Whether you're just breaking out on your own or have been renting for a while, it's important you're well-versed in related terminology as possible. Knowledge is power, and although most landlords are on the up and up, some will take advantage of naive new tenants.
Fortunately, the term you're likely to care about most is also one of the easiest to wrap your brain around. "Rent" is definitely a topic that comes up when discussing any rental, be it a smaller unit or a rental house, since it's likely one of the largest expenses per month.
Simply put, rent is the set amount of money paid to use a property that someone else owns. It's important to always have this amount specified in a legally-binding lease. That way, your landlord can't increase it without warning or approval.
Rent is usually collected via periodic payments on a monthly schedule, but that's really dependent on the lease terms. Some landlords offer discounts to renters who pay multiple months at a time upfront, like six months or even a year. Others might prefer regular payments on a quarterly basis. It doesn't really matter when or how often payment occurs, as long as everyone's on the same page about the specified intervals.
Of course, most renters also pay money for first and last month's rent just to obtain occupancy in the first place, so factor that bump into the move-in expenses. In cases of financial hardship, like a job layoff, it's important to communicate with the landlord. Often, they'll offer the tenant a minimum price to pay until things straighten out.
Rent payment varies from landlord to landlord. Some have fancy online auto-pay options, and others stop by on the first of the month for a check or similar payment method. If the landlord mails a bill, be sure to return it for payment quickly and promptly to avoid dings on your credit score, however.
The most common example of rent is the amount of money a tenant pays to live on someone else's personal property. Sometimes, the owner is a big company (as is the case with most rental communities), but individuals do own and rent out condos, houses, townhomes, trailers, a basement or upstairs apartment (that are part of a larger home) and even single rented rooms.
Of course, it's also possible to rent other property items, like cars. Rent in certain areas, like those with lots of university students, for example, are likely cheaper than in major metropolitan areas.
For the record, experts say that no more than 30 percent of a person's pre-tax income should go to monthly rent. Not sure what you can afford? Use this handy rent calculator to figure it out.
Your property owner sets the amount of rent paid for a particular dwelling and it depends on a lot of factors. For example, the rent is always higher than the amount the owner pays per month for the land and property, plus any related expenses. This allows the owner to turn a profit, which brings us to our next point.
Economic rent is any income or extra pay earned by a particular resource, like land. So, when a landowner rents out a house and makes a profit, they benefit from economic renting. Or, cultivated land, like that which grows crops, or land that serves as pasture for cattle, also generates income.
One important part of the concept of economic rent is that the supply in question isn't increased — there's only so much land to go around. So, no matter how great the demand for land in an area is, the supply doesn't change.
Vacation rentals are big business right now. These are also known as cottage rentals, which landlords rent out to one group for less than 28 days at a time. So, one organized group can stay for a couple of weeks, then they leave and another one comes in and so on. Payment for temporary use of another's property like this is usually collected upfront.
The main thing that rent pays for is the privilege of temporary occupancy of a property. The price, paid at fixed intervals, allows the tenant possession and use of the dwelling for a set period of time. Failure to pay the rent, or other lease-breaking offenses, can result in early termination of the contract, however.
Often, your rent includes other expenses. For example, it's not unusual for large communities to include utilities, such as water and electricity, at a set rate. Trash collection and sewer fees are also usually folded into rent.
Rent also often includes a bump that the property manager uses to pay for cultivated or improved land efforts, like weekly or monthly lawn and garden service. House rents are more likely to include this hidden cost, although other cohousing communities also have landscaping needs.
Parking, building and amenity repairs and upgrades are also factored in. So, don't be afraid to use that pool. You're paying for the amenity and related service provided, albeit in a roundabout way.
Sometimes, cable and internet are in the monthly rental fee, but definitely find out for sure from your particular landlord.
Although it might seem like padding to include so many things in the rent price, it's actually much more efficient. This way, the tenant doesn't have to handle nearly as many bills and the property owner probably scores a lower rate from utility providers for mass use. Seems like a win/win situation, for sure!
Other expenses not included in rent include renter's insurance, natural gas, telephone lines, streaming services and so on. So, get ready to fork over some extra income for Netflix, because your landlord's not likely to cover it.
However, the good news is that these are items that people often split with roommates, which lessens the financial impact. For example, one party pays the Hulu bill, another one handles the Netflix charge. And it all comes out in the wash.
Cleaning services and repairs for any crazy damage are also not included in the rent. It's one thing if the roof leaks and your place floods. But the landlord is not going to cover the cost of the destruction of one's property by irresponsible actions.
Although some communities have additional storage options, they usually come at a price. So, if you just can't squeeze all of your belongings into the closets already at your disposal, inquire about this extra expense.
It's a leap of faith for a landlord to let someone take temporary possession of a rental house or other property. Show them you're up to the task by fully understanding the definition of rent and other related terminology. Soon, it'll seem like second nature and you'll be an old pro.