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Spring is almost here — and those looking for a new rental face a competitive market.
U.S. asking rent prices jumped to $1,959 in February, according to Zillow Group. latest Hire purchase report. That’s just 0.4% from last month, but up 3.5% from a year ago.
The national rental vacancy rate remained steady at 6.6% through the end of the fourth quarter of 2023, according to the Federal Reserve.
Vacancies have increased in some cities due to new construction, and more new apartment buildings are expected to hit the rental market in 2024. However, some cities have few open apartments. The vacancy rate in New York recently reached 1.4%, the lowest level since 1968.
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Consumers hunting for a new place may encounter different types of rental properties available on the market, from simple rental buildings to properties that may have their own quirks, such as apartments and housing cooperatives.
“Buildings really set their own policies on what a landlord can do if they decide to rent the unit and for how long, and what the requirements are to do that,” said Carlo Romero, StreetEasy’s concierge.
That means if you’re looking for a rental, you should consider what the application process is like, any fees involved and what amenities you’ll have access to, experts say.
Advances can vary significantly
Properties such as condominiums and cooperatives tend to carry high down payments, while traditional rental buildings are more likely to be subject to local rent regulation policies.
“In an apartment or co-op building, upfront costs and fees are set at the building level and can vary significantly,” Romero said. “An application fee to rent an apartment can be several hundred dollars, maybe even a thousand. And there are often moving or relocation fees attached.”
By comparison, for a typical rental building, under New York State law, the application fee is capped at $20and the security deposit is limited to one month’s rent, Romero said. Wisconsin has a similar cap where the application fee cannot exceed $20.
Rhode Island has a new state law which prohibits landlords, tenants and property managers from charging rental applicants application fees beyond the actual cost of conducting certain background checks, if necessary.
In addition to the monthly rent, be sure to ask about any additional expenses you may be responsible for in a potential unit.
What you need to know about renting an apartment or co-op
Condos and co-op properties are primarily aimed at people looking to buy. They may appear on a rent-to-buy platform if the owner decides to rent the property.
There are key differences between condos and co-ops. A condo is a real estate property that one can own in a larger complex. In a co-op, a resident owns a share of the building based on their unit size, but does not own that property.
If you come across condos or co-ops in your rental search, here are a few things to consider:
1. Apartments
In general, apartment owners have more flexibility when it comes to renting out their apartments, experts say.
“Having a tenant approved by the condo board tends to be simpler than a co-op application,” Romero said, because co-ops can often have more intense processes on their own terms and such rules vary from building to building. building.
Apartments tend to be newer buildings and have more amenities, such as in-unit or in-building laundry facilities, a community pool, or an outdoor space.
Most condos include a home owners association and require HOA fees. Ask your prospective landlord whether you as a tenant will be responsible for such costs or other ‘common charges’.
For perspective, the average HOA fee for condo owners is $300 to $400 per month, but can exceed $1,000 per month in some markets, according to RubyHomea luxury real estate website.
In most cases, a tenant renting an apartment has the same privileges as a landlord, Romero said. However, as a potential tenant, it is important to ask before signing the lease if access to such amenities is provided to the tenants.
Some buildings in New York, for example, have units available to both apartment owners and renters, but apartment owners may have access to certain amenities that aren’t available to renters, Romero said..
2. Cooperatives
If a co-op building allows shareholders to rent out their units, the prospective tenant may need to apply to live in the co-op and go through a co-op board approval process.
The application process for a co-op is really up to the building board, “and they can reject an applicant for any reason,” Romero said.
Each building may have its own requirements. It could require an independent background check with additional fees, experts say.
“A co-op is like a company. They have to like you if you’re one of them,” said Frank Dong, a Redfin real estate agent.
Additionally, co-op buildings may have rules that limit the amount of time a tenant can live there, Romero said.
3. Traditional rental buildings
While apartment and co-op buildings may have restrictions on how long a tenant can live, tenants have more certainty that they can continue to rent in traditional rental buildings. In such properties, you usually don’t run the risk of a landlord wanting to live in that unit or run into building policies that limit how long you can stay.
Plus, “the implementation tends to be a lot simpler,” Romero said. You know what the application fee will be, you know what the deposit will be and you know how much you will have to pay up front.