On Your Own by shuifanglj


									    On Your Own

Applied Business Practices
• When do you expect to move to home of
  your own?
• Why do you want to live independently?
• What costs do you expect to pay?
          Types of Housing
• Four housing options after high school
  – Live with parents
  – Live in a dorm
  – Rent an apartment
  – Buy a mobile home, condominium, or single
    family home
• What should you discuss before you share
  an apartment or dorm?
  – Responsibilities and living habits
     • Who cleans what, groceries, expenses
     • Neatness, house guests, entertainment rules
  – Make agreements in writing
  – Look for the apartment together
     • No one to blame for poor choice
          First Month’s Budget
• First and last month’s rent
• Security deposit
  – Amount the landlord holds to cover damages to
    the rental property
• Utility service (deposit)
• Phone service (maybe)
• Water/garbage
        Sources for Apartments
•   Family and friends
•   Classified section of the newspaper
•   Real estate agencies
•   Internet
• What types of information do you think are
  in a lease agreement? Tell of at least four
  things you think are in a lease. Please use
  complete sentences.
             Types of Housing
• Lease
  – Legal contract you sign that gives you the
    right to live in the apartment for a specified
    period of time
• Tenant
  – Person renting the apartment
• Landlord
  – Owner of the rented property
         Good-Tenant Criteria?
• Landlord will be screening:
  –   Credit check & bankruptcies
  –   Employment & Income
  –   Rental history & evictions
  –   References
• Must put in Application fee to
  pay for screening
• Applies to each tenant
• Non-refundable
   Legal & Illegal Discrimination
• Legal                        • Illegal
   – Poor credit history          – Race
   – Insufficient income          – Religion
   – Bad references               – Ethnic background or
                                    national origin
   – Past behavior i.e.
                                  – Sex
     destruction of property
                                  – Age
   – Tenants would exceed
                                  – Tenant has children
     valid occupancy policy         (except in senior housing)
                                  – Mental or physical
• Tips to Renting
  – Rent should be no more than 1/3 of monthly
    take home pay
  – Make a checklist to evaluate the apartments
     • Ensures you inspect the most important features of
       each apartment
• Purpose of a Lease
  – Protect the landlord and the tenant
     • Be sure you can live by the conditions of the lease
 What to Expect in Agreements
• The length of the tenancy
• The amount of rent and deposits the tenant must
• The number of people who can live on the rental
• Who pays for utilities
• Whether the tenant may have pets
• Whether the tenant may sublet the property
• The landlord's access to the rental property, and
• Who pays attorney fees if there is a lawsuit.
    Illegal Contract Provisions
– Giving up your right to
  defend yourself in
– Limiting the landlord’s
  liability for things
  they’re normally
  responsible for
• What do you think are some of the
  responsibilities of a landlord? What do you
  think are some of the responsibilities of a
        Landlord’s Responsibilities
• Making repairs in a reasonable
  amount of time
• Keeping premises safe and clean
• Entering premises only at agreed-
  upon time unless there is an
• Paying interest on deposit money
• Collecting rent
• Maintaining exterior grounds of
             Tenant’s Responsibilities
• Pay rent and utilities on time
• Using the rental for the purpose stated in lease
• Taking reasonable care of premises
• Notify landlord of major repairs needed
• Giving notice if leaving at end of lease
• Giving notice if leaving before lease is up AND
  paying rent for balance of lease unless a new tenant
  is found
• Paying for any damage to walls, floors, and furniture
• No alterations to property the landlord must fix later
• Giving landlord new set of keys if locks are changed
• Paying all rent if roommates move out and you stay
Renter’s Insurance
• Insurance covers loss
  to belongings:
  – From fire & theft
  – Depends on value of
    policy: $25K – 50K
  – Deductibles start at
 Landlord’s Legal Right to Enter
• May need to:
   – Make repairs
   – Show property
• Must give notice
   – Varies by state from 24
     hours to “reasonable notice
• No notice needed:
   – Emergency
      • Fire
      • Serious water leak
   – Abandonment
• You can’t refuse access
• Put your request in
• Give landlord time to
  respond. Required
  response time varies by
  state but generally:
   – 24 hours for no hot or cold water,
     heat, electricity or for other
     hazardous or life-threatening
