School’s Out for Summer … But Tuition Is Back in the Fall

I can only imagine the enthusiasm of students and teachers who will finally able to be back in a classroom and learning in person as schools and campuses around the country start coming back to life this fall. As I walked around my neighborhood every morning earlier this spring, front lawns were dotted with signs pronouncing “Congratulations, graduate!” for kindergartners, fifth-graders, high school seniors, college grads and every grade in between as families celebrated these important milestones.

The experience of the pandemic has reminded us just how important and irreplaceable educational experiences are for our future generations. For those thinking about giving the gift of education to a young loved one, there’s never been a more meaningful time.

There are a few ways to make a gift that can be used for education, each with its own set of features you should evaluate thoroughly before deciding upon the right vehicle to use.

The Education-Specific Option

If you want to ensure your gift is used strictly for education, there are two common ways to do so. The first and most straightforward way is to directly pay for the student’s education by writing a check for their tuition payable to their educational institution. Paying for tuition in this way is an efficient way to give, as this type of support does not count toward your annual gift tax exclusion amount ($15,000 per person in 2021) or your lifetime exemption amount ($11.7 million per person) as long as the check is made payable directly to the education institution.

While writing a check is an easy way to pay for tuition due, many parents or family members start thinking about how to save for future college costs as soon as the future college student is born. One of the most popular methods to save for future educational expenses is the 529 savings plan. A 529 savings plan is a tax-advantaged account that can be used to pay for qualified education costs. Once a 529 savings plan is opened, anyone can contribute to it on behalf of a beneficiary.

While there is no federal income tax deduction for making a contribution to a 529 savings plan, some states do offer a state income tax deduction for contributions made by a resident to their state plan. The account, once invested, grows tax-deferred each year until the student goes to college. Withdrawals from the account are tax-free as long as funds are used to pay for qualified educational expenses. (The important word here is “qualified,” as some costs, such as application fees or transportation costs, do not fall into the qualified category.) Some examples of qualified education costs include:

  • Tuition and fees for a single college or university
  • College room and board, books and supplies, computers and internet access
  • Registered apprenticeship program expenses
  • Tuition and fees for K-12 schools up to $10,000 per year
  • Up to $10,000 in student loan debt repayment

Keep in mind, however, that if the funds are withdrawn for a reason other than the educational uses noted above, income taxes and a 10% penalty will apply to the growth in the account.

Since a 529 plan account is generally established for the benefit of another person, any money you contribute counts as a gift to that person, so your contribution is a great way to utilize your annual gift tax exclusion amount. You can give the full $15,000 each year to a single beneficiary, or $30,000 if you are married and your spouse also contributes. You could also take advantage of a special rule and do a lump sum contribution by accelerating up to five years of your annual gifts all at once — $75,000 if you are single or $150,000 if you are married. A lump sum investment of $150,000 to a 529 savings plan when a child is born would be worth more than $350,000 by the time they turn 18 if the account compounds at 5% each year.

Some families worry about overfunding a 529 account for their child or loved one. If your loved one doesn’t go to college or college ends up costing less than you originally anticipated, one of the great features of a 529 plan is that you can change the beneficiary on the plan to another family member of the original beneficiary. Parents can change the beneficiary to another child, a cousin or even themselves!

A 529 prepaid tuition plan is another way to pay for college, though not quite as common as the more traditional 529 savings plan described above. With a prepaid tuition plan, you prepay future costs at a specific college or university, locking in future tuition costs today regardless of how many years are left until actual enrollment. 

The More Flexible Option

There are other ways to financially support a loved one’s education without putting money directly toward tuition costs. Trusts and custodial accounts are a great way to build in flexibility.

By setting up a trust, the trustee can specify what they want the money to be used for, all of which would be clearly laid out in the terms of the trust. For example, you may specify that it be for education-related expenses, such as housing, meals, transportation, internships or textbooks. The trustee may also specify when the money can be accessed by using an age limit or creating terms for the money to be distributed over a specific period of time, for example. For those making the gifts, trusts offer greater customization and flexibility than a 529 savings plan offers. However, trusts do come with higher legal costs to set up and administer as well as less favorable tax treatment, as trusts do not provide tax-free growth or distributions like 529 savings plans do.

A custodial account offers a similar structure to trusts, though they’re easier and less costly to establish. Unlike trusts, however, once the beneficiary reaches the age of majority, the account becomes theirs. They will be able to take control of the account and use the remaining funds for whatever purpose they like – whether it is next semester’s tuition and books or the new car they have their eye on.

