Pitfall #1: Paying Too Much in Rent
Make a checklist of items you want in a rental property. During the inspection, savvy renters will ask question and take time to "kick the tires".
As for cost of a residential property, go to Zillow or like site. Make sure to choose a price that fits within your means. When reviewing an application, property managers usually look for income of at least three times the cost of rent.
Pitfall #2: Skimming, not reading, the Lease
Does anyone actually read legal documents anymore? A lease is a contract that details the terms of the rental. Understand what you have to do and what the landlord must do.
If you have roommates, that's great for keeping costs down, but you are likely financially responsible for their behaviors. For example, if you pay your half of the rent and your roomie does not, both residents are still responsible for paying the lease - this month and for the full term. Roommates should formalize their arrangement as much as possible on the lease. They may even consider a separate legally binding contract stating their rental obligations to protect one another in case of a negligent roommate.
Pitfall #3: Overlooking Utility Costs and Insurance
Usually, renters focus solely on the price of rent without taking into consideration all of the costs. The largest is typically utilities, but also note HOA fees, landscaping, trash, water, parking, etc. Landlords typically insure the physical structure, but usually the tenant is required to insure their belonging in case of a fire, flood or other issue. The best way for renters to make sure you aren’t forgetting a component is to make a household budget and/or itemize your expenses.
Pitfall #4: Not Protecting A Security Deposit
A security deposit is an amount of money (typically worth one month’s rent) that new residents give to their landlord or property management company in advance of moving into a rental property. It protects the landlord from financial loss if the renter fails to pay rent or causes damage. What can renters do to protect themselves? Take thorough pictures of the property prior to moving in. Email to the new landlord as a form of documentation or ask him/her to email to you.
Pitfall #5: Negligent Landlords
While most landlords are professional and fair, it’s good to watch for red flags before signing a lease. Talk to people - ideally current tenants! Look closely at the property for signs of neglect, damage, wear and tear, or pest problems. A clean, well-maintained property is a sign that the landlord is responsive and attentive to property maintenance, which ensures that renters won’t end up taking on costs themselves and have a positive rental experience.
Some questions to consider:
When was the unit last painted?
When were the carpets last replaced?
When were the furnace and air conditioning units last serviced?
Look for specific answers - how s/he responds - a landlord should know exactly when major work was done.
Pitfall #6: Repair Costs and Making the Space Yours
Landlords generally pay to repair leaky plumbing, electrical failures, and other standard maintenance items. Unfortunately, there’s a gray area in which tenants can be charged for repairs if they’re liable. It’s best for renters and landlords to discuss who’s responsible for what and include repair procedures in the lease prior to signing.
Residents should report any issues/damages to the landlord immediately and should never try to repair a major issues involving electric, plumbing, heating, cooling, and sewer. Renters who attempt to fix an apartment problem and then wind up causing more damage may be held liable for costs.
Pitfall #7: Renting (Residential) Instead of Buying
In addition to talking to friends and family, consult a financial professional. Approximately 1/3 of Americans rent (https://www.policygenius.com/homeowners-insurance/homeowners-vs-renters-statistics). While many people refer to the price-to-rent ratio, the gain/loss on a purchased property - when it is eventually sold - is likely much more impactful.
A rental contract is typically only for a year - if don't like your rental - or if you lose your job - you are only financially committed for the term of the lease. If you buy a house, and the economy happens be in a down-turn when you want to sell, remember 2008. Don't overlook Pitfalls 1 and 3; make a budget and be sure to include all the additional costs of home ownership such as property taxes, repairs, selling costs and potential gain/loss on the sale.