Personal Finance 

Total Cost of Renting

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Victorian MansionOne of the main reasons why I bought my home was because I was tired of moving every year. I hated packing up my things, renting a truck (Ugh, U-Haul sucks), moving my things, then unpacking my things. It felt like such wasted effort. However, in my numerous moves, I did establish a great way to come up with a total cost of housing metric that helped me compare various housing options.

When I first started comparing apartments, I got the basics right. I compared the total rent, I accounted for utilities, and I accounted for any insurances I would need. I failed to recognize commute time and cost though, which played a significant factor in my first apartment (25 miles one way). That’s just one of the considerations I missed, there are several more

The total cost of renting should include the following factors (in the order of most likely to be overlooked):

  • Parking
  • Commute mileage and time
  • Automobile insurance
  • Renters insurance
  • Deposit
  • Utilities & Rent


Parking is one of those factors that you’re either keenly aware of or entirely oblivious to. I’ve been fortunate enough to have lived in apartment complexes where there was ample parking and the farthest I’d ever have to park was a few hundred feet from my building’s front door. In more populated cities, parking can be a huge pain. My friends in Baltimore tell me that if they get back into the city from work past 8 PM, there’s almost no chance they’ll find any street parking nearby. Having some place safe to park is crucial when evaluating places to live and some apartment complexes, especially in cities, charge you extra for a parking spot.

Commute Mileage & Time

Many people fail to seriously consider commute mileage and time when comparing rental properties because they don’t see it as being significant. With the recent fall in gas prices, it’s becoming less and less financially significant and so people are more easily overlooking it. I think that’s a mistake.

A long commute can have a draining effect on a person. Having to drive an hour home after a long ten hour day of work absolutely sucks. Having to drive an hour to work, so you can stay there for ten hours, then drive home… that’s brutal. However I’ve seen people do that drive just so they can save a hundred dollars on rent and that seems a bit foolish. If there are other reasons for that trade, then by all means do it, but to do it for just money seems foolish.

Automobile Insurance

Many of my friends love living in Baltimore City but many of them also complain about how their automobile insurance rates are so high. That’s because a car in Baltimore is more expensive to insure than in the suburbs. While I’m not an actuary, I believe it’s a combination of the higher population density, both in people and in cars, and the higher incidence of crime. That and people aren’t that great at parallel parking. 🙂

Renters Insurance

This is another, though less important, insurance number that is likely higher in the city than in the suburbs. Before you select a place, call your insurer and see how much renters insurance would be in your new place. It’s not likely to be significantly different, since renter’s insurance is often very cheap, but it could be big enough to change your decision.


Some places require one month’s rent as deposit, others require only a few hundred dollars. I personally prefer the apartments that require only a few hundred dollars because I don’t want to have to fight with the landlord to get my deposit back when I move out. I’ve heard of so many horror stories of people getting screwed on cleaning deposits because they forgot to vacuum or were blamed for regular wear and tear, I just prefer to avoid it entirely. My first apartment had a $300 deposit ($1200 monthly rent for my roommate and myself) and no cleaning requirement. We were allowed to leave the place as filthy we wanted to and we wouldn’t lose a penny of our deposit and it was perfect.

The laws on deposits varies from state to state. Some states require a landlord pay you interest on your deposit and others limit the deposit to one or two months rent. Check your state’s website for additional details, plenty of unscrupulous landlords, especially individuals, try to skirt by the law when it comes to deposits. Know the laws and your recourse. (If I were you and I learned a landlord was trying to break the law with regard to deposits, I’d rent somewhere else).

Utilities & Rent

I listed these two together and last because very few people overlook utilities and rent when comparing places to live. 🙂 I always prefer a place that offers utilities included over one where you have to pay the bill yourself because it gives you a bit of protection against any bad months. As for rent, I recommend you take a look at Rentometer to get a better idea of how your rent compares to those in your area.

Are there any other financial factors I’m missing?

(Photo: johncarleton)

{ 12 comments, please add your thoughts now! }

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12 Responses to “Total Cost of Renting”

  1. Jim says:

    There are some bad landlords out there but they aren’t all out to cheat tenants. There are many bad renters out there which are the reason why good landlords have leases with rules and things like deposits.

    Frankly if someone has a security deposit and lease that requires cleaning (as most do) then the tenant is responsible to clean before leaving. Thats the contract. If they don’t clean then they are legally responsible to pay the cleaning expense. If someone “forgets” to vacuum then they probably also forgot to clean the tub, clean the fridge, clean the oven, etc. You really can’t rent out a filthy apartment and cleaning all that stuff costs money. I would NEVER rent an apartment without the requirement that the tenant clean before leaving. Not requiring cleaning is an invitation for renters to trash a place. And trust me there are many renters who will take that invitation. Most renters can be trusted not to do so but theres always people who will abuse a situation.