Similar to 529 plans, contributions to both trusts and custodial accounts for the benefit of another person count as a gift to that person, so you will need to file a gift tax return. If you are considering using a trust or custodial account, the beneficiary may be subject to Kiddie Tax rules, so take this into consideration when evaluating your options.

The gift of education, no matter how big or small, will make a lasting difference in a loved one’s life. Ultimately, however you decide to make this gift, know that there isn’t a wrong way to do it!

Senior Wealth Adviser, Boston Private

Kathleen Kenealy, CFP®, CPWA® is the Director of Financial Planning and a senior wealth adviser for Boston Private. She specializes in working with successful individuals and families to manage, protect and grow their assets. Kenealy provides guidance on investment, retirement, philanthropic, estate and tax-planning strategies.


4 Reasons Paying for College With a Credit Card Is a Terrible Idea

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Credit card offers and promotions are everywhere. All those rewards are tempting and can get you thinking of ways to get the most out of your credit card.

With the high cost of college tuition, you might be wondering if you can use a credit card to pay for school and get rewards. But before handing over your card, you should know there are significant risks involved.

4 Issues to Consider Before Using a Credit Card to Pay for College

It seems like a great idea: If you earn 1% cash back on all purchases and use your card to pay a $10,000 tuition bill, you’ll get $100 in rewards. However, the reality isn’t that simple.

Dr. Robert Johnson, president and CEO of the American College of Financial Services, believes there’s few, if any, advantages to using a credit card for your education.

“I think it’s dangerous for students to use credit cards for routine expenses,” he said.

That’s because credit cards are significantly different from other forms of debt, such as student loans. Relying on a credit card to pay for your tuition and fees can cause problems later on. Watch out for these four issues.

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1. Sky-High Interest Rates

Some student loans have an interest rate as low as 4.45%. In late 2017, credit cards had an average interest rate of 13.16%, according to the Federal Reserve. If you have poor credit or don’t have an established credit history, you could face interest rates as high as 25.00% for a credit card. That difference in interest rate is significant.

“Credit cards are riskier because the interest rates are substantially higher and because they’re so easy to use,” said Dr. Johnson. “One must make a deliberate and purposeful decision to take out a student loan. It’s so easy for someone to simply take out a credit card and incur high-interest-rate debt without thinking through the ramifications.”

Over time, your credit-card balance can balloon. You could end up paying far more than you originally borrowed.

“Credit-card debt is the highest-interest-rate debt and is very difficult to extinguish if the balances get large,” said Dr. Johnson.

If you think you can avoid paying high interest fees by paying off the debt quickly, make sure you have a concrete repayment plan. The average cardholder has a balance of over $4,000. With college costs added on top of that, you could end up paying thousands more. Once you get into credit-card debt, it can be tough digging yourself out.

2. Fees Might Negate the Rewards

You might be able to earn rewards for charging your tuition, but you could end up paying more than the reward is worth in fees.

Schools charge an average 2.62% processing fee, according to a 2016 survey. That means a $10,000 charge to pay for school would add $262 to your bill. That’s more than double what you’d earn in cash-back rewards and would make college even more expensive.

3. Fewer Repayment Options

Beyond high interest rates, credit cards have more limited repayment options compared to federal and private student loans.

With student loans, you typically have a grace period. You don’t have to make payments on your loans until six months after graduation. If you experience financial hardship and have federal student loans, you can postpone payments or even qualify for a reduced payment with an income-driven repayment plan. With a credit card, you don’t have those benefits.

If you use a credit card to pay for college, you’ll have to start making payments right away, even while you’re still in school. If you lose your job or face an unexpected emergency, you still have to keep up with your payments or risk wrecking your credit history. You can quickly end up over your head.

“Credit-card debt limits their flexibility once they graduate, as their earnings go toward trying to extinguish debt,” said Dr. Johnson.

4. Effect on Your Credit Score

Your credit history can have a significant impact on your life. A poor credit score can impact you in many ways, from applying for an apartment to job hunting.

Your FICO credit score is determined by a range of factors. One of the most important is your credit utilization. Accounting for 30% of your score, your credit utilization is how much of your available credit you use. The more you use, the more it hurts your credit report. For example, if you have a $10,000 limit, charging $2,000 will leave you with a better score than charging $9,000.

