Tips from Apartment Owners Association of Southern California.
As a tenant, a wrong decision relating to the financial part of renting can result in the major life change of having to move home. Put simply, there are three key issues relating to rent that all tenants should consider before signing on the dotted line to avoid any potential pitfalls later on.
Firstly, it’s important to look at how much rent you can afford to pay. Just like the banks evaluating a home loan, most property managers are looking for prospective tenants to have a net income of three times the rent they will be paying. For example, if a single person is looking to rent a $200 apartment, they will need to be earning at least $600 after tax a week. Likewise, if there is to be more than one occupant, their combined net income should be three times the rent. Even if a property manager doesn’t insist, history shows that not sticking to this formula will almost certainly result in difficulty over paying the rent at some stage.
Secondly, consider the way you will pay your rent. The best way is to set up a direct debit such as Payment Gateway, to make sure the rent is paid on time, every time without you having to do a thing. There is generally a small cost attached to using any direct debit, but the reality is there’s not really any “free” way of paying rent – even if you were to pay in cash there would be a time and travel cost attached to getting into the agent’s office.
Lastly, look at when you pay the rent. Tenants have an obligation to pay on time and in advance otherwise they are in breach of the lease agreement. The catch is there’s usually a lag of between one and four days from when a payment leaves your account and arrives in the agent’s account. It’s a good idea to set up the payment a couple of days before the due date to make sure you aren’t in default. If your pay date is later than your due date, pay a couple of days extra up front when you begin the lease to synchronize the dates.
All in all, if you line up your financial ducks before you commence a tenancy, you’re unlikely to end up in trouble over the rent later.