Despite all that, or maybe because of it, I learned a lot about life, love, and apartment hunting that year and I was able to do much better when I got ready to pick out my next apartment at the end of my lease.

Here are a few things I learned the hard way, but you should know before you go hunting for your first apartment.

Your Realistic Budget and The Market

When my fiance and I started looking for our first apartment, we had a budget of $600/month in mind for a 1-2 bedroom apartment. (Where we came up with that I have no idea as neither of us actually had a written monthly budget.) After viewing nearly 30 properties and making calls all over town, we realized that this was definitely on the low end for an apartment in our college town.

Luckily, after looking for a few weeks we were able to find an apartment with utilities included for $620/month.

If I could do this over again, I would have a better idea of what I could reasonably afford because I would have a written monthly budget for all of my money, much like I do now. I would also do some research to find out what the going-rate for apartments is in the community.

Check Up on Property Management Company

The property management company I ended up renting that first apartment from was a nightmare to deal with. They managed a lot of property in the town and it was clear that they had more than they could adequately manage. When I moved in I was told the apartment had already been cleaned, and yet it was disgusting! I ended up cleaning it myself and then when I left at the end of the lease I cleaned it very well and still had to forfeit most of my deposit as it wasn’t up to their “standards.”

Additionally, I had to have them come in for repairs and maintenance twice that year due to normal wear and tear. Despite the fact that things broke/wore out from normal use I was charged a huge amount for the repair. Rather than fight with them about it after I’d already moved out (as one of them happened the last week of my lease), I just paid the fee.

These are all reasons why you should check up on the property management company to find out their reputation before you rent your first apartment.

Decide What You Can and Can’t Live Without

Due to my tight budget for that first apartment, I had to go without some things I never thought I’d miss. I had no dishwasher that year. I know, I know #firstworldprobs, but I seriously missed having a dishwasher! I also had a terribly scary spot in the wood floor in the living room where the sub-floor was rotted through so the floor sagged quite a bit.

Another thing I had to put up with was not having a door to my bedroom. I never thought about it until after I moved it, but a door would’ve been nice since the bedroom was right off the kitchen.

If I could do it over again I’d make a list of my “must haves” and some things I’d like but could live without. This list proved useful when I rented my second apartment as it had both a bedroom door and a dishwasher.

The biggest lesson here is to do your research well ahead of time before you rent your first apartment so you know what to expect. Talk to some of your college friends who already live in an apartment to find out about rental rates, property companies, and more. You should also do some research online to find out more about the property company you are renting from.

Where ever you are in the world, whether you are looking for Yorkville condos for rent in Toronto or even apartments for rent in Winnipeg, looking for someplace to live takes time, some serious digging, and knowing exactly what you want (location, size, cost).

Live and learn I guess!

Have you ever rented an apartment? What did you learn by renting your first apartment?

What to Look For in a First Apartment is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Most first-time homebuyers often debate whether they are ready to invest in their first properties and transition from renting to buying. Hesitation on such large purchases is inherent.

However, rent prices are more expensive than ever, prompting many lessees to dip into their savings and apply for mortgages without second thought. After all, owning an affordable home is a long-term investment that hopefully presents returns at resale, whereas renting only helps the landlord build equity.

The American dream of buying a home and make the transition from renting to buying starts with sensible financials, but homeownership isn’t for everyone. Ask the following questions before breaking a lease and moving money around to support a down payment.

Is a mortgage affordable?

Generally, putting down at least 20 percent of a home’s purchase price with a loan covering no more than 80 percent is recommended when making the transition from renting to buying. Loans of more than 80 percent of the home price often require homeowners to pay additional insurance to protect their lenders’ investments, called private mortgage insurance.

Credit scores significantly impact interest rates offered to borrowers, even when buyers provide heftier down payments. Typically, credit scores under 680 are red flags to bankers. They might agree to financing, but usually with increased interest rates or less favorable terms.

Prospective buyers should raise their credit scores before applying for mortgages to receive optimal offers. Individuals with credit scores above 750 receive lower interest rates, allowing them to put more money toward their principals and build their equity faster.

When researching the transition from renting to buying, don’t forget about closing costs, or mandatory fees charged by lenders and third parties, which typically range between 2 and 5 percent of a home’s purchase price. Some homeowners can negotiate for their mortgage lenders to pay for closing costs, but unsurprisingly, the deal usually entails higher interest rates that cost borrowers more over the life of their loans. Sellers sometimes agree to cover these costs, especially when they receive their initial asking prices without bargaining.

