Alternatives to Buying a Home
If you're relocating to the United States, you may not be ready to purchase a home. If this is the case, renting or leasing may be the perfect solution. Cities in the United States offer an array of rental options. This provides you with plenty of choices in the market, whether you're looking for an apartment, a townhome, a mid-rise, a high-rise, condo or a single-family home. Better yet, rental rates in the typical American city are very affordable. Of course, rental rates are also dependent on the location of the housing space, so significantly cheaper apartments are not difficult to find if living in a specific area of a city is not a concern.
Purchasing a home offers many distinct advantages, but it's not always the right solution. When deciding between buying a home or renting an apartment, each individual must assesses his or her own personal needs. Circumstances vary, and the following factors should be considered when making temporary or permanent housing arrangements.
Cost - Buying a home usually requires a substantial investment of cash for a down payment, closing costs and points paid to lenders. You may also need to buy appliances, additional furniture, window coverings and other items.
Additional Costs - With a home, you may possibly have a yard, a community pool or other additional amenities that come with having more space. You'll also be responsible for maintaining the yard, heating and cooling a larger space as well as perhaps paying homeowner association dues to maintain the pool and other amenities.
Reduced Flexibility - If your company relocates employees frequently, or you're not interested in staying somewhere for more than a year or two, you may want to think twice about buying. The costs you incur to sell a home (realtor's fees, closing costs, costs to market the property) may outpace any gains in the property's value or selling price.
Not Ready to Commit - How likely is it that your life and your needs will change?
Is your family growing, or do you have children who are getting ready to leave home or go to college? Is divorce or separation a possibility in your near future? Will there be other demands on your income or savings?
Return on Investment - Most people believe property always appreciates or gains value, but that's not always the case. A change in the neighborhood or the economy can affect the value of your property, which is certainly an issue at the current moment. Sometimes you'll make money as a result of your purchase, but you may lose money on your investment if you haven't owned the property for long. You'll also need to consider any additional money that you put into the property for improvements or upkeep while you live there.
Maintenance Responsibility - Home ownership requires being responsible for making the repairs or hiring others to make them, being available when repairs need to be made and paying for whatever work is necessary.
Lifestyle Factors - Is the neighborhood you're interested in affordable without having to sacrifice a wide selection of housing options? Is it close to your place of employment or your child's school? Can you find rental housing where you would like to live, or is purchasing a home the only option?
Tax Advantages - If you itemize your income tax, you can deduct interest you pay on a mortgage and property taxes that you pay. You can also deduct points paid to lenders in the year that you incur that cost. If you don't itemize, you won't get these deductions.
Peace of Mind - Ultimately, you need to decide if you'll be more satisfied and comfortable in a home you own, or in a home you rent.
If renting is the best option, here's a basic checklist:
* Set a reasonable budget you can afford. Don't forget that you may need to pay for utilities and other items not included in your rent. Many properties will not approve you as a resident if you'd have to spend more than a third of your gross income on the rent.
* Check out your credit record with a report from a consumer reporting agency (credit bureau), and clear up any problems or mistakes on your record before you fill out a rental application.
* Make a list of what you are looking for in your new home or apartment, including the kinds of features that will make you feel comfortable with your choice. Use your list to check out the rental housing you're considering.
* Look over any property you're considering and see how well it is maintained. That will give you some indication of how well the property is managed and cared for.
* If you're considering an apartment or multi-unit property, talk to some of the existing residents about their experiences with the property. Ask how satisfied they are with the property, how repairs or other problems have been handled, and if they would recommend the property to their friends.
* Visit the places you're considering at night, to see if they look well lit. Compare them to similar properties in the neighborhood.
* Drive around the neighborhood you're considering, and look at the other rental properties available.
* Ask the leasing agent or the owner or manager of the property how emergencies are handled and how any crime or safety concerns are communicated to residents.
Before you start looking and comparing properties, determine your needs. Do you need a place with lots of space, good closets, close proximity to work or school, or conveniently located near shopping centers and public transportation? Are you looking for a neighborhood with a suburban feel or prefer being closer to higher density, urban areas?
Then, of course, you must determine how much space you need and whether or not you'll need a storage space for extra furniture. Are you interested in a specific school district for your children? Is there a washer dryer in the rental? How is the traffic leaving your neighborhood in the morning and at night?
Types of Housing Available
The Unites States offers many lifestyle choices leaving you with the daunting task of determining what living space suits your individual needs.
Houses - From elaborate Victorian-style homes to modest bungalows, there are many architectural models available. While you can expect to pay more, you'll get more in return, including a fenced yard.
Duplexes and fourplexes - These are multi-property, non-apartment facilities and are more commonly found in central urban areas.
Apartments - Each city in the United States offers a host of apartment styles with a wide range of available amenities. These can include garden-style apartments with three levels or less and usually have staircase access. Mid-rise apartments are four-to-six levels and are more dominant in urban areas.
Townhouses and condos - Ideally suited for busy professionals who require more amenities, including concierge services, maid service, shuttle services and valet parking.