   – 72 hours for refrigerator, range,
     oven, or major plumbing problems
   – 10 days for all other repairs
       Tenant’s Rights for Repairs
• Options when
  landlord won’t repair:
   – Pay less rent
   – Withhold rent
   – Make repairs
   – Hire professional &
     deduct cost from rent
   – Call building inspector
   – Mediate or go to court
   – Move out (give notice)
• Varies by state
     When You Can Be Evicted
• Not paying rent
   – Even if one day late with rent
   – Three-day notice to pay or
     move out required
• Not complying with terms of
  rental agreement
   – Ten-day notice to comply or
     move out required
• For creating a waste or
   – Three-day notice to move out
   – No option to stay to correct
         Illegal Landlord Actions
• Even if you’re behind in
   – Lockouts
   – Utility shutoffs
   – Taking your property
     (unless you abandon it)
   – Retaliatory actions
When the Tenant Breaks the Lease
• Tenant can legally
  break the lease if:
  – Landlord fails to make
  – Fails to comply with
    health & safety
• Tenant responsible
  for remainder of rent
  under lease term
  – Landlord has duty to
    find a new tenant
• Besides rent and security deposits, what
  are some other costs you should be
  prepared for when moving out on your
• Why is it important to create a budget
  before you move out on your own?
           When You Move Out
• Provide written notice
  according to your rental or
  lease agreement.
   – Rental: Usually 30-day
   – Lease: You’re responsible
     for rent for remaining
     leasing term unless landlord
     can rent unit
    More When You Move Out
• Clean apartment and
  leave in same condition
  as when you moved in
  (except normal wear and
• Leave forwarding address
  for deposit return
      How to Protect Yourself
• Ask parents to walk
  through rental with
• Take pictures of
  everything (include
  date on photo)
• Go through rental
  check list
• Read Article “”Roommate: How to Get
  Along with Them”
• Write a two paragraph summary
      Budgeting for the Move
• When preparing for the move keep in mind
  – Your personal and financial goals
  – Your income
  – Your lifestyle
  – Your fixed expenses
  – Your flexible expenses
  – Moving costs
  – Moving-in costs
  – The cost of setting up house
• Fixed Expense
  – Items you have committed to spend
    • Example: utilities, rent
• Variable/Flexible Expense
  – Items you can choose to spend or not
    • Going to movies or eating out
      Furnishing Your Home
• Used Furniture
  – Thrift Stores
  – Salvation Army
  – Good Will
  – Garage Sales
Furnishing Your Home
• Consumer Reports
  – #1 magazine that reports the strengths and
    weaknesses of many different brands of
       Furnishing Your Home
• Energy Labels
  – Predict the cost of
    running the appliance
• Floor Models
  – New items reduced in
    price because they
    have been on display
    in the store
                     Buy or Rent
• Advantages of Renting
   – Lower cost
   – Less responsibility
   – Mobility
• Advantages of Buying
   –   Ownership
   –   Value
   –   Your own space
   –   Fewer Restrictions
   –   Tax deductible
   –   http://www.jumpstart.org/madmoney/asproot/pgv_money_reality.
               Buying a Home
• Down Payment
  – Specific % of purchase price you pay up
• Mortgage
  – A loan to buy real estate
  – Property serves as collateral for the loan
• Principal
  – Amount you borrow
            Buying a Home
• Mortgage Redemption Insurance
  – A form of life insurance where the balance is
    paid if borrower dies before loan is repaid
          Housing Expenses
• Things to consider that might be
  – Repair and upkeep
  – Initial utility costs such as installations
  – appliances
                    Buying a Home
• Closing Costs
  – Fees you must pay after you buy a house
     • Includes
        – Property taxes (taxes on real estate that might need refunded to seller for
          a portion of the year)
        – Attorney’s fees (preparing and checking legal documents)
        – Loan origination fee or points (commission for granting the loan)
        – Title Search (legal right to own a property)
        – Recording fee (written evidence conveying title from one person to
        – Appraisal fee – charge for examining and determining the value of the
        – Liens (claims against the property by others)
              Buying a Home
• How much can you afford?
  – The rule of thumb is that you can generally afford
    a house 2.5 times your gross annual income.
• Example
  – Gross annual income = $50,000
  – $50,000 X 2.5 = $125,000
• Calculate the down payment and amount
  left for the loan for the following:
10% down payment on a house $125,000
20% down payment on a house $88,900
25% down payment on a house $115,500

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