Forbes 2024 renting statistics reveal that 34% of housing units in the United States are occupied by renters – which is roughly 45 million units. How can all those tenants be sure they’re making the most of their living situation? What are some red flags to watch out for when signing an agreement? In this episode, Cristina and Randy are getting the answers from David Pupo, a real estate and property management expert.
Cristina asks Question 1: “David, what are the most important things you have to look at when you get the rental agreement?”
David responds: “There are a lot of things when it comes to a rental agreement. It's a contract. So, just like any other contract, you want to be familiar with what's going on inside of it. Many of us just think that it's the same contract that everybody uses, but no.”
David follows up: “Some of the things that you want to be able to understand are, first and foremost, what are you paying? Where is this property located? How long does this actually last? There are different terms when it comes to a rental agreement. You could be at six months, you could be at 12 months. There are some people I know that do it for like two years. If they find somebody good enough, they will just lock you in. Because when you're in the rental world, they understand the value of good tenants, and they would much rather keep somebody in there at a lower amount and not have to deal with turnover.”
David follows up: “A credit pull of somebody is like their resume. How high is their credit score? What do their on time payments look like? Do they have outstanding balances? Are they missing payments? Those kinds of things are all taken into consideration.”
Randy asks Question 2: “In your experience, what's the best way to find some reliable roommates?”
David responds: “Is it that you own the property and you're looking for roommates, or are you a renter looking for other roommates? I would actually say the second one in itself is a red flag.”
David follows up: “In those contracts that we're talking about, there's sometimes going to be parts about not being able to sublease the property. So, let's say my name, David Pupo, is under a rental agreement for 123 Main Street for $2,000. If the landlord walks the property and there's David, Christina and Randy all living there and they're all paying $2,000. The landlord is going to say, well, there's only one person on this rental application. So, caution, look in that contract to see if you can sublease it.”
David follows up: “To sublease means you can add other people into that agreement. Then, let's say like you and I, Randy, we live together in that property. If I go, “Hey, Randy, you're responsible for a thousand, and I'm responsible for the other thousand,” that would be like subleasing. It’s more common really in the northeast. It's not as common here in Florida.”
Crisitna asks Question 3: “What are some of the warning signs that our listeners should watch out for when they're touring potential rentals? Just like me, where I made the assumption that the washer and dryer would be included.”
David responds: “The last property that I rented before I owned my property, before I owned my home, the same exact thing happened where the washer and dryer were not included. It was an old washer and dryer that worked. However, they put in the contract that they are not responsible if anything goes wrong with it. You can use it by any means necessary. But if something goes wrong and you have to replace it, it's on your dollar.”
David follows up: “There could be a lot of things when it comes to walking a property. So you can start off with: who is responsible for what? Like utilities, and when the garbage needs to get taken out. If you're walking the property itself, take “before” pictures before somebody moves into a property. So we all understand exactly the condition that somebody is moving into.”
David follows up: “I would say if you're the landlord, you should always be responsible for landscaping. If you have a pool and it's a house, be responsible for the pool cleaning. Be responsible for the maintenance of the property. Because on the other side of it, if the tenant says that's a hundred bucks I can save, they're not going to do it. It's not their house, and then the owner of the property is going to have code enforcement calling. Those kinds of small little maintenance things, I would always say make sure that the landlord takes care of it.”
David follows up: “As the landlord, you want to take care of it. It is a lot of money to repair a pool if it's too far gone. It can be a couple of thousand dollars to repair a pump, or if you have to get it reglazed which means they have to empty out the whole pool and refinish it. That's a couple of thousand dollars too. So it's really small things that, if you're the landlord, are much easier to do before it becomes a big thing.”
Randy asks Question 4: “So besides rent David, what other fees should listeners expect to pay when they're trying to sign a lease?”
David responds: “Apartments and houses run a little differently. There's usually a management company in place for an apartment building. If we're just taking things into consideration for a house, it's a lot easier. The tenant is going to be responsible for the electrical and utility bills, water, and stuff like that. More times than not, Wi-Fi – that's going to be a really big one that they have to take care of themselves. Those are all small little fees that the tenant should think about. And the landlord will take care of the pool and the landscaping, and stuff like that.”
David follows up: “In an apartment, there’s typically an HOA. So if the apartment is owned by, let’s say an owner, they're typically taking care of that through their HOA fees. That's the homeowner's association.”
Cristina asks Question 5: “Why should renters go in and get renters insurance? Why is that important? And then what does it typically cover?”
David responds: “Renters insurance is super important if you're in a place like Florida. If there's something like a hurricane that hits you and you have no control over it, there's going to be a lot of things that the rental insurance can help out with. It's like personal property. It comes over like some kind of liability coverage. Say a big old tree knocks out half of the house. It depends on what kind of coverage you get, but there can be temporary housing, too.”
David follows up: “It’s not mainly mandatory for many landlords to ask that of their tenants, but I think tenants should want that. If somebody broke into the house, hopefully you would have that insurance coverage if they stole valuables, like TVs, or anything like that. Your landlord's not responsible if you leave the door open and somebody breaks in.”
Randy asks Quick Question 1: “David, what are your best tips for getting your security deposit fully refunded when moving out?”
David responds: "When you walk the property with the landlord, make sure you get either a copy of all the pictures or take pictures of the property itself before you move in, and make sure when you move out it looks almost identical.”
Randy asks Quick Question 3: “So, David, can you explain what pet rent is and how common it is?”
David responds: “It’s extremely common to have pet rent, because from the gambit, you can have a small hamster or a large wolf-like sheepdog. If you have something really big, even a $250 pet fee, if a dog rips up a house - you got away with only $250. You should be lucky. So a pet fee? Super common. And that is a fee, not a deposit. Those two words get thrown in the mix a good amount and they're not the same thing. A deposit is refundable. A fee is just your pay to play.”
Cristina asks Quick Question 4: “What if I have to break my lease? What are some tips for that?”
David responds: “There’s going to be usually a part of your lease agreement that has any kind of contract cancellation fees or policies. It changes – that’s one of those things that depends on who you're renting from. Like for most of mine, it's like a 60 day notice. But I recall from apartments, they even might require more and it does become a little crazy. So if it is something like a 60 day cancellation policy and you break it after 30 days, that means that you're technically still owing them like 30 days of rent.”
David follows up: “Most of these things don't really happen too much in day to day. If I had to give a really good tip to people that are looking for decent rentals, go try renting from somebody who's more like mom and pop. They're going to be much more flexible than a business that makes it an apartment complex – they do not really shake too much on their policies and procedures.”
In this episode, Cristina and Randy shared an article: How to Save Money for a House Down Payment While Renting. Check it out if you’re a renter with the goal of home ownership!