Last week, I went to NYC to find my first apartment. Boy was it draining. The all-day excursions had me on every type of public transportation to get to apartment showings and to cafes for in-between Craigslist searches. On top of that, there were the miles and miles of walking with iPhone in hand.
The mission: to find a NYC 2BR apartment for under $3,000 rent to share between 3 people in 5 days. It’s one of those classic recent graduate stories of trying to cram one too many people in a tiny, cheap room.
I know apartment hunting doesn’t seem like it has anything to do with personal finance. File this under the “How come no one taught me about any of this” category. Much like how no one teaches you how to manage money, no one ever educates you about looking for an apartment. Plus, your rent makes up a large chunk of your monthly expenses so it has everything to do with personal finance.
Anyway, to keep things short and useful, I’d figure I’d share some key learnings. I realize I’m late to the apartment hunt game among 2012 graduates, but I think now is the best time to talk about it. In a year when the lease is up, you may go looking for another apartment. Students can stash some of this information away for later when you graduate or find an internship.
I thought I was prepared going into it. I brought all the paperwork and did some research beforehand. Of the 5 days, I spent about the first 2 and a half days just figuring it all out. Here are some of the things I learned in those days:
- This is one of the first time your credit score matters. Landlords and property management companies do a credit check on you before deciding they will let you take an apartment. If you have bad credit or no credit, they will probably pick one of the many other applicants who have good credit. Start using a credit card and build your credit.
- _Be realistic in your expectations, really. _The three pillars of apartments (I guess real estate in general) are price, size, and location. We were looking for a cheap place in a great location that was just barely big enough to fit 3 people. We thought we were giving up the size. Turns out, we weren’t really giving up anything. Something that fits 3 people is considered pretty big. We ended up picking a place that was less central.
- You gotta get out there and spend the first days figuring it out. If you haven’t experienced apartment searching before, then the next set of insights might sound a bit foreign. We as human beings tend to procrastinate caring about things right up until its our turn.
- _ Brokers try very hard to make a commission off you. _They prey on the naive. 75% of the content on Craigslist and other similar services are brokers trying to lure you in. My friends told me 15% was the standard brokers fee. I thought it was 15% of the $3,000 (that equals $450). I thought, “Not bad, I’m willing to pay that”. I later found out it’s actually 15% of the ANNUAL rent. That means $3,000 12 0.15 = $5,400. That’s way more than the $450 I thought.
- If you really want to find something that doesn’t cost a broker’s fee, look for stuff straight from property management companies. These are companies that literally own buildings in the city. If you find stuff online (there are some on Craigslist, you just have to look hard) through them or even just call them up and ask, you avoid the middle man (the broker).
- The places they show on Craigslist and similar that have specific addresses means that the listing is exclusive. These brokers are not afraid of telling you where it is because no one else can show it but them. If you want that property, you will most likely have to pay the brokers fee. A broker you hire to help you find places mostly show you places that you could have gotten on your own by going straight through the property management company.
If schools did teach some personal finance, there could be a class where students are put in a hypothetical apartment hunt. Being exposed to the whole process, the terms, and the players would save so much stress and money. Even in my pre-hunt research, no one really laid it all out for me. I wish I could send this to me a week ago to save myself hours of exhaustion and confusion.
For all of you out there who have done an apartment search recently, what were some things you learned? Share with us what you wish you could have told your pre-search self.