Who does the current market favor?

Determining the financial benefits of making a transition from renting to buying requires an understanding of the current real estate market. In some locales, renting is inexpensive and therefore more cost-effective for the majority of residents unconcerned with building equity.

In most major metro areas, renting is the norm as it allows for more freedom. However, rents are currently at historical highs. In these rent-heavy cities, leasing becomes cost-prohibitive quickly and the price of a mortgage is more affordable than continuing to rent. The formula to determine the time it takes for buying and renting to equalize – and owning to eventually become cheaper than renting – is known as the breakeven horizon.

The breakeven horizon estimates the point at which buying a home becomes cheaper than renting. Renters looking for apartments in Dallas, for instance, face a median rental price of $1,244 per month. After only 1.1 years of renting in Dallas, buying becomes more financially beneficial than resigning a lease. Further, the median list price of homes for sale in Dallas is $249,000, which isn’t far from the national median of $211,400.

Dallas is much cheaper than a hot market like San Francisco, where the median list price is a staggering $947,000. Prospective Dallas homeowners, on the other hand, would only have to save $50,000, assuming a 20 percent down payment on a $250,000 purchase price, before beginning their home searches. To compare rental properties and homes on the market in Dallas or other areas, visit Zillow. 

How much should homeowners save?

Spending every dime saved to buy a home and make the transition from renting to buying presents many issues. One is that working individuals should have substantial savings for emergencies. Layoffs, illnesses or other events usually require more than one paycheck to address.

Homeowners facing unexpected expenses might struggle to keep up with their home payments, and therefore go into default with their lenders, putting themselves at a high risk of foreclosure.

An appropriate savings goal for financially-minded homeowners is six months of expenses dependent on lifestyle. For example, an individual living on $5,000 a month would be wise to accumulate $30,000 in savings. After accruing six months of living costs, devote additional money to high-earning investments.

Keep in mind additional post-purchase costs, including homeowners association fees, utilities, landscaping and plumbing, among others. Also consider career and future plans when considering the transition from renting to buying.

Homeowners usually remain in one city long-term, especially if they want to receive returns on their investments. Owning a home is a serious commitment, which is why many choose to rent regardless of high rates and lack of equity – the sense of freedom can be priceless and not worth the transition from renting to buying.

Photo credit: Tax Credits.net via Flickr Creative Commons.

When to Transition From Renting to Buying is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Not Getting a Roommate

While deciding to live alone in a two bedroom apartment might not seem like the best use of space or money, in the long run this decision saved me a ton of money and my sanity. Lots of my college classmates decided to share an apartment with people they went to high school with, or people they met during their college classes. For most of these people the classic advice “don’t room with someone you’re friends with” turned out to be very true. Most of these people are no longer speaking to each other and they certainly aren’t still living together. In fact, many of them didn’t even make it through their one year lease term. This resulted in them having to look for a new place to live mid-school year and pay a large amount in fees to get out of their rental contract early.

Having a roommate might save you some money on rent and utilities, but it doesn’t usually save you any money on groceries. The grocery situation is always a tricky one, no matter if you decide to share groceries and split the bill or have each individual provide their own food without any sharing. Groceries and splitting apartment chores always seem to be the big factors that split roommates up.

Live Modestly in an Apartment

By not seeking the most glamorous apartment in the most luxurious neighborhood, I was able to rent my apartments by myself in college and still have them remain affordable. When you are a full-time college student working a part-time job, you don’t need to have all of life’s luxuries in your apartment. Your main focus should be on your education (and having a little fun), not on having the best apartment out of everyone you know.

Part of living modestly also means keeping your other living expenses and bills in check too. Simple things like choosing Netflix over cable TV and setting your thermostat a little lower than you’d prefer during the winter will go a long way in helping you keep your living expenses low. Luckily, the utility bills associated with apartment living are usually much lower than that of a house to begin with. When I lived in an apartment, my monthly utility bills ranged from $30-50 each month (for all my utilities combined)!

There’s something to be said for truly “living like a broke college student,” this is a great way to keep your living expenses low and build wealth quickly if you are no longer a student. I made the mistake of taking on too big a mortgage after college and now I’m almost “house poor”. There are certainly days that I miss the cheaper lifestyle that comes with apartment living.

How else do you think apartment living can save you money?

Photo courtesy of: Matthew Trentacoste

How Apartment Living Can Save You Money is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.