Transcript On Your Own - Rantoul Township High School

On Your Own
Applied Business Practices
Warm-Up
• 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
Roommates
• 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
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Family and friends
Classified section of the newspaper
Real estate agencies
Internet
Warm-Up
• 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:
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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
– Poor credit history
– Insufficient income
– Bad references
– Past behavior i.e.
destruction of property
– Tenants would exceed
valid occupancy policy
• Illegal
– Race
– Religion
– Ethnic background or
national origin
– Sex
– Age
– Tenant has children
(except in senior housing)
– Mental or physical
disability.
Apartments
• 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
pay
• The number of people who can live on the rental
property
• 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
court
– Limiting the landlord’s
liability for things
they’re normally
responsible for
Warm-Up
• What do you think are some of the
responsibilities of a landlord? What do you
think are some of the responsibilities of a
tenant?
Landlord’s Responsibilities
• Making repairs in a reasonable
amount of time
• Keeping premises safe and clean
• Entering premises only at agreedupon time unless there is an
emergency
• Paying interest on deposit money
• Collecting rent
• Maintaining exterior grounds of
building
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
$250
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
Repairs
• Put your request in
writing
• 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
conditions
– 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:
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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
nuisance
– Three-day notice to move out
required
– No option to stay to correct
problem
Illegal Landlord Actions
• Even if you’re behind in
rent
– 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
repairs
– Fails to comply with
health & safety
• Tenant responsible
for remainder of rent
under lease term
– Landlord has duty to
find a new tenant
Warm-Up
• Besides rent and security deposits, what
are some other costs you should be
prepared for when moving out on your
own?
Warm-Up
• 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
notice
– 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
tear)
• Leave forwarding address
for deposit return
How to Protect Yourself
• Ask parents to walk
through rental with
you
• Take pictures of
everything (include
date on photo)
• Go through rental
check list
Warm-Up
• 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
Budgeting
• 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
products
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
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Ownership
Value
Your own space
Fewer Restrictions
Tax deductible
http://www.jumpstart.org/madmoney/asproot/pgv_money_reality.
cfm
Buying a Home
• Down Payment
– Specific % of purchase price you pay up
front
• 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
“unexpected”
– 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
another)
– Appraisal fee – charge for examining and determining the value of the
property)
– 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
Warm-Up
• 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