The problem with using a credit card to pay for college is that it raises your credit utilization. A single semester can cost thousands, eating up a huge chunk of your available credit. If you can’t afford to pay off the card right away and carry a balance, it can take years to get rid of it, lowering your credit score.

If you need to buy a car or want to purchase a home, a poor credit score can cause you to pay higher interest rates or not be approved at all.

Be Smart About Paying for School

If you’re going to school but don’t qualify for federal loans, or if you’ve exhausted all of the financial aid the government offers, there are safer options than using a credit card to pay for tuition.

Private student loans are more expensive than federal loans. But both have much lower rates than credit cards. Many loan servicers also offer important benefits, such as a grace period after graduation and alternative payment options. Student loans can be a much better tool for paying for school compared to your Visa.

If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly,’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get a free credit score updated every 14 days.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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6 Ways I Saved Money On College Costs

Check out this list of ways to save money on college costs. This is a great list!

Check out this list of ways to save money on college costs. This is a great list!How much does college cost? This is a question many wonder. There’s rarely a week that goes by where I don’t receive an email from a student or parents of a student who are looking for ways to cut college costs. That’s why today I want to talk about college costs and how you can create a college budget that works so that you can save money in college.

College is very expensive – there is no doubt about that.

However, I want you to know that it IS possible to get a valuable college degree on a budget!

The average public university is over $20,000 per year and the average private university totals over $45,000 once you account for tuition, room and board, fees, textbooks, living expenses and more.

Even with how expensive college can possibly be, there are many ways to cut college expenses and create a college budget so that you can control rising college costs.

Continue reading below to read about the many different ways I cut college costs. While I was not perfect and still racked up student loan debt, I did earn three college degrees on a reasonable budget.

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1. Take classes at a community college to cut college costs.

Whether you are in college already or you haven’t started yet, taking classes at a community college can be a great way to save money.

Earning credits at a community college usually costs just a small fraction of what it would cost at a 4-year college, so you may find yourself being able to save thousands of dollars each semester.

There is a myth out there that your degree is worth less if you go to a community college. That is NOT TRUE at all. When you finally earn your 4-year degree, your degree will only say where you graduated from and it won’t even mention the community college credits at all. So this myth makes no sense because your degree looks the exact same as everyone else’s’ who you went to college with. You might as well save money because it won’t make much of a difference.

I only took classes at a community college during one summer semester where I earned 12 credits, and I still regret not taking more. I probably could have saved around $20,000 by taking more classes at my local community college.

Also, you are most likely just taking general credits at the community college, so it’s not like you would be missing much by taking classes there instead of a college that has a better reputation for the major you are seeking.

If you do decide to go to a community college, always make sure that the 4-year college you plan on attending afterwards will transfer all of the credits. It’s an easy step to take so do not forget! You should do this before you sign up and pay for any classes as well as to make sure that ALL of the classes will transfer succesfully.

2. Take advantage of high school classes to lower your college budget.

Many high schools allow you to take college classes to earn both college and high school credits at the same time.

This is something I highly recommend you look into if you are still in high school, as it saves time and is one of the best ways to save money on college costs.

When I was in my senior year in high school, nearly all of my classes were dual enrollment courses where I was earning college and high school credit at the same time. I took AP classes and classes that earned me direct college credit from nearby private universities. I left high school with around 14-18 credit hours (I can’t remember the exact amount). This way I knocked out a whole semester of college. I could’ve taken more, but I decided to take early release from high school and worked 30-40 hours a week as well.

3. Take all the credits you can to stay within your college budget.

At many universities, you pay a flat fee. So whether you take 12 credit hours or 18 credit hours, you are paying nearly the exact same price.

For this reason, I always recommend that a student take as many classes as they can if they are going to a college that charges a flat fee tuition.

If you think you can still earn good grades and do whatever else you do on the side, definitely get full use of the college tuition you are paying for!

4. Apply for scholarships to lower your college costs.

Before you start your semester, you should always look into scholarships, grants, FAFSA, and more. You usually have to turn in any paperwork around spring time for the following semester, so I highly recommend doing this right now if you are going to college in the fall.

Another myth will be busted right now. Many believe that all scholarships are impossible to have or it means you have to win a contest. That is just a myth.

I received around $16,000 a year in scholarships to the private university I attended. That helped pay for a majority of my college tuition. The scholarships were easy for me to get as they were all just because I earned good grades in high school and scored well on tests. I received scholarships to all of the other colleges I applied for as well just for good grades, so I know they can be found as long as you do well in high school!

