Is this a bad financial decision?
October 29, 2018 5:18 AM Subscribe
I am trying to juggle moving costs, and I haven't moved a lot in my life. I'm not sure what's normal or how much to spend to get a place you really like.
Here's my situation:
Got married in August, and we're living in a studio apartment. We like it, but we need more space. We found a gorgeous condo that we love. It's a nice, renovated place that's unique among most of the rentals I've seen. The owners are moving out and bought a house, and they'd like to rent to us.
Our current apartment is $1,150/mo. Our lease is up in March. To get the condo, we have to terminate the lease on our apartment. To do that, we have to give 60 days notice and then pay the termination fee of $2300 (we also have to pay the rent during the 60-day notice period of course).
The condo is $1575/mo. (2 bed (+ office)/2 bath). They have offered to not charge us for half of our first month's rent in order to mitigate terminating our current lease.
Does swallowing these costs sound like a reasonable thing to do? Or am I doing something irresponsible here?
Here's my situation:
Got married in August, and we're living in a studio apartment. We like it, but we need more space. We found a gorgeous condo that we love. It's a nice, renovated place that's unique among most of the rentals I've seen. The owners are moving out and bought a house, and they'd like to rent to us.
Our current apartment is $1,150/mo. Our lease is up in March. To get the condo, we have to terminate the lease on our apartment. To do that, we have to give 60 days notice and then pay the termination fee of $2300 (we also have to pay the rent during the 60-day notice period of course).
The condo is $1575/mo. (2 bed (+ office)/2 bath). They have offered to not charge us for half of our first month's rent in order to mitigate terminating our current lease.
Does swallowing these costs sound like a reasonable thing to do? Or am I doing something irresponsible here?
If you don't have the money to burn, the responsible thing to do is wait until March. Something else cool will come along eventually.
Buut.... that condo sounds like an incredible good deal.
An alternative is to find a subleaser on your apartment. Even if it's against your lease. I've subleased even when it wasn't allowed - and how is the apartment going to know?
You'll have to weigh the total cost of moving ($1500, plus overlapping rent periods) with how much is in your bank account, and decide how worth it it is.
Also, I would contact the condo owners and ask if they can hold off 60 days AND give that half off. The later you move, the more money you'll save!
posted by bbqturtle at 5:37 AM on October 29, 2018 [2 favorites]
Buut.... that condo sounds like an incredible good deal.
An alternative is to find a subleaser on your apartment. Even if it's against your lease. I've subleased even when it wasn't allowed - and how is the apartment going to know?
You'll have to weigh the total cost of moving ($1500, plus overlapping rent periods) with how much is in your bank account, and decide how worth it it is.
Also, I would contact the condo owners and ask if they can hold off 60 days AND give that half off. The later you move, the more money you'll save!
posted by bbqturtle at 5:37 AM on October 29, 2018 [2 favorites]
The rent for the new place is 1575 or $18900 per year. Add in the $4600 that getting out of your lease will cost you, and that's $23500 for the year, or 1958 per month. Would you pay $1,958 a month for a year for this two bed condo? Because answering the question is how I would decide this.
posted by DarlingBri at 5:44 AM on October 29, 2018 [28 favorites]
posted by DarlingBri at 5:44 AM on October 29, 2018 [28 favorites]
One of the most important lessons I have learned growing older is that everything can be negotiated, including but not limited to:
- deadlines on papers
- work start dates
- holidays
- start dates on rental contracts
- rents
- conditions of rent (some rental contracts I have seen have crazy clauses)
Looking at the overlapping rent, that is a lot of money to be paying or absorbing. Landlords are in the business of accounting for empty periods and less than 100% occupancy. If they aren't, then they got some serious financial issues (and should not be in the business). You should not be absorbing the costs, unless this was a red-hot rental market with every property going within seconds of viewing. And even then, you should consider.
My answer to this question (and I speak as a hard-nosed banker) is:
1. Make a pitch about why you are the best tenants ever (keep it clean, treat it like your own home, looking for a long-term let for years on end, etc). Make them want YOU as their tenants. It is in your favour that the owners used to live in the property. They are going to feel an attachment to their property and not let any rando in.
2. Negotiate, negotiate, negotiate. "They have offered to not charge us for half of our first month's rent in order to mitigate terminating our current lease." Not good enough!
Say that you love the property, but there are huge costs moving. You cannot afford to pay for an additional 1.5 months rent. Not many people can. You would like the start date to be March, with two weeks overlap at most.
3. (You secretly have some leeway in moving the start date, but you do not tell them this! Nor do you make this your opening offer!)
