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The Secrets of Renting Your First Pad

By Will from Holland

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Do you know the answers to these questions? (If you don't, you're not ready to rent an apartment or condo!)

  • What's the difference between renting and leasing, and which should you do?
  • Planning on sharing expenses with a roommate? Who signs the rental or lease agreement? You or the other person? Does it matter?
  • How do you know if an apartment is right for you?
  • What's a "sublet" clause? And do you need one?
  • Did you know you could still be liable for paying the rent after you leave an apartment?

Make a couple of simple mistakes when you rent or lease your first apartment, and you'll wreck more than your peace of mind. For starters, you possibly could be stuck with a lot of unnecessary bills and you could mess up your credit, too.

How do you protect yourself? Learn the facts:

First Reality: The rent is only part of the cash you'll need.

  • Virtually all apartments require deposits—cash up front. Some apartments require the first and last months' rent in advance plus a deposit.
  • Most apartments don't come with electricity included in the rent…that's extra. You'll have to budget for that.
  • Many apartments don't come with furniture. Have you thought about that?
  • What about renters insurance? If your fancy flat screen TV disappears, you'll want it replaced, right? If a party guest has a bad fall, you'll definitely want insurance for that, right? Is insurance in your budget?
  • And what will the commute from your apartment to school or work cost you each month?

Big Message: Develop a budget for a specific apartment before you sign a rental agreement.

Second Reality: Location matters.

  • If you don't have a car, the best apartment in the world can be a mistake to rent if you aren't close to public transportation.
  • If you work on one side of town, living on the other side might be a mistake with your new commute eating up a lot of your free time.
  • Have a lot of friends? Would it make sense to live near them?
  • Like working out at a gym, jogging or last-minute shopping expeditions? Could you do any of that around the apartment?
  • Own a car? Did you know your car insurance premium could double or even triple if you move into certain neighborhoods?

Big Message: Don't just look at an apartment building. Look at the entire neighborhood before choosing an apartment.

Third Reality: The rental agent.

You're probably going to be dealing with sales people—not unbiased advisors—when you are shopping for an apartment. Most rental people are nice and honest. But even the nicest, most honest rental agents make a living by renting their apartments, not by sending you to rent in another building down the road.

That's why rental agents emphasize the good things about their apartments, not the bad. If the apartment walls are eggshell thin, you probably won't hear that from an agent. If repairs take weeks rather than hours, you probably won't hear that from a rental agent, either.

What does this mean to you? Before renting an apartment, talk to the experts! Chat with people who already live there. And look at the type of people who are living there. If you're young and like to crank the tunes, do you want to be living in a retirement building…especially one with eggshell-thin walls?

The Moment of Truth: What to do when you've found the right apartment.

Should you rent or lease?

  • Generally, when you are "renting," you are living "month to month."
    • Normally, you're not as tied down when you rent.
    • Usually, you can leave with a month's notice.
    • But here's the downside of renting: Landlords can usually raise the rent or ask you to move out without giving you much notice.
  • Generally, when you "lease" a place, you are signing an agreement to live there for a longer period than just a month or two.
    • A lease means you "lock in" your monthly payment: it normally can't be raised until the lease expires.
    • A lease also means you can't move out early without paying big penalties.

Rent or lease? If you don't know how long you're going to be able to stay in an apartment, don't lease. But if you know you're going to be around for many months (a year or more) leasing will usually be better for you.

The "Sublet" Questions: What is it and do you want one?

Short answer: You want a sublet clause, if you're leasing. A sublet clause says you have the right to find someone to take over your lease ("sublet" your apartment), if you decide to leave before your lease is up.

But here's the big catch: Most sublet clauses say you—and not the person who took over your lease—are responsible for making the payments if the person you sublet to doesn't pay. That means you better choose your "subletter" very, very carefully. And some apartment buildings will not give you a sublet clause, period.

Finishing Up: Who signs the agreement?

Let's say three of you are planning to live together, but the rental agent only wants one person to sign the agreement. Your slightly irresponsible roomies want you to be the one to sign, since you're the responsible person in the group. Don't!

By signing the lease, you personally are responsible for the entire lease payment if your less-responsible roommates are short on money any month. You, personally, are responsible for any damages.

Should everybody in your group sign the lease?

Yes, if the renting agent will allow that. Being on the agreement might make your roomies feel more responsible. But there's a catch here, too. If your roomies don't pay their portion of the rent as agreed, you—all by yourself—are still responsible for paying the full rent.

Is this all you need to know to rent your first place?

Not if you want to be a really smart renter.

If you're thorough and if you have 30 minutes, why not learn a lot more by working through our online "Renting a Pad" module? The module is video-driven and interesting, and you can work through it in less than a minute. Here's how:

  1. Go to
  2. Register and create your account
  3. Start working through "Module 9: Renting A Pad"

That's it. A story and a module, and you'll be a rental pro.

Good luck!

Cheers, Will