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How to Get Your Rent Security Back – All of It!

By //  by Kevin M

If you are a tenant, the ability to get your rent security back can be an emotional issue. It’s your money, but it’s being held by your landlord – just in case. That last part is what you worry about. What if “just in case” turns into you’re not getting your money back?

There are ways to avoid that ugly scenario, and to get all of your money back.

Going back to the beginning – doing a thorough inspection at move-in

This is something that you really need to do before you even more into an apartment or rental home. But if you didn’t do it at the beginning, you should do it as soon as possible. What you want to do is establish the fact that the home might contain certain deficiencies that are not as a result of your occupancy.

[Here are 5 reasons why you may be better off renting than owning!]

It has become common in garden apartments for landlords to offer tenants a checklist that they can complete confirming the existence of any problems prior to move in. Even if your landlord doesn’t provide you with such a checklist, you should write a neat and detailed list on your own, and then send it to the landlord either by email or by certified mail so that you will have evidence that it was completed prior to move in.

Don’t cut corners with this step – it is your very best protection against being held responsible for problems you didn’t create.

Get Back Security Deposit

Study your lease and give proper notice

Before giving your landlord notice of your intent to vacate the property, first study your lease in great detail, paying particular attention to the provisions dealing with the termination of the lease.

The lease should spell out the amount of notice the landlord requires. This is generally 30 or 60 days. Don’t assume that the landlord will know automatically that you intend to leave at the end of the lease. There is usually a notice requirement that relates to not renewing the lease.

Also, if you will be terminating the lease early, there should be written provisions in regard to any penalties for doing so. As a general rule, leases will contain language that will require you to forfeit at least one month’s rent if you break the lease. Be ready for this.

Be sure to pay your last month’s rent

Many tenants mistakenly believe that their security deposit covers the last month’s rent. In reality, your security deposit is to cover damage to the property upon the termination of the lease. Your last month’s rent is required even though the landlord is holding a security deposit.

This is especially important if you live in an area where the security deposit normally exceeds one month’s rent. In some areas, it is customary to pay first month’s rent, a security deposit, and the last month’s rent. In other areas, the security deposit is equal to 1 ½ month’s rent.

If you assume that your security deposit is for the last month’s rent, you could forfeit any amounts that exceed the monthly rent. The landlord can easily absorb the extra amount as a penalty for failing to pay your rent on time, or to exaggerate the cost of making relatively minor repairs.

Leave the property in better condition than you found it

Before leaving the rental property, be sure to go through it with a fine tooth comb, and make any necessary repairs. This is particularly important if the damage was done by you, but it can also help if you repair anything that was defective before move in, but didn’t report to the landlord.

[5 tips to prepare for a move.]

It should go without saying that you should leave the home in squeaky clean condition. Vacuum the carpets, mop the floors, and especially clean the kitchen and bathrooms. A landlord can charge a cleaning fee if you leave the property a mess. In addition, it can also cause the landlord to hunt around for other issues he or she can charge you for.

Leave nothing behind

Nothing irritates a landlord quite so much as a tenant who moves out, but leaves a couple of rooms full of furniture, or a basement or garage full of useless storage items, or a backyard filled with yard waste or old tires. If you brought it in – you need to bring it out!

A landlord can charge a hauling fee to remove anything you don’t take with you. And he will take it right out of your security deposit. Then he’ll start hunting for other things to charge you for.

Stay in close contact with your landlord after giving notice – and until your security deposit is returned

A little bit of diplomacy can go a long way in encouraging a landlord to return your security deposit. The relationship between you and your landlord should not deteriorate into open hostility as a result of your moving out of the property. Keep the lines of communication open, and do all that you can to coordinate your departure and the landlord’s transition to a new tenant.

By being a pro-active tenant, you will improve your landlord’s opinion you, and make it easier to get your full security deposit returned, and returned quickly.

Have you ever had trouble getting a rent security deposit back from a landlord?

photo credit: freedigitalphotos.net

Filed Under: Housing Tagged With: contract law, Landlord, Landlord-tenant Law, Lease, Leasehold Estate, Leasing, Monthly Rent, Pay Your Rent, rent, Rent Security Deposit, renting, security deposit, Security Deposit Return, Your Rent, Your Security Deposit

5 Reasons You May Be Better Off Renting Than Owning A Home

By //  by Kevin M

For many, many years the renting-vs.-owning question was a done deal when it came to housing. Everyone who could own a home did, and everyone who couldn’t aspired to do so as soon as possible. Is that still true today? Is renting a better option? And if so, what changes have caused it?

