I don’t think moving home or looking for a new rental apartment will ever get easier. My wife and I have been moving from home to home for the past 7 years and every time we think about looking for a new apartment for rent, it gets overwhelming mentally.
However, we realized that if we break down the process into individual steps and tasks, apartment-hunting becomes more manageable and we tend to cover all the essential details along the way.
We used this step-by-step guide extensively to make our “moving day” smoother and significantly more enjoyable. What it does to the relationship is also marvelous, we bicker less and we are happier even during the worst of “moving day” because we have clarity on what is to be expected.
Step-By-Step Guide On Renting Apartment
Step 1: Determine the rent budget you can afford
Here’s the reality, there will always be a nicer-looking apartment out there but it may be a horrible choice for your finances. While it’s nice to live in the present, having a budget for rent is a great way of preventing financial stress.
For my household, we try our level best to keep our rent and utilities within 30% of our monthly income. Even after our household income grew in recent years, we made a decision to keep our rent budget between 10% – 15% of our household income.
It is definitely a compromise in lifestyle to meet our budget but we figured the additional income we’re making would have been better spent on accumulating investment assets. That includes the 3 million worth of assets we acquired in the past 6 years.
In your case, you might want to first figure out the range of rent you can afford by looking at your situation,
- Monthly income – how much are you making every month?
- Debt – how much are you committing towards clearing your student loan, credit card, or car payments?
- Savings – you should at least save 10% or more every month!
- Monthly expenditure – how much are you spending every month on food and entertainment?
The conventional wisdom is that you shouldn’t spend more than 30% of your monthly income on rent. However, that may depend on your financial situation and the high-interest debts that need to be cleared quickly.
I did cover the 30% rule for rental and accommodation. In this article, I covered how the 30% rule does not cover your financial circumstances and the fact that you may be earning below or above the median wages.
Step 2: Find out your credit score
A credit score is a three-digit number that reflects your credit history and payment habits that banks, credit card issuers, insurance companies, loan issuers, and landlords use to determine your capability in making repayment promptly in a lending or leasing decision.
Depending on where you’re from and where you’re looking to rent, your credit score can be essential in giving landlords or property management companies an overview of how you managed your debts and general finances over the years.
If you’re looking to rent from property management firms in Malaysia, it is quite common that these companies will run a credit score check to find out your credit score. In some cases, landlords in the upper markets may even ask you to supply a copy of your credit report.
For situations where you haven’t built your credit score or you have a low credit rating, one common solution to that is to secure a lease by having a guarantor. The guarantor will co-sign the apartment lease with you, guaranteeing the landlord to pay rent if you fail to do so.
As a landlord myself, I would prefer if the parents or siblings be the guarantor. Having them legally responsible for the rental apartment would give me assurance.
Step 3: List down the location and apartments
Personally, I prefer listing down the locations and amenities before I start listing down the apartments that are worth considering. The thought process behind this is that I prefer living in some environments more than others for the convenience of public transport and quick access to food and daily necessities.
Once we’re decided on the neighborhood of our preference, we tend to do a drive around the area to scout out interesting apartment buildings. After that, what we’ll do is go on the listing portals and determine how far our rental budget can be stretched.
At this point, what we hope to achieve is to determine what our budget would qualify for these particular apartment buildings. For example, if my budget of RM 3,000 is only sufficient for a 2-bedroom while our preference is for a 3-bedroom, we will then remove this particular apartment building from our list.
Step 4: Schedule tours with the responsible property agents
Up to this point, you should have a list of apartment buildings that should fit your requirement and preferences. At the same time, you should also have a list of the top 5 listings in each of the apartment buildings.
Once I have this list sorted, I will then schedule tours with the listing agents to view the place in person. I recommend that you actually visit the place to make sure the facilities promoted are in place and that you are not falling prey to some shoddy rental scams.
I even discussed this in an article covering why you should not make a decision to rent without first viewing the place or having someone you trust to view it on your behalf.
During the tour, do spend some time checking out every space in the apartment. This includes the shared spaces and the common facilities such as the gym and swimming pool. If you’re wondering, it is perfectly normal to test the appliances and faucets for water pressure.
I love strong water pressure for my bath, it refreshes me and I can get quite picky when high-rise apartments come with weak water pressure.
While you’re viewing the apartment, it is also crucial that you ask key questions that may impact your renting experience. To help you with that, I’ve compiled 13 important questions you should be asking before deciding on a lease.