  2. Miss M says:

    Parking is a huge consideration in LA, a lot of older apts do not have parking. My friends rent in one such building, they paid an extra $60 a month to park in a nearby office building. They could only park there from 7pm to 7am! When their cars were parked on the street at night they kept getting broken into. They paid a pretty high price for not having parking. Another consideration is storage room. My mom just went from a house to an apt (divorce) and was deciding between a smaller apt and renting a storage unit or just renting a larger apt. She chose the latter and has the 2nd bedroom stacked to the ceiling with boxes.

    @Commenter Jim – I’ve been ripped off by an unscrupulous landlord. Look up Arnell Management in Orange County, the state atty general has had to go after them several times. I had to file suit to get my deposit back, they are bad bad people. My last landlords weren’t as bad though they did lie about the cleaning thing, said my place was professionally cleaned before I moved in (it wasn’t) and that I had to pay to have it professionally cleaned. I scrubbed for a week till the place sparkled and they still charged me.

    • Brenda says:

      BEFORE moving anything in to the new place you should take photos. Take a tour with the landlord/manager documenting every flaw. Get close ups of any dings or tears in floors, carpets, walls, or appliances. Be systematic. This gives you proof when you leave.

  3. Eric N. says:

    For some reason you always provide the most timely posts for me Jim. haha. Anyhow, starting some time next year I’ll be renting an apartment for the first time and have felt a little unsure on what to look for. I asked others who live on apartments but they didn’t provide as good an answer as your post. Definitely bookmarking this for the future. Thanks!

  4. Andrew B says:

    In many places like the Bay Area, the commute costs typically are higher for home buyers if they choose to live in the more affordable burbs. One of the reasons to rent is to be closer to your job and reduce commute costs. You can live in a better neighborhood (higher priced real estate) renting, too. Depends on your town of course. Not sure how to quantify that benefit…Good topic, though. Most of the costs you highlight can apply as “hidden” to buyers as well.

  5. Donna Freedman says:

    Proximity to shopping is important. If the nearest supermarket is a long, long drive then you’ll probably buy stuff at neighborhood and/or convenience stores and spend more than you need to spend. Since such markets don’t always have everything you need to cook with, you may also spend more money than you’d expected on takeout.

  6. You mentioned that you didn’t like moving every year and I agree, it’s a complete pain. One of the factors you didn’t add was the actual cost of moving which is actually a significant amount of money. Here are some things to consider:

    * hiring a truck or a moving company
    * payment to disconnect any services you’d originally signed up for too long for
    * connection fees for any utilities and/or internet at the new house

    I have found that these things can add up to a fair amount in some cases.

  7. Scott says: is a great resource if you need to take up a legal battle with your landlord. When my wife moved out of her place we had to threaten legal action against the landlord to get her final $50 back. The property manager checked her out of the house and said all looked ok but then withheld $50 for repairs when they gave the deposit back. In Virginia, landlords have 30 days to give you a detailed list of needed repairs otherwise you get your full deposit back (she never got a list and didn’t even hear from the property manager until well after 30 days). And if they give you a list you still have 15 days to get the repairs done yourself before they can legally take out some of your deposit money. The only hairy part for us was her landlord was active duty military which according to the lawyer we talked to means the laws are more vague concerning timely deposit returns and such… so beware.

  8. Jim says:

    Miss M “My last landlords weren’t as bad though they did lie about the cleaning thing, said my place was professionally cleaned before I moved in (it wasn’t) and that I had to pay to have it professionally cleaned.”

    That sounds to me like you went into the rental agreement knowing the conditions. If you thought the landlords were liars then why did you still rent from them? Did you agree to have it professionally cleaned when you moved out as part of the lease? It sounds like they required it. If its in the lease then you agreed to it. If you don’t want to agree to something in the lease terms then rent somewhere else.

    Jim @ Freeby50

  9. Jim says:

    I totally agree that there are bad landlords out there. Renters should educate themselves on the law and read the lease carefully.

    But there are many good landlords. I rented 4 places in a 8 year period and 3 of the landlords were great. One landlord failed to fix a plumbing problem and thats the only real complaint I had.
    My father has been a landlord for decades. He has been a good landlord. Through his experiences I’ve seen dozens of horror stories of bad renters.

    People are people. Renters or landlords are just people and some of them are good people and some are not.


  10. poor boomer says:

    If you are in a position to buy a home, there are added considerations in the form of opportunity costs of NOT buying.

    For example, if you have $20K for a downpayment, the gross opportunity cost of NOT buying is the annual rate of appreciation of area homes, In this case, you also benefit by NOT buying, since you have $20K with which you can enjoy financial gains. Perhaps you keep $5K in a liquid (e.g. money market account), and invest the remaining $15K for higher yield. By subtracting your investment gains from your gross opportunity cost, you reach a net opportunity cost (which at times will be negative) of not buying a home. (Basically, if your investment rate of return exceeds the rate at which homes are appreciating, it may be better to rent than to own. Conditions change, and at other times it will be better to own than to rent.)

    In some cases – some areas, in some locations, at some times – your ‘net opportunity cost of not owning a home’ may be negative

  11. Greg says:

    If you have kids, changing schools and school districts is not good.

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