Renting Vs. Owning: 5 Reasons You May Be Better Off Renting

House Prices Aren’t Rising Any More

When house prices were rising steadily owning made far more sense than renting. You were building wealth in the form of increasing home equity while you were living in the property. But that dynamic has been missing for the past five years and even if it does return, it’s unlikely that it will be anything like the price increases we’ve seen in the past.

Renting vs Owning

Consider the following:

  1. Mortgage rates are at historic lows, house prices are lower than they have been in years, and yet prices show few signs of recovery
  2. The 76 million-strong Baby Boom generation have entered the retirement years—a typical time of trading down or selling off housing completely
  3. Generation Y is showing nothing like the fever to own a home that previous generations did
  4. Millions of households have been impaired by the financial meltdown, effectively removing them from the housing market for a very long time
  5. Though employment has been improving, jobs security is conspicuously absent

It seems that the combination of these factors are putting a lid on house prices and probably will for the foreseeable future. And if prices aren’t rising, there’s no imperative to own right now. Better to rent and see how it all plays out.

Freedom To Follow The Jobs

Let’s spend a little more time on item #5 from above. When you buy a home you’re usually signing a mortgage note that will bind you to the house for something like 30 years. Can you conceive of a job that you’ll have for 30 years?

Probably not.

Jobs and even careers are becoming notoriously unstable for reasons that appear to be beyond the financial meltdown. A 30 year mortgage requires some level of income stability for the term of the loan, and that may require not just changing jobs, but also uprooting to follow them to distant places.

If you have to make a geographic move to find work in your field, owning a home will complicate matters. You’ll have to sell or rent out your home in order to make the move. And if you can’t do either, you may have to pass up the job opportunity.

When you rent, it’s far easier to pick up and follow a job.

A House Is A Capital Trap

It’s not just a mortgage you have to contend with when you buy a home; you also have a down payment tied up in it. That wasn’t much of a problem when you could easily sell a home after just a few years—for more money than what you paid for it—or borrow out the equity any time you wanted. Today, your down payment is likely to be tied up for many years.

In addition, when you own a home you have to put money into repair and maintenance, adding thousands of dollars to the money you already have tied up in the house.

At a time when so many people are dealing with job and career issues, as well as debt problems, can you afford to tie up thousands of dollars in equity in a house? When you rent, all of your money can be held in liquid accounts ready for your use.

Maximum Financial Flexibility

Here’s something we don’t like to think about too much…if you were to experience a permanent income reduction, what would you do to lower your house payment to adjust to the smaller paycheck?

If you rent, you can move to a lower priced home or apartment, or even move in with family. If you own, you first have to sell your house. In today’s market, selling a house can take months or even a year or more. Worse, if you’re in a negative equity position, you may not be able to sell at all.

Renting provides the financial flexibility that’s more consistent with today’s economic and employment circumstances. Owning, because it’s long term in nature, is rigid and locks you into a lifestyle you may not be able to sustain—or get out of.

Some people may consider such thinking to be negative; I consider it being prepared.

The Mortgage Interest Income Tax Deduction Isn’t What It Used To Be

Real estate agents often hype the mortgage interest and real estate tax deductions as a compelling reason to own a home rather than to rent. Renting, after all, offers no income tax deduction. Two factors are now weighing against that assumption though.

First, interest rates are at very low levels—a 4% interest rate on a $150,000 mortgage, will produce only a $6,000 mortgage interest deduction. Second, the standard deduction is $11,900 for a married couple filing jointly in 2012; it’s possible that even owing a house will not get you any more than $11,900 in deductions. At best, you may only get additional deductions on part of your housing costs, but nothing like the 20%, 30%, or 40% deduction agents are quick to point out.

The mortgage interest and real estate tax deductions continue to be a real factor for higher income households buying higher priced homes. But for many middle class households, and most lower income ones, the deduction will make only a minor improvement in your cash flow.
Am I saying you shouldn’t buy a house? In many cases, yes, that’s what I’m saying. It’s not as “right” as it was a few years ago, not for a lot of people. Consider the value of owning against the possibility that the home could drop in value—would you buy knowing that might happen? Do you feel your job/career is stable enough that you’ll be able to make the payments and not need to move to another city for the foreseeable future? Is your financial situation strong enough that you could weather a prolonged period of unemployment and still keep up the house payments?

These questions were always a part of the homeownership equation—they’re just more relevant now than ever.

