I'm Renting - Not Buying

Trying to rent a property these days almost feels like you are buying it instead.  Why are there so many regulations?  Why is so much money needed to move in?  I am going to try to answer these questions and a few more in this article.

Let’s talk a little bit of history to help us understand how the real estate market got us here today.


When the housing bubble ‘popped’ in 2007 – 2008 thousands of homeowners went into foreclosure because they could not afford their mortgages.  So what happens to the thousands of vacant bank owned properties?  Many were bought by investors whose main goal was to rehab and then rent or sale the properties.  There are also private owners who decided to invest in real estate and bought 1, 2, 5, or maybe 10 properties for the sole purpose of being a landlord.  There are homeowners that moved away and either could not sale the property and be able to come out even at closing or may move back in a number of years, and these owners decided to rent their properties.

Why can’t I find an available rental?

This is due to supply and demand.  Homeownership is at an all time low which means fewer people are buying homes.  To clarify – homes are still selling, there is just not a current influx of buyers like there has been in the past.  Instead, they are renting properties.  So when you have 30 people wanting to rent a property but there are only 10 properties available, someone is not going to be happy.

Why are the rent prices so high?

This too is due to supply and demand.  When there are more people wanting to rent but not enough rental properties for everyone, prices go up because someone will pay ‘the price’ if they really want the property (and qualify). 

You may be thinking, ‘This should be illegal’.  In reality this is just part of the cycle in the real estate industry.  I mentioned the housing bubble earlier, and I mentioned how people began to buy the foreclosed homes.  In 2009, 2010, 2011 the opposite of now was happening.

Due to all the foreclosed homes being sold at much lower prices, those who could, bought what they could.  Some of those buyers were going to live in the homes, but many saw the opportunity to invest in real estate, and rent the properties.  This led to there being more available properties than there were renters.  What happened to those rental prices?  They went down.

I remember having a 4 bedroom 2.5 bath near-new home for $1500 a month.  I showed it to a lady.  She called me back 2 or 3 days later and said, ‘I looked at another house for rent on that same street with the same floor plan.  They are asking $1300 a month.  If your owner will take $1300 a month I will apply with you because I like working with you better than the other agent’.  Guess what my owner did – she accepted $1300 a month.  Should lower rental prices be illegal?  No…….it’s the cycle of the real estate market.

  Proving 3 times the monthly rent is too much!

This may be, but it is the normal requirement.  The main reason for the three times requirement is because the national studies say a household should not spend more than 30% of their gross income on their rent/mortgage in order to afford their basic needs.  When you apply for a property, make sure to include all income that comes into the household.  These should also be gross (before taxes are deducted) figures.  Income that can be included:

  • Your hourly wages/salary
  • Child support
  • Alimony
  • 18 year old child’s job wages/salary
  • Spouse’s hourly wages/salary
  • 2nd job wages (as long as it’s verifiable)

Some places may also accept forms of government cash assistance programs as a form of income.

Most times your income is going to fluctuate, meaning you may not always make $500.00 to the penny every week.  It may be $475.00 one week and $618.00 another week.  In that case, look at your Year To Date (YTD) Gross Earnings on your pay stub.  If your normal weekly pay is $500.00 and let’s say your last pay stub for September states your YTD Gross is $20,252.94.  Calculate your ‘average’ gross earnings based on that figure.

$20,252.94 (YTD Gross)  /  9 (months) = $2250.33 average monthly gross income

This figure would qualify you for a monthly rent of $750.00 compared to the $670.00 on the chart.

Why does it cost so much to move in?

I hear a lot ‘I’m a good renter’.  While this may be true about you, there are many renters that are not good renters.  Now you are thinking, ‘It’s not fair that I have to pay because of the bad people’. It is not fair, however in order to make sure that landlords are not accused of discrimination while attempting to approve the most qualified renter, standard practices are put in place to help avoid that.

What this boils down to is that the landlords have to take appropriate and legal measures to protect their investment.  Let’s go over some of the move in fees.

First month rent – This one is a given.  Rent is paid in advance (at the beginning of the month) and therefore must be paid before a renter takes possession of a property.

Security Deposit – This is an amount that is usually equal to 1 month’s rent, sometimes more.  This is held in a separate bank account by a landlord/property management company until the renter moves out.  It is held in the event the renter damages the property above normal wear and tear, and is disbursed after specific guidelines are followed per the Florida Landlord Tenant Law.

Pet deposit – This is a refundable deposit a renter pays should they have a pet and the property is pet friendly.  It is held and disbursed with and as the security deposit is.  In many cases, it can be used towards any damages to the property even if the damage is not related to pet specific damages.  The lease should specify this.

Pet fee – This is a non-refundable fee for being allowed to have a pet on the premises.  A renter can also be charged a Pet Deposit too.  It’s not always either/or.

Application fee – This is usually a non-refundable fee for the application processing.  Many landlords/property management companies use a third party to pull credit and criminal backgrounds on applicants.  The third party charges fess for this service hence the application fee.

Pro-rated rent – Where I don’t agree with this one, some landlords/property management companies charge a pro-rated rent up front along with a full first month rent.  Most rents are due on the first day of each month, so if a renter moves in on any other date, there is a pro-rated rent due.  Many landlords/property management companies then want the renter to pay the pro-rated amount for the move in month plus one full month rent before taking possession of the premises.  A renter should ask about this before submitting an application. 

Last month rent – Many landlord/property management companies are going this direction of collecting last month rent in advance.  For years you primarily only saw this with apartment complexes.  This is a charge I am torn on.  It boils down to risk for the landlord.  If a renter fails to pay the last month rent or skips out, the landlord has an additional month’s rent plus the security deposit to help offset damage and loss until the property is re-rented.  On the flip side for the renter, that is more money to come up with before move in.  But another way to look at it is that is one less thing to pay the last month of occupancy. 

The above are the main funds required before move in on many rental properties.  There could also be additional fees or charges for a new move in.  Make sure to ask about all required fees and deposits before submitting an application.  Get it in writing too.  This way you can refer back to it if needed.

Some final thoughts before wrapping this up.  I and many landlords and property management companies understand how expensive it can be to move into a new property.  Things that I hear more often now are ‘greedy landlord’, ‘out-to-get-you’, or ‘they only want wealthy renters’.  These comments are about 95% not true.  The thousands of landlords I have worked with over the years simply want renters who pay the rent on time and who take care of the property.  If there is something you are not sure if it will disqualify you from a rental property, disclose that information and ask lots of questions.  In the end, if you don’t get ‘that property’, look at it like this – It wasn’t meant to be for you.  Keep your head up and keep looking.  You will find the right property at the right time.

Thanks for taking the time to read this, and I always welcome comments and questions!