Around half of Real Estate Agents or Brokers who rented a home out had to deal with a tenant who missed their last rent payment. You may be tempted to ask why this was the state of affairs even after the tenant put in all the required information about them on the application form. The answer can be traced back to which financial transaction is associated with the home rental process.
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Paying a tenant screening fee
A tenant screening fee is a charge, often charged by property management companies, for running a credit check and criminal background check on a prospective tenant. Landlords who manage their own properties may also charge a tenant screening fee to cover the costs of hiring a third party to provide the necessary credit and background checks.
Making a security deposit
When you rent a home, one of the first steps is to make a security deposit. A security deposit is an amount of money that you pay to the landlord that they can use if you break the terms of your lease. The most common reason for using a security deposit is if you leave the property in bad condition when you move out.
But it can also be used if you don’t pay your rent on time, or for other reasons as specified by your lease.Security deposits are usually refundable at the end of your tenancy, meaning that as long as you don’t break the terms of your lease, you will get this money back.
Paying the first month’s rent and security deposit
Paying the first month’s rent and security deposit is a major expense for new renters, who might have already paid for a move and other expenses.Because the security deposit is returned only after the tenant leaves, and might be applied to unpaid rent, damage or cleaning costs, it’s important to make sure the home is clean when you move in.
Take photos of any pre-existing damage and make sure your landlord signs an inspection list acknowledging those issues. You’ll also want to keep copies of that list and any other documentation related to your move.
Completing a rental application
Completing a rental application. A landlord or property manager will use the information in the application to obtain a credit report and verify other details, such as your employment history. Some landlords may charge a fee for this report.Signing a lease agreement. This document outlines the responsibilities and rights of both the tenant and landlord with regard to the tenancy.
It is important that you read and understand all provisions before signing it.Paying a security deposit and paying first month’s rent. These are often required at lease signing, though some landlords will accept payment for first month’s rent in advance if you decide to wait several weeks before moving in.
Signing a lease or rental agreement
The process of renting a home can be broken down into several steps.The first step is to contact the landlord or property management company to discuss availability and get an application.The next step is filling out the application and paying the application fee, which can be used by the landlord to do a background check on you.
Next, if your application is accepted, you will sign a lease or rental agreement. This document spells out what your rent payment will be, when it will be due, what utilities are included in that payment, and other terms and conditions of your tenancy.The last step is paying any fees associated with the move-in process, including security deposits and pet deposits if applicable.
Getting renters insurance
Renters insurance is not a legal requirement when you rent a home. However, your landlord most likely will require you to have renters’ insurance if you sign a lease agreement. If you do not purchase renters’ insurance, and your property is damaged because of fire or theft, for example, you may be held legally responsible for these expenses.
Renters insurance covers your personal items and your liability in case someone is injured while on the premises. It also covers some living expenses if your rental unit becomes uninhabitable due to damage from weather or other causes.
Paying a security deposit to the landlord or property management company
The security deposit is money paid to the landlord or property management company before moving in. It’s meant to cover the cost of any damage done above normal wear and tear, as well as any unpaid rent at the end of the lease.The security deposit is so named because it is meant to protect the landlord against financial loss if the tenant skips out on rent or causes damage to the property.Depending on your state, this deposit can be equal to one month’s rent or, more commonly, two month’s rent.
At move-in time, both you and your landlord should do a walkthrough of the property and document any existing damage using photos or videos as evidence. When you move out, assuming there are no damages above normal wear and tear for instance if there’s a hole in wall from where your TV was mounted then your security deposit will be returned along with accrued interest (in some states).
Conclusion
The home rental process is associated with multiple financial transactions. Finding buyers for a home or property it is not an easy undertaking, but once the transaction has been completed, new rentals offer renters the opportunity to embrace their tenants’ rights and obligations in a new territory.