There are other ways to find scholarships as well. You can receive scholarships from private organizations, companies in your town, and more. Do a simple Google search and I am sure you will find many free websites that list out possible scholarships for you to apply to.

Tip: Many forget that you usually have to turn in a separate financial aid form directly to your college. Don’t forget to do this by the deadline each year!

5. Search for cheaper textbooks to lower your college budget.

Students usually spend anywhere from around $300 to $1,000 on textbooks each semester, depending on the amount of classes they are taking and their major.

For me, many of my classes required more than one book and each book was usually around $200 brand new. This means if I were to buy all of my college textbooks brand new, I probably would have had to spend over $1,000 each semester.

I saved a decent amount of money on college textbooks by renting them and finding them used. Renting them was nice because I just had to pay one fee and didn’t ever have to worry about what to do with the textbook after the class was done, as I only had to return them. There was no worrying about the book being worthless if a new edition came out, which was nice! Buying books used was nice occasionally as well just because sometimes I could make my money back.

I recommend Campus Book Rentals if you are looking for textbook rentals. Their rentals are affordable and they make getting the textbooks you need easy.

Read: How To Save Money On Textbooks + Campus Book Rentals Review

6. Skip the high price of living on campus to cut your college budget.

To save more money, I decided to live on my own. I didn’t have the option of living at home after high school and living on campus would have cost me a ton of money.

Instead, I found a very cheap rental house (the house was VERY small and probably could have been considered a tiny home) and was able to somewhat easily commute to work and college from it. I probably saved around $500 a month by living on my own instead of on campus, and I learned a lot by living on my own at a young age as well.

If you can live at home though and want to save money, I highly recommend it if it’s an option for you. You can save thousands of dollars a semester by doing this!

I understand that some are against this because it may impact your “college experience,” but I think most people would be fine not living on campus, especially if it’s not in the budget. You could probably save around $40,000 over the years on your degree by living at home.

How did you cut college costs and control your college budget? How much student loan debt did you have when you graduated?

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Investing in a College Town Rental Market: Ann Arbor, Michigan

College towns are attractive markets for investors in rental properties for several reasons. Students and faculty create large and dependable markets of tenants. Local economies dominated by academic institutions are remarkably stable compared to those based on manufacturing or agriculture. Larger universities create hundreds of non-academic jobs in research centers, medical facilities, and new companies spun off by technologies developed locally.

Ann Arbor, Michigan, home to the main campus of the University of Michigan, is an excellent example of a campus-based economy that is much larger than its facility and student body. One out of three local jobs are in educational service, and an additional one out of ten are in technical, professional and scientific services. At $39,235, Ann Arbor’s average per capita income and its median family income of $102,615 are 20% to 30% higher than national averages.

WalletHub ranked Ann Arbor, the nation’s fifth-best college town and the best small city college town in 2020 based on academic, social, and economic opportunities for students. It also ranked Ann Arbor, the nation’s “most educated city in 2020,” outranking San Jose, California, and Washington, D.C. It also placed first in educational attainment and quality of education and attainment gap.

Read: 5 Reasons Why You Should Still Buy an Investment Property

college university student leaving librarycollege university student leaving library

Affordability is Under Fire

Popularity can have a downside, and Ann Arbor is experiencing the price of success in rising housing costs and decreasing affordability, especially in Washtenaw County as a whole.

As of February 2020, the average monthly rent in Ann Arbor was $1,580 for an 882-square-foot apartment, a 3% increase over 2019, higher than the national median for a comparable apartment ($1,468) and considerably higher than nearby Detroit ($1,069) or East Lansing ($1,294), home of Michigan State University. Half of Ann Arbor tenants spend 30% or more of their household income on rent. HUD defines cost-burdened families as those “who pay more than 30% of their income for housing” and “may have difficulty affording necessities such as food, clothing, transportation, and medical care.”

“Ann Arbor – and its central driver, the University of Michigan – is a magnet for highly educated households with upward mobility and significant disposable income. With some exceptions, Ypsilanti (City and Township) and their challenge of being overloaded by a disproportionate number of at-risk households and homes with negative equity – is where the most affordable options exist,” stated a 2015 Washtenaw County housing study.

“Ann Arbor will become more costly, and less affordable, especially to non-student renters in the short run and eventually, to aspiring buyers as well. The driver for higher costs is a combination of high livability and quality of life, great public schools, resulting in sustained demand by households with discretionary income, and resulting expectations of stable and continually rising property values,” the study concluded.