Some of the quick questions I will ask my future landlord are often related to security and utility deposits. On top of that, some of the expectations and responsibilities between the landlord and myself, as the tenant.
Step 5: Negotiate your lease terms
After visiting numerous and I do say numerous apartments that may potentially be your next home, you will want to negotiate your lease terms with the landlord. It can be the case where the television is just worn out and you’d like it replaced.
In my case, our current rental place was at a good price of 25% below market ask for a similar unit in the market. This opportunity was only made available because of the Covid-19 pandemic where jobs were made remote and most Malaysians moved home to their hometowns. This led to an increase in vacancies in the main city of KL.
When we saw the place, we knew it was a good bargain and we decided that we wanted to secure the deal for 2 years. We made our offer to the landlord and we made clear our conditions that we are looking to rent the place for 2 years and we’ll renegotiate the lease after that.
It was definitely a win-win situation for the landlord because we were in the thick of the pandemic and Malaysia’s movement control order was in full effect. On top of that, things do not look to be lifting in the next year or so.
However, the tricky situation is that my wife and I can only move in 2 months from now as we had an ongoing lease with the current place. We raised our situation to the landlord and ultimately, we came to an agreement that we’ll move in 1.5 months from the day the offer was accepted.
What I’m trying to tell you from this is that the lease terms can be negotiated and you should bring up your thoughts and considerations to the potential landlord. As long as your conditions are reasonable and it can be interpreted as a win-win situation for both parties, very often the deal will get through.
Step 6: Discuss with your spouses (if applicable)
Oh yes, this is really important especially if you’re a married man or woman. Moving into a new living space is a very personal journey. Whether you like the furniture, the beddings, the cabinet style, or maybe the view, these are personal preferences.
One lesson I learned right after getting married is that you should always take your wife to viewings and get her opinion of the place. As cliche as it may be, a happy wife is really a happier life.
The repercussions of not getting your spouse’s opinion and agreement can be horrible and severe which I will not discuss further in writing, lest I incur the wrath of my beloved.
Step 7: Prepare the necessary funds
When you sign a lease, there will be some upfront costs involved. Generally, it involves a 1-month advance rent, a 2-month security deposit, and a half-month utility deposit. Besides that, there is also stamp duty for the tenancy agreement now made mandatory by Malaysia Inland Revenue Board (LHDN).
If you have a pet, then you should expect to pay a separate pet deposit on top of the other general security deposits.
Step 8: Sign the dotted line
Once you feel completely comfortable with the lease terms, the landlord, and the living space, it is now time to sign the lease. It is important that after you sign the lease and pay the advance rent and deposit, you made sure to receive a receipt for all the payments made to the property agent.
Now, it is time to get packed for a smooth moving day and to expect a new adventure in a new space.
Tips and Tricks On Renting an Apartment
Use a longer lease to lock in a good deal
When an economic crisis happens and real estate vacancies increase, it is possible to get rental rates at 50% – 60% of previous rates. This happens because landlords get desperate to cover their monthly installments even if it means renting it out at a loss.
In those cases, it might be a good idea to lock in the rental rate with a longer lease. Once the lease expires, the landlord may increase the rent to its previous high depending on the personality of the landlord.
In some cases, the landlord would opt to keep you around if you have been a good tenant and caretaker of the place. When that happens, you might even be able to negotiate your rent and have a minimal adjustment.
Parking can be really important
Whichever apartment type you choose, you should check and see if there is a reserved parking spot. If the apartment you’re renting does not supply a reserved parking spot, you might find yourself in a pickle with the apartment’s management or waste time looking for a public parking spot.
Be wise with your budgeting
My wife and I willingly chose to rent instead of settling in one of our own apartments because it makes financial sense to our property investing journey.
When you live in a space, you become the consumer of the space and financially, it makes better sense if we keep our cost of consumption to the lowest possible level. On the other hand, when you rent out an apartment, the rent you receive becomes revenue to your property business. Ideally, having a higher rent means better business for as long as expenses are kept at a down low.
With this logic, we keep our rent low by renting from older apartment units at a much lower rent while renting out our newer nicer looking apartments at a much higher rent.
Get to know your neighbors
When you move into an apartment building, having good friendly neighbors is similar to finding treasure. The opportunity to have a cup of warm coffee on a cold Sunday morning makes a difference in our lives. Being able to surround yourself with good friends also makes living a little less lonely and isolated.
Anyone can buy a good house, but good neighbors are priceless!
