Ask the Experts

Post-Grad Pad

I’m in my last year of school, so it’s time for me to start thinking about my life as a “real adult!” One thing I’m not sure I’m ready for is having my own place. I’ve never rented my own apartment before, and I don’t think I’ll be ready to buy a home, obviously. What advice do the experts have for a first-time apartment hunter? How soon should I try to stop renting and buy a home instead?

As a recent graduate, you will most likely begin by renting an apartment or home. It will likely only be after some years of saving that you are able to make the jump to home ownership, if you so choose.

So let’s start with rentals: renting a living space has never been easier, thanks to the rise of many online tools. Modern apartment-hunters can search for living spaces online, fill out an online rental application, and even communicate with landlords over the web. You can find an apartment on Craigslist or a specialized app–or, of course, you can walk into a real estate broker’s office and find one the old-fashioned way. In any case, you should be prepared to pay a realtor’s fee (how much the fee is will vary by location–it can be as high as 12 or 15% in high-demand markets like Manhattan).

As a first-time apartment hunter, you should know a few things. First, remember that the law obligates your landlord to disclose certain things. Experts recommend that you read the lease thoroughly (some cities have a standard lease) and look for any disclosures that you’re not comfortable with. Don’t forget about things like the deposit and that realtor’s fee, and be conservative with your budget: your rent should not strain your financial situation. Finally, you should strongly consider getting renters insurance when you move in. Your landlord’s insurance policy will not protect your personal property, so you need your own!

Eventually, you may want to buy a home. Nationwide, renting is actually about 38% more expensive than owning a home; the conventional wisdom also holds that paying into a mortgage is wiser than paying rent, as the former will give you an asset (the property itself) for your trouble. When you’re ready to make the jump, look carefully at both home quality and location, say the experts at Troy, Michigan’s Robertson Homes. In real estate, location is key; the value of your property will be high (and may continue to rise) if your space is in a good school district, a safe neighborhood, or a convenient location.

Good luck finding the perfect post-grad pad!

Marcus Williams is a Senior Financial Consultant in Financial Services and Advisory at EY.