Millennials recently passed Baby Boomers as the prime rental group in the United States, comprising 20.8 percent of the population (roughly 68 million people). This means many of those aged 22 to 37 years old are finally moving out of their parents' homes and renting for the first time. With a national shortage of rental units and price increases, it's not easy finding a place to live, especially in high-cost cities like San Francisco and Washington D.C.
"Millennials make a lot of rookie mistakes when they are looking, because they don't consider everything there is to know," says Gary Saharov, a realtor with Caliber Associates in New York City, who sees about 20 young apartment hunters a week. Here are five mistakes to avoid, and what to do instead.
1. Instead of sticking to online listings, try different methods
According to Zillow Research, four out of five renters go online to search for apartments, the majority being millennials. This is because technology has changed the apartment rental experience, and even agents are spending less time at the desk and closing deals on their cell phones. There are a lot of helpful real estate sites like Renthop, HotPads and Naked Apartments.
However, you could be missing some listings. For example, brokers have access to the Residential Listing Service (RLS) database, which provides every listing available, even those you won't find on a website. And according to Naked Apartments, 30 percent of renters find an apartment through a connection (like posting on Facebook that you're looking for a place). And if you have a bigger budget, luxury condos generally have on-site leasing offices, and there's no fee for rentals.
2. Forget high season. For cheaper rent, move during off-peak months
The rental market is seasonal, according to Saharov. High season is generally April to September, when the majority of apartment hunters, from recent graduates to those who want to move in better weather, look to sign a lease.
"Months like December and January are not as hectic, and you can find cheaper rentals, often $50 to $150 less a month," says Saharov. Because there's more availability and less demand, management offices tend to offer free months and no fees in slower months as opposed to high season.
3. Stop searching for apartments too early or late — there's an ideal timeframe
Many young people look for apartments three months out or two weeks before moving, which is too far and near.
"They've heard stories regarding how quickly rentals go and how fast the market moves, so they think starting early will guarantee a spot," explains Saharov. He's also had people look for apartments at the very last minute because they're not educated properly.
In reality, "The best time to make a decision is 30 to 24 days before move-in date," says Saharov. "That's when apartments typically come onto the market. For instance, an apartment available July 1 will most likely be listed June 1. You will see the most recent apartments available and can apply at that time, and it only takes a day for the application to process. The ideal apartment you found a week ago is probably not going to exist."
4. Don't get stuck on an amenity. Think about what it is you really need
Flexibility is key when searching for apartments. Do you really need a doorman or would another form of security be acceptable too?
"I had a client who strictly wanted a doorman. Based on her other preferences and getting to know her personality, I showed her a cool building with a virtual doorman, and she loved that the unit had a bigger space and cheap rent, so she took it," says Saharov. "Some people set up standards but in reality they really don't care when they actually see the places."
5. Just because you think you can afford the rent doesn't mean the landlord agrees. Have a guarantor ready
A guarantor is someone who signs their name to the rental contract and will pay the rent in the event you don't.
It's quite common for young people to need a gaurantor in major, metropolitan cities like New York City, San Francisco and Washington D.C. Jeffrey Geller, COO of Insurent, a private company that serves as a gaurantor for qualified renters, says approximately 55 percent of customers are young people.
"There's been an increase in millennials since we launched in 2008, due to landlords wanting to further minimize their risk and definite need for an institutional guarantor."
In New York City, a guarantor must have good credit, make 80 times the rent and can be a combination of people (like both your mom and uncle). Outside NYC, requirements for a guarantor vary, determined by landlords and management companies, who can tell you specific details when you inquire about a rental.
"It's really only major metro cities that you need guarantors," Geller says. "Smaller cities, like Saratoga, Florida, for instance, are much more open in rental requirements and require much less."
Common customers Insurent works with are college grads and professionals entering the job market, international students, self-employed millennials who don't have great credit, U.S. students whose parents don't meet the guarantor requirements in their city and U.S. students who don't necessarily want to go to their parents.
"College grads aren't always going to make 40 times the rent, a common requirement in most metro cities in the U.S.," Geller says. "In the past they took cheaper apartments or got roommates so they didn't have to ask their parents. Now there are other ways."
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