In high school, my friends and I would fantasize about moving into our own apartments as soon as we turned 18, with the goal of escaping the tyranny of our parents' rule and finally knowing the freedom of doing whatever we wanted all day. Eighteen came and went, of course, and soon I was about to graduate college -- and still lived at home. Somehow, the more I realized I had nowhere near enough in my savings account to move out, the less oppressive my life at home seemed.You see, in order to leave the nest and rent your own apartment, there are all of these sneaky expenses you have to cover up front; it doesn't end with a security deposit and first month's rent.
I eventually made it out into the world on my own, but you better believe it cost me big. Below is what to expect when you, too, move into your first apartment some day (better start saving money now).
How Much Does an Apartment Cost?
1. Application Fee
Many landlords will charge prospective tenants a fee in order to apply for the apartment they're renting out. The fee accomplishes a couple of things; one of the major objectives is ensuring applicants aren't deadbeats and are serious about renting the apartment. Think of it as similar to a college application fee.
Additionally, an apartment application fee can cover additional expenses on the landlord's part, like running a credit check on applicants.
However, it's important to note that the application fee is not supposed to simply help the landlord gain a profit while showing property, and there is a limit on how much can be charged. Expect to see fees ranging around $25 to $30, though you can always choose not to apply for an apartment that requires a fee be paid -- you just might have to narrow your options.
2. Security Deposit
Once you actually secure your apartment, you will need to supply a one-time, up-front security deposit that the landlord will hold until you move out. The security deposit is required to protect the landlord against extra expenses caused by damage to the property. This deposit is usually the equivalent of a month's rent, sometimes a bit more, and if you're lucky enough to find a place that allows pets, you will likely have to pay an additional pet deposit.
Additionally, as a real estate agent in New York who does both rentals and sales, Crystal Green, vice president of Charles Rutenberg Realty, has worked with a fair amount of NYU and Columbia students, as well as young people who are new hires fresh out of college. She said, "Young people who are less established credit-wise are sometimes caught off guard when, instead of the typical one-month security deposit required in most instances, landlords want two months."
If you eventually move out and leave the apartment in good condition, as close to it was when you first moved in, you should expect to get your deposit back. However, if there is damage, such as severely stained carpets or holes in the walls, your landlord can keep some or all of that deposit to make repairs before the property goes back on the market.
3. Moving Expenses
Depending on how far away from your parents' house you're moving, it might be necessary to hire a moving company. Never cheap in the first place, Green points out "Many moving companies might quote you a rate, but inevitably manage to take longer to finish the job than anticipated." This ends up costing significantly more than you budgeted. And even if you don't need to hire a moving company, at the very least, you can expect to spend quite a bit on gas going between two houses during the moving process.
Depending on your credit situation, utility companies might treat you just like a landlord would and require a deposit be paid in order to receive service. When I moved into my first apartment, the electric company required me to pay an additional $186 deposit because I had no credit history -- an expense I was definitely not expecting -- which wasn't returned to me until a full year later. Expect the same from the gas company, cable company or any other monthly contract service for which you're a first-time customer.
5. Furniture, Dishes, Toiletries, Cleaning Supplies, Etc.
You're lucky if an old couch or TV accompanies you from your parents' house to the new apartment, but remember, you have to furnish the entire place. Then there are items like plates, paper towels, bathroom cleaner, a microwave -- the list goes on and on. I'll never forget the day I realized I didn't own a can opener.
Of course, filling your apartment with every item you could possibly ever need is a huge, unrealistic task to take on. So once essentials like paper plates, a mattress and a can opener are taken care of, you can create an inventory of what you need, from most to least important, and begin setting aside a monthly budget specifically for tackling these new expenses.
How Much to Save and Cover the Cost of Renting an Apartment
Obviously, the cost of renting an apartment is really high in comparison to all the other expenses a young adult is used to paying. So how can you plan for these costs and save money ahead of time?
Mitchell D. Weiss, a professor at the University of Hartford Barney School of Business, tells me he recommends his students think of their gross salary in terms of quarters, "Where the first quarter will go for taxes (federal, state, Social Security and Medicare), the second for rent, the third for debt and the fourth for everything else."
Weiss explains, "The median first-year salary for 2011 graduates was a little more than $40,000. When I use this number with my students, they usually have a visceral reaction to the $10,000 that's left over for everything else -- food, insurance, gas, clothing, vacations, beer."
With this in mind, consider your income now: Would a quarter of that be enough to cover your rent? How about all of the expenses outlined above?
If you're not making enough money to foot those costs comfortably, or don't have enough in your savings account to pay all of the up-front costs like application fees, moving fees and security deposits, it's time to start saving now (and be a little nicer to your parents) until you can afford to move out on your own.