Knowing where most people make their mistakes with their finances can help you avoid the same mistakes yourself. So, below we have compiled 5 of the worst money mistakes renters make when renting a house.
Take a look at all of them, check out the references we’ve included, and let us know how we can help!
5 Critical Money Mistakes Renters Make
1. Failing to read the lease (thoroughly) – One of the biggest mistakes made by house renters is in failing to read the lease completely. They tend to skim through the agreement or contract quickly when presented with it. But the landlords understand that it is a binding contract that you are agreeing to abide by for a specified amount of time. If there are clauses in the contract that you don’t agree with, ask the landlord to elaborate or ask for more time so that an attorney can scrutinize it and interpret it for you. Items in a lease like early termination fees can cripple a renter.
2. Paying too much for rent due to location – Many renters are comfortable renting a house because it is close to schools or work. For convenience sake, renters often opt to pay higher monthly rent in exchange for the privilege of living in close proximity to their place of business. A real estate agent may be able to guide you about the other houses you could rent that are cheaper. Driving a little extra way to your place of work might be worth the savings you’ll get on your rental payments.
3. Overlooking small fees – The important legal issues are often in the fine print. You are responsible for everything in your lease, so make sure you read it all. Small fees that are listed as an aside at the bottom of the lease may add up to hundreds of dollars over the course of a year. Items such as pet fees, move out cleaning fees, and parking fees may be additional expenses.
4. Paying for repairs themselves – If you are renting a house or apartment, there is a tendency to think you should pay for some repairs yourself. Don’t do it! Unless the lease specifically states that “residents are responsible for repairs,” the responsibility for all repairs to your house or apartment fall with the landlord or home owner. They know this when they rent the house out to you. So call your landlord when something goes wrong and don’t give them free house repairs!
5. Paying rent for too long for a house you could buy instead – One of the biggest long-term mistakes that renters make is paying for a rental too long. If you can estimate that you’ll live in a house over 3 years or more, it is to your advantage to consider buying a house instead. Buying a house is an investment and it can increase your net worth, gives you something that you own, and makes you more financially secure. As long as you rent, you will never be able to do anything with your monthly rent payment except to keep on paying them.
WHY YOU SHOULD CONSIDER BUYING A HOUSE OVER RENTING
Renting will not increase your net worth or allow you to invest in your future. If you purchase a house, you will have the option of staying in the house as long as you want to, selling the house or renting it out to others. There is some added responsibility for this decision but many find it far more beneficial than continuing to put monthly rental fees out for something they will never own.
You may want to consult with a local real estate agent or advisor in Chicago. They may be able to advise you as to the best solution for your situation. Renting is fine if it’s for the short term but you may want to look into buying a house if you want to make a serious investment in your future.