What do you think about owning versus renting today? Do you think the pendulum has swung in favor of renting?

photo credit: FreeDigitalPhotos.net

Filed Under: Housing Tagged With: 5 reasons, affordable housing, causes of the united states housing bubble, economic tax, Economics, finance, home mortgage interest deduction, home prices, Housing, mortgage, owning a home, owning versus renting, real estate, real estate tax deductions, recent economic, rent, rent control, rent vs own, renting, renting out your home, renting vs buying, subprime mortgage crisis, tax changes, tax deduction, taxation, the rent

Financial Tips For Living With Friends Or Relatives

By //  by Khaleef Crumbley

Living with friends or living with relatives can be a great help, when you run info financial trouble (especially when you are trying to pay off debt). However, if certain financial details aren’t agreed upon in the beginning, you can run into an extremely stressful situation, which may threaten to ruin the relationship.

Here are three major financial concerns, which should be addressed before you consider living with friends to be a viable option. These items should be important to both the one in need, as well as the one extending the help.

How Long Will You Need To Stay?

The first thing that needs to be worked out is how long you plan to live with your friends or relatives. Whether it’s for a few weeks or six months, you should be able to give them an estimate on how long you will need to stay with them.

Think about it…if your “host” thinks that you are only staying for a couple of months in order to save up for, and find an apartment, they will handle things in a certain way. However, if you actually plan to say there until you go back to school to finish a degree – and you’re only a sophomore – then that might change things a tiny bit!

Living With Friends Calendar
photo by Renjith Krishnan

 

If you need to stay for a year while you finish a degree or training program, or even if you are just trying to stabilize yourself while you get out of debt, state that from the beginning so that there will be no misunderstandings down the road.

Of course, you can’t always be sure of what will happen in the future, but, it is still extremely important that you both be on the same page with this.

If you feel that you will need to stay longer than you originally estimated, make that known as soon as possible. Just be sure that you are always keeping your host in the loop whenever your situation changes.

How To Split Up The Bills When Living With Friends

This is probably the most important conversation that you can have with your future host (because they are probably wondering, how will this affect my finances). There are a couple of reasons why this is so important:

First, if you simply pay what you think is a fair amount, then it can lead to negative perceptions and resentment. If you pay too little, it can make your host feel as though you are simply taking advantage of them, and that you really do not appreciate their help!

For the entire time that you are living with friends, they may resent every time you spend money – no matter how little it is. If you are throwing them $300/month, and then go out and buy an iPad 2 or Kindle, they may have a serious problem with that!

However, if you sit down with them and agree on a fair amount for you to pay, then they may not mind as much when you go out and buy a new laptop (although, that may not be wise if you are there because you are in financial distress and trying to pay off debt)!

The second reason why you need to come to an agreement about who pays what is because your presence will increase the household bills! You are sucking up all of their electricity, heat, cooking gas, water, and other utilities, and you need to be mindful of that!

You should sit down with your host and decide how you want to break up the living expenses before you move in. You may decide to pay for all of the utilities, while your host pays the rent/mortgage entirely. Another option would be to simply pay them a certain amount for rent each month.

Of course, you can decide on a myriad of combinations – you pay gas/electric and buy food, while they pay cable and rent, for instance – but the point is to avoid having any misunderstandings or bad feelings at some point in the future! It would be a good idea to write out an agreement with these details included – simply for clarity.

Discuss Your Financial Plans

I think this one can be optional, depending on the relationship. When living with friends or relatives, it may be extremely helpful for you to discuss your financial plans with your host. If you need to funnel all of your extra money into student loan repayments, or any other category, be sure to make that clear – especially when discussing how to split up the bills.

This can help to avoid any misunderstandings or resentment toward how you handle your money while living there. Also, if they are going to allow you to stay in their home for free, it would be great to show them that your plans include paying them back once you get on your feet!

Remember that communication is key in situations like this! Living with friends or even living with relatives can cause a lot of unspoken problems and tension, and you need to do everything in your power to prevent this from happening!

photo by AR Mclin

Reader Questions

  1. Have you ever had to live with relatives or friends due to a bad financial situation?
  2. Have you ever had to take someone in as a result of bankruptcy or debt (or any other misfortune)?
  3. If you were to be on either side of this arrangement, what other financial issues would you discuss?

Filed Under: Personal Finance Tagged With: credit, debt, finance, financial planning, friend, friends, living with friends, living with relatives, pay, pay off debt, relationship, relatives, rent, stressful, tension

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