Also, in your favour is that March is generally not peak moving time. Occupancy is generally lowest Jan and Feb- no one looks to move then. You have advantage here.
posted by moiraine at 5:56 AM on October 29, 2018 [11 favorites]
- deadlines on papers
- work start dates
- holidays
- start dates on rental contracts
- rents
- conditions of rent (some rental contracts I have seen have crazy clauses)
Looking at the overlapping rent, that is a lot of money to be paying or absorbing. Landlords are in the business of accounting for empty periods and less than 100% occupancy. If they aren't, then they got some serious financial issues (and should not be in the business). You should not be absorbing the costs, unless this was a red-hot rental market with every property going within seconds of viewing. And even then, you should consider.
My answer to this question (and I speak as a hard-nosed banker) is:
1. Make a pitch about why you are the best tenants ever (keep it clean, treat it like your own home, looking for a long-term let for years on end, etc). Make them want YOU as their tenants. It is in your favour that the owners used to live in the property. They are going to feel an attachment to their property and not let any rando in.
2. Negotiate, negotiate, negotiate. "They have offered to not charge us for half of our first month's rent in order to mitigate terminating our current lease." Not good enough!
Say that you love the property, but there are huge costs moving. You cannot afford to pay for an additional 1.5 months rent. Not many people can. You would like the start date to be March, with two weeks overlap at most.
3. (You secretly have some leeway in moving the start date, but you do not tell them this! Nor do you make this your opening offer!)
Also, in your favour is that March is generally not peak moving time. Occupancy is generally lowest Jan and Feb- no one looks to move then. You have advantage here.
posted by moiraine at 5:56 AM on October 29, 2018 [11 favorites]
It definitely doesn't hurt to ask if you can start the lease on the new place 30, 45, or 60 days later, offer a deposit and first months rent payment now.
Do you know anyone who could take over your lease, or wants to move in and start a new lease? If yes, you might be able to negotiate not paying the lease-breaking fee, since you're saving the landlord the time, effort, and money it would cost to find a new tenant.
Personally, paying that much money to break a lease would not be worth it to me, unless you know from experience it is very hard to find a condo like the one you found for this price, and don't forget to factor in location, convenience, etc.). Basically, DarlingBri's way of thinking is correct. And of course, the $1958 number drops a little if you will stay for 2, 3 years (this is ignoring any annual rent increase).
posted by never.was.and.never.will.be. at 5:57 AM on October 29, 2018
Do you know anyone who could take over your lease, or wants to move in and start a new lease? If yes, you might be able to negotiate not paying the lease-breaking fee, since you're saving the landlord the time, effort, and money it would cost to find a new tenant.
Personally, paying that much money to break a lease would not be worth it to me, unless you know from experience it is very hard to find a condo like the one you found for this price, and don't forget to factor in location, convenience, etc.). Basically, DarlingBri's way of thinking is correct. And of course, the $1958 number drops a little if you will stay for 2, 3 years (this is ignoring any annual rent increase).
posted by never.was.and.never.will.be. at 5:57 AM on October 29, 2018
If I'm reading this correctly that your lease is up in March, but you have to pay a lease termination fee anyway (? I've never heard of that), it sounds like you're going to have to pay that termination fee when you move *regardless of where you move to* or if you wait another year to move or whatever, so that money is effectively gone whatever you do and isn't particularly relevant. It's effectively already spent. (Unless you can avoid this by subletting or transferring your lease to someone else? Then you could maybe shorten that 60 days too).
I agree that adding the extra 60 days overlapping rent to the total cost of renting the new place for a year, and seeing if it still feels like a good deal to you, is the way to go. Personally I would go for it every if it seems a little on the high side, because living somewhere I like contributes hugely to my quality of life, but that sort of thing is hard to quantify.
posted by stillnocturnal at 6:27 AM on October 29, 2018
I agree that adding the extra 60 days overlapping rent to the total cost of renting the new place for a year, and seeing if it still feels like a good deal to you, is the way to go. Personally I would go for it every if it seems a little on the high side, because living somewhere I like contributes hugely to my quality of life, but that sort of thing is hard to quantify.
posted by stillnocturnal at 6:27 AM on October 29, 2018
The number one question is can you afford to pay to break your lease right now. If you'd have to go into debt to do so, it is probably not worth it.
The second question is whether it is difficult to find rentals in your area. If it's unlikely that something equally good will come along in the next few months, that is also important.
