the keys to your unit.
Furnishing the Apartment
The average cost to furnish primarily depends on two factors – how much furniture you already own and your personal taste. If you use hand-me-down furniture or thrift store finds, you might be able to furnish your apartment for $1,000 or less. Those with expensive taste may spend up to $5,000 to get all the essentials for their new pad.
How Much of Your Income Should You Spend on Rent?
Now that you know the initial costs of renting an apartment, you’ll want to ensure the monthly rent is within your means. Generally, financial experts recommend spending no more than 30% of your gross income on rent. Moreover, most landlords require you make three times the monthly rent to qualify for the apartment. Now, if you have multiple or varying income sources, calculating an exact amount might be tricky. Our platform boasts a detailed income tracker [ew3] that shows you how much income you bring in each month and the sources of the income.
Use Chunk to Manage Your Apartment Expenses
Our comprehensive platform makes apartment living so much easier. You can effortlessly download all your banking transactions – perfect in case you can’t remember if you paid rent or a utility bill. Furthermore, with our expenditure tracker, you can identify all expenses related to housing, including renters’ insurance, utilities, and application fees.
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