Temporary/Corporate Housing - This option best suits people in these situations: homebuyers encountering various delays; homeowners who are renovating their homes; new residents or visitors searching for an apartment or house; tourists or business people on an extended stay; personnel who are relocating; visiting executives; or corporate clients. Search online using key words such as temporary or corporate housing for companies in the region you will be staying in.
Part of your rental-search tool kit should include helpful resources, online and printed. You'll also want to cruise neighborhoods of interest to you and look for signs on front lawns. While you're at it, stop by the local grocery store and peruse the free publication racks. There you'll find any local resources that may include listings in a specific neighborhood. Ask if there is a regional newspaper as well. Your company's relocation representative can also help you with availabilities in various neighborhoods.
* Craig's List (craigslist.org) is free to landlords and apartment hunters.
* Apartment locator services - These are independent companies that have access to databases containing information on as many as 2,000 apartment communities. Apartment locators can help prospective renters focus their apartment search based on information such as preferred location, budget, size requirements, lifestyle preferences and desired amenities. In most cases, this service is free to prospective residents because apartment owners or management typically pay referral fees after leasing. Use the Internet to search for apartment locator services in the area.
* The Apartment Guide - This free publication features information on hundreds of apartment communities nationwide. It includes photographs, descriptions, features, rates, floor plans and maps. Copies are available at most grocery and convenience stores (apartmentguide.com).
* For Rent Magazine - Another free publication, For Rent Magazine is the largest apartment rental publication in the nation. Published every two weeks, it provides up-to-date, comprehensive information on more than 50,000 apartment communities. The magazine contains information on communities for senior citizens as well as employment opportunities within the industry. It is available at more than 2,000 locations, including most grocery and convenience stores. On its Web site, apartment hunters can search by location, price amenities or alphabetically (forrent.com).
In addition to affordable rents in the area, amenities provided by many apartment complexes are considered luxuries in major international cities outside the US. Expect to find amenities such as disability access, some paid utilities, balconies or patios, cable-ready outlets, emergency maintenance, laundry facility, outdoor pools, hot tubs and spas. Many have tennis courts, basketball facilities, billiard rooms, playgrounds and fitness facilities outfitted to rival private gyms. Also available at many complexes are limited-access gates, dry cleaners, lush landscaping and basic cable television. Some apartments have luxurious clubhouses with big-screen televisions, executive business centers, parking garages, sundecks, gazebos, elevators and video-monitored limited entries.
Interior features considered standard for most apartments include heating, air conditioning, mini-blinds, ceiling fans, fully equipped kitchens with a dishwasher and multiple phone lines.
Other features might include nine-foot ceilings, crown molding, oval garden tubs, bay windows, fireplaces, or garages and/or covered parking. In addition, some communities have resident programs that include free and optional services such as maids, concierges, aerobic classes, guest suites for visitors, free shuttle services and car detail centers.
Refer to this list to help you customize your own version that you can take with you when looking at properties. You can also take a photo of key features that you can clip to the checklist as a reminder.
* Activities: Many places will have at least a few of the following available: basketball court, swimming pool, gym, tennis courts, fitness center, walking trail, picnic areas, pet areas and maybe even a play area for children.
* Appliances: Which appliances do you require? Some older buildings might not come with the basics, whereas others will have everything you need. You just need to decide which appliances are important to you: washer and dryer (or just a hookup), microwave, dish washer, oven/stove or garbage disposal.
* Who pays the utilities? It can vary from place to place.
* Bathrooms: How many bathrooms do you require? Do you need a tub in every one, or can you get by with shower stalls? Don't forget to turn on the shower to check water pressure.
* Cable or Dish: Many complexes will include some sort of cable package, but if you need every channel there is, do your research. Some apartments might not let you put up a dish, so keep that in mind if you're using services such as DirecTV or Dish Network.
* Phone/Internet: If a particular service provider is important to you, ensure that that provider services your area by asking the landlord or going to the provider's Web site and entering the zip code in the service area box.
* Ceiling fans: This may not be important to some, but others want a ceiling fan in every room. These are especially cities with warmer climates and helps keep air circulating, even with air conditioning on.
* Kitchen space: Is there adequate counter space and is the space laid out well? Are there enough cabinets and is there a pantry to store foods? Does the kitchen look clean and smell okay?
* Living Space: It's better to have too much than too little. If you go too small, you'll either be living with clutter, or spending extra money to put some of your belongings in storage.
* Parking: Don't overlook parking space, especially if you have more than one vehicle. If you check during the day, there could be plenty of available parking spaces, but how about at night when everyone is home from work?
* Pets: Many rentals will have strict policies when it comes to pets. Some might not allow them at all, while others might just require an additional security deposit. In some cases, the deposit can be pretty high and may not be refundable. Ask plenty of questions if you're unsure. Keep in mind that even when pets are allowed, a big dog that growls at children or barks all night long, will probably be asked to leave.
* Renter's insurance: Even if the landlord doesn't require renter's insurance, it's usually pretty cheap and worth having.