To me, it seems like a potentially reasonable move. We have been in that situation a number of times, although usually when we absolutely had to relocate for jobs. A couple of times we've had to swallow the full fees. Other times, landlords have taken mercy on us and released us from the lease for less than the contract would require.
The rent for the new place is 1575 or $18900 per year. Add in the $4600 that getting out of your lease will cost you, and that's $23500 for the year, or 1958 per month. Would you pay $1,958 a month for a year for this two bed condo? Because answering the question is how I would decide this.
This math assumes that you'll be in the condo for only one year. If for some reason this *is* a one year only situation, it doesn't seem worth it. If you think you'll be there for 2-3 years or indefinitely the cost of getting out of your lease shouldn't be factored into the monthly cost in this way.
posted by Kriesa at 6:31 AM on October 29, 2018
The second question is whether it is difficult to find rentals in your area. If it's unlikely that something equally good will come along in the next few months, that is also important.
To me, it seems like a potentially reasonable move. We have been in that situation a number of times, although usually when we absolutely had to relocate for jobs. A couple of times we've had to swallow the full fees. Other times, landlords have taken mercy on us and released us from the lease for less than the contract would require.
The rent for the new place is 1575 or $18900 per year. Add in the $4600 that getting out of your lease will cost you, and that's $23500 for the year, or 1958 per month. Would you pay $1,958 a month for a year for this two bed condo? Because answering the question is how I would decide this.
This math assumes that you'll be in the condo for only one year. If for some reason this *is* a one year only situation, it doesn't seem worth it. If you think you'll be there for 2-3 years or indefinitely the cost of getting out of your lease shouldn't be factored into the monthly cost in this way.
posted by Kriesa at 6:31 AM on October 29, 2018
Response by poster: Thanks all. I realize my description was a little confusing.
They are willing to let us move in on 12/15, but we wouldn't pay rent in December. We'd begin paying rent in January.
If I give 60 days notice at my apartment complex now, we would stay here until 12/15 and pay the $2300 termination at the end of December.
So it works out like this:
November - Apartment Rent: $1150
December - Apartment Rent: $1150
Break Lease on December 30 - $2300
January - Condo Rent: $1575
Financially, this is affordable for us. We have a fair amount of money saved up, and $1575 is below 30% of our monthly income.
posted by uncannyslacks at 6:45 AM on October 29, 2018 [1 favorite]
They are willing to let us move in on 12/15, but we wouldn't pay rent in December. We'd begin paying rent in January.
If I give 60 days notice at my apartment complex now, we would stay here until 12/15 and pay the $2300 termination at the end of December.
So it works out like this:
November - Apartment Rent: $1150
December - Apartment Rent: $1150
Break Lease on December 30 - $2300
January - Condo Rent: $1575
Financially, this is affordable for us. We have a fair amount of money saved up, and $1575 is below 30% of our monthly income.
posted by uncannyslacks at 6:45 AM on October 29, 2018 [1 favorite]
Do you have $3450 to spend in December without jeapordising your finances for January? Remember to factor in moving costs (ie movers, truck rental).
And you didn't mention a deposit for the new condo. I'm assuming there's a deposit involved in that? So you have to factor in that cost for your January, possibly December budget.
Emotionally, how do the two of you feel about spending $2300 to get what you want, 3 months sooner? (also bearing in mind the risk that this condo or similar may or may not be available in March). This is entirely subjective, we can't answer that for you.
posted by like_neon at 6:59 AM on October 29, 2018
And you didn't mention a deposit for the new condo. I'm assuming there's a deposit involved in that? So you have to factor in that cost for your January, possibly December budget.
Emotionally, how do the two of you feel about spending $2300 to get what you want, 3 months sooner? (also bearing in mind the risk that this condo or similar may or may not be available in March). This is entirely subjective, we can't answer that for you.
posted by like_neon at 6:59 AM on October 29, 2018
Financially, this is affordable for us.
Then it's ok. You want to do it. You're an adult and you have enough money. The end.
posted by something something at 7:05 AM on October 29, 2018 [21 favorites]
Then it's ok. You want to do it. You're an adult and you have enough money. The end.
posted by something something at 7:05 AM on October 29, 2018 [21 favorites]
Are you able to find a subletter / replacement tenant for the last few months on your current lease? Everywhere I've lived it's been normal to do this as a way to move out early and not pay the penalty.
posted by DoubleLune at 7:13 AM on October 29, 2018 [1 favorite]
posted by DoubleLune at 7:13 AM on October 29, 2018 [1 favorite]
Financially, this is affordable for us.
