By Amber King-Telcoe Federal Credit Union
You have just graduated and you are ready to move out! Finding an apartment at 18 can be challenging if you have no credit. However, you can still acquire one with a few additional tools.
References
This may seem like something you only need for a job or college, but references can be helpful in many situations. These are a way for your peers to humanize you and dote on your character. Consider personal and professional references here. The standard is typically three references. Adding more professional references is key. This could be a teacher, employer, or a current professor. Giving the idea that you are responsible at school and work will make you look more trustworthy to the landlord when it comes to paying rent and caring for the apartment.
Proof of Income or Savings
The key to securing any apartment is proving that you can afford the rent. If you work full-time this should not pose any issues. However, consider having at least three months of income and making sure you make at least three times the rent. If you will be attending school and do not plan to work full-time consider having a healthy savings on stand-by. Many students opt to use their refund checks from college to pay their rent for several months. If you are receiving student loan funds that may seem like an option to pay your rent but it may dramatically affect the size of the debt that must be repaid later. Student loan debt is at an all-time high with roughly $1.7 trillion in debt shared by 43.8 million people. This debt will limit your options to qualify for other loans in the future (homes, cars, etc.) as well.
Budgeting
Budgeting is something that people are not taught at a young age. It can be a trial-and-error learning experience. An online budget template or downloading an app to track your expenses can help with accountability. Write down your fixed expenses such as car insurance, rent, utilities, and any additional expenses that do not change monthly. After this, you can add in variable expenses such as groceries and gas. This is the basis of your needs. If you have additional income left over, it can be funneled into savings and wants. Discipline and the ability to say no is important to help meet your goals. Say yes to all invitations to dinner, the movies, etc. can deplete your funds quickly and throw off your budget.
Roommates
You may have considered splitting expenses on an apartment/rental home with roommate(s). It can be a great way to save money and meet new people. However, it’s best to weigh the pros and cons before signing a lease.
Pros:
· Rent is expensive, having a roommate could save you hundreds of dollars.
· There will be less expense when it comes to shared furniture. You will be able to split the cost or both parties can bring their own to share.
· Living alone can make it harder to be social. Having someone there all the time will allow you to create a friendship.
Cons:
· There will be little to no privacy. Typically, everything is shared, and it can be difficult to have space of your own without staying in the bedroom all day.
· Issues could arise about shared responsibilities such as cleaning. There could also be issues about friends coming over or how loud someone can be at certain times of the day.
· You run the risk of a roommate not paying rent or utilities on time. Meeting bill due dates are important because you run the risk of having utilities shut off or having issues with the landlord.
Co-Signing
Given that many 18 to 19-year-olds do not have any credit history, getting an apartment/rental home may require an additional signer. This person is a safety net if there are any issues with payment on the primary renter. Many apartments/rental homes decide to do this to cover them if anything happens or you do not meet the threshold for the income requirement. A parent or grandparent are common cosigner if their credit history is positive. This can strain family relations if your family ends up paying your rent or if you break your lease. Finding a way to rent without a cosigner is preferable when possible. You may want to consider setting up a credit builder loan the day you turn 18 to help establish credit.
Security Deposit
Once the apartment has been secured, many apartments/homes will require that a deposit is made. This can be a hefty amount so saving in advance is crucial. For example, you may be required to put down up to three months’ rent to secure a spot. Depending on the monthly rent, this can be thousands. One thing not to forget is utility deposits for your necessities. Online you can find estimates for bills you will likely have. If you have not opened a savings account you may want to do this so you can put a portion of each pay check back for your future rent/deposit.
Reading Your Lease
Take time to read the fine print on your lease agreement. This is something that no one wants to do and usually, they end up regretting it. Reading your lease will tell you about all the rules and regulations your apartment/home may have. The lease will let you know what you can change in the apartment/rental home and what you can be penalized for. If you find anything in the lease confusing, ask for clarification before you sign. If you decide to move due to safety concerns, the landlord not fixing broken appliances, etc. you may be sued for the remainder of the rent due in the lease. Reading the lease and asking questions about valid reasons that a lease can be broken is important.
Summary
Getting an apartment/rental home at a young age is not easy and there will be challenges. Preparing in advance can be your best option to succeed when it’s time to take action. Without a credit history, many apartments will still allow people to rent as long as they provide sufficient evidence that they are capable of doing so.