Is Paying Rent Ahead of Time a Good Idea?
Depending on where you live, rent could be a big percentage of your income. Paying rent every month quickly becomes a heavy burden on your budget if you’re not prepared. Because of this, many people choose to pay their rent ahead of time.
However, before you hand over your rent in advance, make sure you know exactly what you’re getting into. Sometimes paying rent in advance has a lot of benefits, but it might not be the best choice depending on your situation.
According to Smart Asset, the average rent in the U.S. for a two-bedroom apartment is $1,207. That’s a lot of money for most people, and it can be overwhelming to your budget to pay so much upfront. Here’s a guide to whether you should pay rent ahead of time.
When to Pay Rent in Advance
When exactly should you consider paying rent in advance? In general, there are only two circumstances when it makes sense to pay in advance. First, if you live in a competitive area and you need to secure a unit, paying ahead is a good way to make sure you get the unit you want. Offering a month or two of rent upfront might help your potential landlord take you seriously as a candidate.
However, this could also be a rental scam. You need to be vigilant to avoid paying into a fraud. For instance, many “landlords” pretend to own the property and take a deposit or upfront rent to “secure” the unit. Meanwhile, they’re really just running away with your cash.
Always research the property and the landlord to make sure you know exactly whom you’re dealing with. If in doubt, a real estate agent can help you navigate this process professionally and safely. Finally, verify that your landlord isn’t foreclosing on the property when they ask for rent upfront. As long as you do your due diligence, paying upfront is a smart way to gain an edge on the local competition.
Finally, the second reason it might be smart to pay rent in advance is to get a discount. Often, landlords offer incentives to pay rent early. This is a win/win since they’re guaranteed their rental income, and you land a discount. Sometimes you’ll get a percentage off rent or a discount, and this might be worth it to you.
When to Avoid Paying in Advance
Ultimately, paying in advance does come with risks. An accident or emergency could happen, causing you to move out on short notice. The landlord might decide to sell the property if you’re on a month-to-month lease. A lot of things could happen that are out of your control. When you pay in advance, you risk not being able to get that money back from a problem landlord.
Paying rent so far in advance might also put you in a harmful financial situation. It’s always smart to have enough money saved for emergencies, and if you have to dip into this fund just to secure several months of rent, it might not be worth that risk.
Some landlords simply do not accept prepaid rent since it limits their own situation. First, they’ll need to pay interest on this rent in some states, and this is a tax liability. In addition, they’re less able to have control over their property by raising the rent or selling the apartment in the near future. For these reasons, it’s unlikely to see many landlords accepting long-term rent payments in advance.
Pay Rent Safely and Confidently
Ultimately, it’s up to you whether it’s a good move to pay your rent upfront. If you’re trying to secure a unit in a competitive area or if you’re eligible for a discount, it might be a good idea. However, beware of common rental scams to make sure you’re safe with your money.
Paying rent upfront puts you in a situation where you might not see that money again. You want to do your research to ensure your landlord is trustworthy and reputable. As long as you’re careful, paying rent in advance could be a good way to gain stability while renting.