Since this move sounds like it would be a huge increase in your quality of life, and you say you can afford it, I think you should do it.
posted by Dip Flash at 7:15 AM on October 29, 2018 [3 favorites]
Since this move sounds like it would be a huge increase in your quality of life, and you say you can afford it, I think you should do it.
posted by Dip Flash at 7:15 AM on October 29, 2018 [3 favorites]
Oh jeez, just do it. The only caution I would urge is making sure you have a 100% legal agreement with the new landlords and have an ongoing confidence the tenancy won't get wierd in a year or two when things break or they decide they're undercharging you for rent. First-time landlords can go either way: super wierd, or super cool.
Anyway, you're talking about a significant but affordable one-time expense to get into a nigh-perfect ongoing situation. Just do it.
posted by seanmpuckett at 7:16 AM on October 29, 2018 [1 favorite]
Anyway, you're talking about a significant but affordable one-time expense to get into a nigh-perfect ongoing situation. Just do it.
posted by seanmpuckett at 7:16 AM on October 29, 2018 [1 favorite]
Based on your update, I would do this. The fact that you are only paying $425 more per month with the new rent on a place that is so much bigger and that it sounds like you like a lot, plus the fact that you can afford it--life is short, go for it. Moving ends up being an expensive, stressful hassle at the best of times anyway!
posted by tiger tiger at 7:27 AM on October 29, 2018
posted by tiger tiger at 7:27 AM on October 29, 2018
You are paying essentially four months rent with 5 months left on the lease of your studio. If it were me and I could afford it, I would actually not terminate, but I would rent the condo and use the current studio as storage or as a home office or for whatever reason you might need. Do you have visitors coming to town? They can stay there. It seems like a huge cost to pay 4 months out of 5 remaining to be let out of a lease. Ask to move in January 1st and have 3 months overlapping.
If you can afford it and you love the condo and you think you will be there for a few years at least, amortizing the cost of the remaining lease over say 3 years is not so bad.
posted by AugustWest at 7:40 AM on October 29, 2018 [8 favorites]
If you can afford it and you love the condo and you think you will be there for a few years at least, amortizing the cost of the remaining lease over say 3 years is not so bad.
posted by AugustWest at 7:40 AM on October 29, 2018 [8 favorites]
Depending on the state, your landlord may not be able to withhold approval of a reasonable candidate for sublet (or assignment, which is a little trickier, but actually better for you). If you can find someone halfway reliable, that would save you a good chunk of money. Based on the prices, I'm guessing it's not New York, but you should look into that.
posted by praemunire at 8:02 AM on October 29, 2018
posted by praemunire at 8:02 AM on October 29, 2018
Lease termination fees depend on your state. Washington for example, requires the landlord only to mitigate the damages caused when the tenant broke their lease. Damages include any lost rent and the cost of advertising the unit for re-rental. If your landlord tries to charge you more than their actual damages, or continues to charge you rent in addition to taking your deposit or charging you a termination fee, you could argue that the landlord is attempting to penalize you. The law does not allow landlords to penalize tenants above and beyond the mitigation of damages for loss of rent due to a tenant’s breaking the lease.
In other words it's somewhere between dicey and illegal for a LL to charge you a termination fee while collecting rent from a new tenant.
I'd work hard to help the LL re-rent the place, and get you out of that "termination fee" if you/they can get a tenant to start in January.
posted by Dashy at 8:03 AM on October 29, 2018
In other words it's somewhere between dicey and illegal for a LL to charge you a termination fee while collecting rent from a new tenant.
I'd work hard to help the LL re-rent the place, and get you out of that "termination fee" if you/they can get a tenant to start in January.
posted by Dashy at 8:03 AM on October 29, 2018
Never underestimate the value of a leisurely move-out. That should figure into your calculations as well. If you took a different place at lease-end, you might be in the position of moving out one place and into another entirely on the very last/first day of the month. Moving vans/trucks are sometimes not available, or set at a premium.
A longer move gives you time, and you’ll have time to clean the old place so you can maximize your deposit return.
posted by mochapickle at 8:39 AM on October 29, 2018 [1 favorite]
A longer move gives you time, and you’ll have time to clean the old place so you can maximize your deposit return.
posted by mochapickle at 8:39 AM on October 29, 2018 [1 favorite]
This is fine. Moving costs money. You're going to have to pay for physically moving your stuff from place to place somehow, you may have to pay new service deposits, you always need to buy new stuff when moving into a bigger place, etc, etc. It sounds reasonably thought out and paying a $2300 lease-break fee isn't great, but it's fine if you have the cash.
posted by GuyZero at 9:30 AM on October 29, 2018
posted by GuyZero at 9:30 AM on October 29, 2018
Oh jeez, just do it. The only caution I would urge is making sure you have a 100% legal agreement with the new landlords and have an ongoing confidence the tenancy won't get wierd in a year or two when things break or they decide they're undercharging you for rent. First-time landlords can go either way: super wierd, or super cool.
