Objective 2.02 ANALYZE financial and legal aspects of renting.

Terms to know: Landlords are property OWNERS. They expect tenants to: Pay rent on time Keep property in reasonable condition Tenants are RENTERS. They expect landlords to: Make necessary all repairs Give written notice to enter the unit Not increase rent until the lease ends Lease is a legal document that includes Length of agreement Amount of deposits, rent, and fees Address of unit Who pays utilities Number of people that can live in the unit Pets (types and sizes).

The Rental Process Application Application Fee – shows landlord you are serious. Usually $25- $100 or higher Credit Check through a credit agency tells if the tenant pays bills on time.

The Rental Process cont. Security Deposit: Covers cost of future damage to property May equal 1 or more month’s rent Can be returned partially or in full Pet Deposit - covers pet damage.

The Rental Process cont. Advance on Rent One or more month’s rent in addition to deposits

The Rental Process cont. Renter’s Insurance Insurance to cover the renter in the event of flood, fire, theft or any other hazard VERY inexpensive.

The Rental Process cont. Utilities Water, gas, sewer, electricity, phone, cable, trash collection Sometimes the landlord will pay some or all utilities, BUT usually the tenant pays all.

How Much Rent Can I Afford? In general your housing should not exceed 28% of your gross monthly income.

Calculating Rent if Paid by the Hour Hourly wage x # of hours worked weekly = weekly income Weekly income x 52 weeks in year = annual income Annual income / 12 months = monthly income Monthly income x 28% = maximum rent Example: $6.00 x 40 hours = $240 $240 x 52 weeks = $12,480 $12,480 /12 = $1040 $1040 x 28% = $291.20

Calculating Rent if Paid by the Week Example: Weekly Income = $340 $340 weekly income x 52 weeks = $17,680 annual income $17,680 annual income/12 = $1473.34 monthly income $1473.34 monthly income x 28% = $412.54 maximum rent

Calculating Rent if Paid by the Month Example: Monthly Income = $3000 $3000 monthly income x 28% = $840 maximum rent

Calculating Rent if Paid by the Year Example: Annual Income - $32,000 $32,000 annual income /12 months in a year = $2666.67 monthly income $2666.67 monthly income x 28% = $746.67 maximum rent

Complete “Finding Maximum Rent”

Ending a Lease Suppose you need to move earlier than expected. What are your options? Continue to pay the rent until the end of the lease Assign the lease Sublet the lease.

Assigning the Lease This means to transfer the remainder of the lease to another person The original tenant is NO LONGER responsible for any rent or damages.

Subletting a Lease Tenant leases the property to another person BOTH tenants are responsible to the landlord EX: college student leaving for semester abroad and lets friend rent apartment.

Results of Violating the Lease Breach of Contract When either the landlord or the tenant fail to meet the terms of a lease Eviction Legally removing tenants from the property before the lease expires Tenant must receive written notice.

In summary…..

So, how much can you really afford? Choose your job (2 or 4 year degree) Go to www.salaryexpert.com and calculate your MONTHLY salary for your apartment’s location Divide your monthly salary by .28 to discover the amount of rent you can afford Can you afford the apartment you chose? Reflect in writing the changes you will make and how you feel about making these changes to your selection. BE REALISTIC! Write all of the above information on your original document and turn in.