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More people than ever are renting rather than buying homes – at the end of last year, there were 10 percent more rented homes in the country than just five years ago, according to a recent analysis of U.S. Census data.
While that isn’t a shocking fact given the economy, it does go against the well-worn assumption that owning is better than renting. After all, the money homeowners spend on their living arrangements is an investment, while the money renters spend is pretty much gone forever once it leaves their pockets.
Likewise, homeowners typically see their homes increase in value and may receive tax breaks on their mortgage interest, while the only thing renters see going up is their monthly payment. That’s the tough reality of realty.
The most obvious reason renting’s on the rise is that many people can’t afford homes. Although you might be surprised – check out our story on how some houses are selling for less than used cars. Many would-be buyers are waiting for prices to stabilize, and others are finding mortgage money is hard to come by – frustrating, since rates today are at historic lows.
If you’re in the enviable position of deciding whether to rent or buy, be sure to check out these two stories to weigh the costs and benefits of ownership: Rent or Own Your Home? New Rules and Homes: Should You Rent or Buy?
Here’s are a few of our favorite tips to reduce your rent:
- Use knowledge of the market as leverage with the landlord. Shop around for the best local rents, using local classifieds, and sites like Craigs List and Rent.com. When you meet with potential landlords, let them know you know the local market, including deals as good or better than they’re offering. See if they’ll lower the price to beat their competition.
- Make good on your good name. Landlords like to see good credit, stable jobs, and people who stay in one place. If you’re leaving a previous landlord on good terms, ask for a letter of reference. If you’ve got a steady job, get your boss to write a letter to prove it. Solid credit rating? Print out your report and bring it along. If you’re missing these things, be frank about it, since they’ll probably ask or check anyway. Being trustworthy is worth something, too. In the meantime, work on that credit score – check out our story, 3 Steps to Improve Your Credit History. You also might be able to offset bad credit – see how the landlord feels about a cosigner or paying a higher security deposit.
- Negotiate with more than money. You might have something to offer a landlord besides money, especially if you’re handy, have some extra time, and are dealing with someone who just owns one or two properties rather than a big, inflexible property management company. Ask if you could do some of the maintenance in exchange for lower rent. Other ideas? See if you can save money by signing a longer lease. And if you are flush with cash, offer to pay several months up front in exchange for lower rent.
- Read the lease. No, really. This should be a no-brainer, but sadly, it’s not. Don’t be rushed into signing without understanding the terms, and ask questions if you’re confused. Make sure you know what expenses you have to cover, what’s allowed and what isn’t, whether deposits are fully refundable and what fees you’ll have to pay if you break the rules of the contract.
- Spend a little to save a lot: Get renter’s insurance. Once you move in, think about getting a policy. Sure, landlords have insurance, but that covers their building, not your stuff. Prices vary, but it’s a lot cheaper than car insurance. You can typically get $30,000 of personal property coverage – against theft, fire, sometimes natural disasters – for under $300 a year. That’s according to Insure.com, which also happens to have a good list of ways to save on renter’s insurance.