Just to add a little to this - make sure you/they are clear on what happens when something goes wrong at 2am. Are they going through a management company and do you call them? Which one and what are their reviews? If not what happens when you call the new landlords who have never managed a property before? How far away do they live and how long will it take for them to arrange for repairs?
posted by bowmaniac at 10:44 AM on October 29, 2018 [1 favorite]
Just to add a little to this - make sure you/they are clear on what happens when something goes wrong at 2am. Are they going through a management company and do you call them? Which one and what are their reviews? If not what happens when you call the new landlords who have never managed a property before? How far away do they live and how long will it take for them to arrange for repairs?
posted by bowmaniac at 10:44 AM on October 29, 2018 [1 favorite]
Negotiate the overlap to try to make it shorter.
Having some time where you have overlap is awesome. Like 2 weeks or so is perfect. It lets you get into the new place, and clean, paint or otherwise prepare the new space without your stuff there. You'll probably be buying new furniture, and maybe building stuff from Ikea or wherever. Much easier with less stuff there.
If you're only staying there for a year, that extra cost may not be worth it, but if the new place is somewhere you'll be staying long term, then go for it.
posted by thenormshow at 2:19 PM on October 29, 2018
Having some time where you have overlap is awesome. Like 2 weeks or so is perfect. It lets you get into the new place, and clean, paint or otherwise prepare the new space without your stuff there. You'll probably be buying new furniture, and maybe building stuff from Ikea or wherever. Much easier with less stuff there.
If you're only staying there for a year, that extra cost may not be worth it, but if the new place is somewhere you'll be staying long term, then go for it.
posted by thenormshow at 2:19 PM on October 29, 2018
Seconding AugustWest's response. Their response correctly noted that the lease breakage fee is almost equivalent to just paying through the end of the lease normally. In such a situation, why gift those couple months of usage of your current apartment back to your landlord? You could use it for personal uses, as they noted, or you could sublet to try to recover some of the cost of the overlap. This can be a bit risky depending on how strong tenancy laws are in your area, but it you can find somebody whom you trust who's looking for a couple month studio sublet, this could be the best financial option.
posted by Expecto Cilantro at 3:35 PM on October 29, 2018 [3 favorites]
posted by Expecto Cilantro at 3:35 PM on October 29, 2018 [3 favorites]
It's exciting that you have found a unique apartment. The first thing I'll tell you is that while it's easy to argue there's always another cool place out there...honestly there may not be anything like the place you've found. That's one reason why taking the place might be the right decision. As far as paying the money for early termination of your current lease...I would definitely encourage you to talk with your current landlord. Perhaps a deal can be made along the lines of if they find a tenant quickly you won't need to pay the fee or not as much? In certain cities right now it's a land lord's market. That penalty money is designed to make sure they don't get screwed over. But in reality they may find a tenant without any loss of income. It can't hurt to talk with them. As far as striking up a deal with your new landlord...I honestly feel like they're already giving you a decent discount by taking half off for the first month. You can always try to negotiate for a slightly lower rent payment with them but I feel like the person you should be talking to is your current landlord. People break leases all the time and often find ways around the penalty fee. And that fee you are being saddled with seems excessively high especially considering that the apartment itself isn't all that pricey. At the end of the day if you truly love the new place and can stomach the additional costs, I say go for it. If it's gonna cause financial woes then wait till the end of your lease. And some of the other ideas on here about using your current space to rent out or for storage is certainly a decent option if nothing can be done about the early lease termination fee. Hope it all works out!
posted by ljs30 at 3:55 PM on October 29, 2018
posted by ljs30 at 3:55 PM on October 29, 2018
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I have been told that the goal is for housing to cost 25-30% of your take-home (in this case, the combined takehome of you + your partner). I've also been told that it's antiquated. I've also read "50% on essentials like rent, food, paying off debt, etc, 30% on nice-to-have, 20% on savings," which feels closer to how I live but probably is increasingly unrealistic given that rent costs a lot.
I will say, as someone who has cohabitated twice: you should go for extra space if you can afford it. Being crammed in with someone in a tiny place with no privacy can contribute to stress and unpleasantness!
posted by Alterscape at 5:34 AM on October 29, 2018 [3 favorites]