* Storage: Many apartments will at least have a small storage closet, usually accessed from the porch or balcony. Some offer storage buildings for an additional fee. If you require a lot of storage, make sure there's a storage facility nearby. See page XX in Chapter 4 for more about storage.
What To Expect
After deciding on a place to live, you'll be asked to complete a rental application. Make sure you're prepared and have the following pieces of information available.
* Current and former addresses
* Current and past employment, along with dates
* Credit references
* Copy of your credit report (if available)
* Bank information
Most apartment communities will require a security deposit, which generally averages $200 to $400 depending on apartment size and other considerations. Standard leases cover six or 12 months, though some communities now offer seven and 13-month terms.
Many apartment communities have strict policies regarding pets, often limiting them to 20 pounds and requiring a pet deposit. When outside, a pet must be kept on a leash and walked only in designated areas.
There are many apartment communities that employ full-time maintenance people to handle repairs and perform preventive maintenance, with some offering 24-hour emergency repair services. When renting or leasing, be sure to establish responsibilities for repairs and maintenance.
Peace and Quiet
Your rights as a tenant include the right to "quiet enjoyment," as it is called in the law. This means the landlord cannot evict you without cause or otherwise disturb your right to live in peace and quiet.
If other tenants in your building are disturbing you, you should complain to the landlord. The landlord has a duty to see that you are protected from other tenant's wrongful behavior. Of course, you may not disturb other tenants, either.
Except under certain circumstances in which case you are subject to certain conditions, a landlord may not interrupt utilities to a tenant unless the interruption results from bona fide repairs, construction or an emergency.
Health and Safety
You have a right to demand that the landlord repair any condition that materially affects your health and safety. Under federal law, by renting you the property, the landlord guarantees that the unit will be a fit place to live.
Under certain conditions, you and the landlord may have a written agreement that you will make needed repairs. The landlord does not have a duty to pay for or make repairs if you or your guests cause an unsafe or unhealthy condition through negligence, carelessness, abuse or accident - unless the condition resulted from "normal wear and tear." Also, the landlord must provide smoke detectors. You may not waive that provision, and you may not disconnect or disable the smoke detector.
Although there are some specific exceptions, under federal law, a dwelling must be equipped with security devices such as window latches, keyed dead bolts on exterior doors, sliding door pin locks and sliding door handle latches or sliding door security bars and door viewers. These devices must be installed at the landlord's expense. If such devices are missing or are defective, you have the right to request their installation or repair.
In the United States, legal disputes between residential landlords and tenants are typically heard in small claims courts. If a landlord files an eviction suit to remove a tenant, the tenant will be served with an eviction notice. Tenants may appear before a justice of the peace, present their version of the facts and explain why they should not be evicted. Tenants who lose in small claims court may appeal their loss to a county court.
The National Association of Insurance Commissioners (NAIC) offers these tips for former homeowners who are now renting:
1. How much renter's insurance do you need? Talk to your insurance agent or company about the property you want to protect and the property hazards you would like to be insured from. Your agent can give you coverage policy specifics based on your state and the type of policy you want. They will answer any important questions you have about:
* What hazards are included in your plan and if you need a separate policy for specific circumstances
* If your insurance plan affects your roommate(s), if any
* How you should determine value for your items
* What some of the insurance terms mean or what they include
* What optional coverage might be available to you
* How much liability coverage is included in your plan
2. Can you get a discount on renter's insurance if your residence has particular safety features, like a burglar alarm? Many insurers will reduce your premiums if you have fire or burglar alarms, fire extinguishers, sprinkler systems and/or deadbolts on exterior doors. Some companies might also offer discounts if you have more than one policy with them. Be sure to ask about any discount you might be entitled to.
3. Are you covered in the case of a flood or earthquake? These natural disasters are not generally covered by a renter's or homeowners insurance policy. Ask your insurance agent or company if your policy fully protects you or whether you need to purchase additional coverage.
4. Could owning a pet cause your premium to be higher? Certain municipalities require that owners of select breeds of pets have insurance policies to cover damages and/or injuries caused by the animal. This liability might be covered under a standard renter's insurance policy, but some insurance companies might require the purchase of additional coverage. Talk with your insurance agent or company about the options and how they might affect your premium costs.
5. Does renter's insurance only cover you when you're at home? Many policies do not limit protection to home-based situations. For example, items you have insured often are covered if they are stolen by someone who breaks into your car or if they are damaged while not on your property.
6. Is personal liability included? A renter's insurance policy covers your property and your personal legal responsibility (or liability) for injuries to others and/or their property while they are on your property.
7. Will you receive additional living expenses if you have to live somewhere else while your apartment is being repaired? If there is damage to the building you are renting and you must live elsewhere while the building is being repaired, you will have coverage for additional living expenses incurred during the reconstruction period.
8. How do you expedite your renter's insurance claim? A home inventory - along with photos and proof of ownership - make it easier to file an accurate, detailed insurance claim in case your home is damaged or destroyed in a disaster. A home inventory can also help determine how much coverage you need from your renter's insurance.