Should I Renew the Lease or Buy a Property?
Should I renew the lease or go buy a property? This is one of the most common questions that renters ask themselves. Chances are, you find yourself agonizing over this situation at least once, but possibly many more times over the course of your life. Deciding to renew your lease is as important as deciding whether you should rent or buy. In real estate, market timing is important, but so is knowing what is a great deal, both on the renting and buying side of the equation.
The last thing you need is to rack up unnecessary expenses after moving to a new pad or staying put that you later realize could have been avoided. There are just so many factors to consider. If you stay put in your current Boston Pad, you have to deal with the potential of rising rent and perhaps a sub-par landlord. If you buy at the top, what happens if the market makes a correction in a long and tired asset bull run?
Most apartment rental leases in the Greater Boston Area are usually fixed term and written to expire in one year. Landlords in the Metro-Boston are governed by the greater market forces of a huge university and educational system that puts leases beginning and expiring on a Sept 1st cycle. In fact, over the years we have extensively studied rented apartments and availability dates. We have noticed a range of as low as 68% to as high as 80% of all leases beginning and ending on 9/1. Those dates don’t leave much room for finding other timeframes to effectively move. Therefore, long range planning is a must in your quest to figure out whether you should buy or renew your lease.
Planning is Essential
If you ever have heard the phrase “If you fail to plan, plan to fail” well, that certainly applies to Greater Boston Real Estate. If you are thinking of buying, it is important that you give yourself enough time to be successful and learn the marketplace. You want to think about putting in at least 2-3 months of groundwork to know the market before a purchase. You also have to consider the amount of time it takes to close on a purchase of a property.
If you are thinking of renewing your lease you have to think about your exit strategy and if you can sublet your place or not. You certainly do not want to be in the position of paying rent and a mortgage at the same time if you move into your purchase but can’t sublet or find renters. You now have to start playing chess not checkers with your housing decisions.
How Long Have You Lived There?
If you are lucky enough to have lived in the same apartment for several years, you can always ask the landlord for a month to month lease. Sometimes landlords will be generous and provide that to you, if you have been a great tenant, and the landlord is considering upgrades to the place.
If a tenant has lived in a place for a long time, some landlords don’t mind it being vacant for a couple of months as they recondition or reposition the asset for higher and better use. Under a tenancy-at-will agreement, you can move out after giving 30-day notice to your landlord. This agreement also allows your landlord to give you a 30-day notice to ask you to leave or to increase your rent.
If you are considering purchasing, try to work out a lease agreement with your landlord so that both of you can potentially win. Many landlords do not mind ending a lease in April or May if they are going to do a quick renovation to put it back on the rental market for June which is the second largest month of lease availability and renting dates. When in doubt, always seek the advice of a seasoned real estate agent to go over market timing and forces at play in the neighborhoods you are targeting to find your purchase. Knowing key factors will help you make a right decision that will save you time, money, and stress.
Familiarity with your Rental and the Surrounding Area
You are a seasoned renter. You already know the kind of neighborhood in which your apartment is located and the services it has to offer. Since you live there, you already know the condition of your apartment and the layout of the floor plan. You have already optimized and furnished the place so that is a sunken cost that you don’t have to deal with again for a while. And you already are familiar with your landlord’s personality and their management style. Renewing your lease means you don’t have to deal with the ugly surprises that come with living in the rental since you already live there.
There is a flip side to renewing the lease in this situation. If you choose to stay in a neighborhood that no longer matches your lifestyle or that bores you, you will most likely have to stay there until the lease ends. Living in East Boston, for instance, has abundant parks for outdoor activities. However, you may now prefer to live in the Allston/Brighton area that could have more shops or places to your liking so that you can hang out with your friends.
Moving out can be a better option if a neighborhood’s lifestyle is that important to you and you want to make the change. You should keep track of how much time you are commuting and going to places of your interest. Boston’s endless building boom is making the roads more congested and commute times are increasing, so being efficient in Boston is a must for true happiness.
The Expenses of Moving into a New Property That You Purchase.
The cost shifts of not renewing your lease and switching to a purchase situation come in mainly these forms: mortgage, taxes, deferred maintenance remedy, moving out and setting up residency in your new property. The expenses you have to pay when moving out include but are not limited to:
- Hiring a moving company
- Buying packaging supplies
- Renting a moving truck
- Storing items in a storage facility
The average cost of moving within the Boston area as of June 2016 is $432.91—and that’s for a small one bedroom apartment. The average cost of storing your items for one month during the same year is $105.81.
To set up your residency at your new place, the expenses you may have to pay include the following:
- Maintenance updates
- New furniture
- New amenities and decorations
- Landscaping costs (or equipment if you do it yourself)
- Potential snow removal costs
- Possible extermination and pest control costs
When renewing the lease, you won’t have to deal with the expenses and the hassles of moving. Plus, it gives you plenty of time to plan your move after the next lease expires. There are times when it makes sense to move. For example, you serve in the military and you have to be transferred to a faraway base. Or you work far away and you need to decrease your commute time to work.
Parking in Boston is challenging. The city designates many residential streets as “Resident Parking Only”. In order to park there, you have to apply for the resident parking permit at City Hall. The permit is free of charge, but you have to provide proof of your residency in Boston. When you decide if you want to stay longer at your apartment, you need to consider whether you can park at your residence without any problems. If your current apartment has a parking garage, off-street parking, or both, renewing the lease allows you to continue taking advantage of the parking convenience.
If you have to move out, make sure the new apartment will provide easy and convenient parking. The last thing you need is to move to a residence where it is difficult to park there. Never be afraid to check out the neighborhood both during the day and at night to assess parking demand. You can also hire a professional parking agent from websites such as BostonParkingSpaces.com to help scour the neighborhood to help find you great local parking spots.
Your Relationship with your Landlord
You want a landlord who responds to your maintenance requests immediately, provides excellent customer service all the time, and is available whenever you need them. Not to mention, they must always act professional and make you feel comfortable and wanted. If none of these criteria apply to them, it would be best not to renew the lease. When you move into a new community, hopefully you will get along better with a new landlord. When moving out, you may have to establish a different relationship with a new landlord, so there’s a possibility that you may or may not get along with them. Having a good tenant-landlord relationship is crucial, so keep this in mind when you plan to move out.
Getting Along with Your Roommates
If you have roommates, getting along with them is crucial to living in an apartment peacefully. You will be living and sharing the space with them all the time. When your roommate commits misdeeds, it is best if you move out when the lease expires. You do not want to live with someone who invades your privacy, damage your property, or refuse to work and pay the bills.
Even if your roommate does not do anything wrong, something about having one just bothers you. Maybe you need more privacy. Maybe you and your roommate have personality or lifestyle differences that lead to conflict. Either way, it is a legitimate reason to leave. However, you should notify them in advance if you even start thinking about moving out. It will give them plenty of time to search for a new roommate. Otherwise, you could be responsible for paying your portion of the rent until they find someone to replace you.
Sacrifice Certain Amenities
Your apartment offers free heat and hot water, you pay a reasonable rent, and it is located near Revere Beach. You receive notice stating the lease is about to expire. You’re thinking about moving to the Fenway/Kenmore area where there are nightclubs, Fenway Park, and the Museum of Fine Arts. However, you have to pay for hot water and heat. All apartments and rentals offer different amenities to their tenants. Because of that, some amenities that you enjoy at your current residence may not be available at a new apartment. Not renewing the lease can prompt you to sacrifice some amenities that you want.
Compare the list of amenities at your current rental to the ones at the prospective rental and see which ones are available and which ones are not. If the new apartment does not have certain amenities that your current place has, ask yourself if they are important to you. Moving out won’t be an issue if you give up on the amenities that are not important to you. At the end of the day, you are probably looking at a cost increase of anywhere from $200-$400 dollars per month depending on a number of lifestyle habits combined with the insulation or condition and size of the apartment.
Renewing the Lease
If you want to move out of your apartment, but you feel that you can’t for whatever reason, it is not the end of the world. Renewing the lease can give you the opportunity and plenty of time for you to search for new apartments and to examine its surrounding vicinity. You will have plenty of time to plan the move and save money. By the time the lease expires again, you will be ready to leave for sure.
If you decide once and for all that you do not want to renew the lease, just be prepare for the expenses that come with moving and potentially purchasing and make sure that the new apartment or home you will be moving into is worth it. To look for a new apartment or purchase a property, check out BostonPads.com where you will find listings of both great apartments as well as condos and homes that will suit your needs and preferences.