Read: Investing in a College Town Rental Property: Charlottesville, VA

The Ann Arbor Rental Market is Vast and Profitable

In many ways, Ann Arbor is a great rental market. The massive student body drives demand. About 70% of the University of Michigan’s 46,000 students live off-campus and the current cap rate for Washtenaw County apartment buildings is a respectable 7.6%. (The capitalization rate is the ratio of rentals’ net operating income to property value. Low cap rates imply lower risk, and higher CAP rates indicate higher risk.)

Living off-campus is so popular; the university maintains web pages listing rentals and providing advice and information for off-campus renters. This summer initiated a “virtual housing fair” to help students find rentals for the 2020-2021 school year.

group of young college students hanging out at homegroup of young college students hanging out at home lists 1,235 properties in Ann Arbor, with a median home value of $355,600, about 17% above the national median of $304,100 in July. Of the total homes in Ann Arbor listed on, 60% are for sale, and 34% are rentals.

Read: What to Know Before You Rent to College Students

Though several new high-rise apartment buildings recently opened and more are under construction, single-family rentals still dominate the market. lists more than 200 single family homes for rent in Ann Arbor. Smaller rental households are a result of the above-average presence of single-family rentals relative to apartments. The average household size for Ann Arbor rentals is 2.2 people, compared to 2.3 for Michigan and 2.5 for the nation as a whole.

COVID-19 and Ann Arbor, Michigan

COVID-19 delayed the University of Michigan’s plans for the fall semester but did not cancel fall apartment rentals. The university’s plans include both in-person and remote classes, a new academic calendar, and the elimination of breaks and changes centered around preventing the spread of the coronavirus.

Despite the pandemic, Ann Arbor is still one of the best college town markets in the nation. As in most markets, acquisition is a challenge. Property prices in Ann Arbor are rising, and the smaller, less expensive homes that make ideal single-family rentals are few and far between.  Otherwise, conditions are good for single-family rental owners and will improve as the nation returns to health.

Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.


How To Sign a Lease on an Apartment You’ve Never Set Foot In

You finally found The One! After doing the virtual legwork to search for an apartment, you’re ready to take the plunge and sign on the dotted line. But how do you sign a lease on an apartment that you’ve yet to see in person?

“The virtual leasing process doesn’t need to be all that different than if you were able to tour it in person,” says Laurence Jankelow, co-founder and chief operating officer of Avail, an online rental management service.

“Once the virtual showing has been done through Zoom, FaceTime, or Google Hangouts, the rest can be done online as well,” he says.

Online applications, credit checks, and deposit payments can make the process of leasing an apartment easier for both renters and landlords or property managers. Even if shelter-in-place orders are keeping you from touring an apartment firsthand, here’s how signing a lease from home would work.

By email

Pre-pandemic, some landlords or property managers may have been slow to embrace technology, but the new normal has forced them to get up to speed. This means leases can be sent to you by email, signed by you, scanned or photographed, and emailed back. You also may have the option of mailing your signed lease.

Some landlords will ask tenants to sign a document stating that they understand the risk of renting an apartment sight unseen, to avoid liability in case the tenant is disappointed in the actual apartment. Experts recommend tenants read the lease carefully and not rush to sign until they are satisfied that all of their questions have been answered.

“Renters should be cautious of any hidden fees above and beyond rent. Some buildings have additional charges for amenities like gym, pool, and parking,” says Liz Goldman with William Raveis Real Estate in Connecticut.

Goldman advises tenants, if not using a real estate agent, to consult an attorney before signing if they don’t understand the terms of the lease. Be sure to keep a copy of all the paperwork that you and the landlord sign as they are official documents.

Rental property website

Many apartment complexes offer the option of signing the lease through the property’s website. But before signing the lease, experts recommend that tenants know the exact location of the apartment being rented and to ask to see it, rather than just a model.

“They are entering in a legally binding contract, so they need to make sure they are comfortable with everything outlined in the lease,” says Adam Goldfarb, chief operating officer at Manco Abbott Real Estate Management and president-elect for the California Apartment Association’s board of directors.

Once you decide to rent the apartment, you can visit the property’s website to begin the process to sign the lease.

For example, at one of Goldfarb’s properties, tenants would go through their general leasing procedures by logging on to the portal, filling out an electronic application, and uploading necessary documents that the on-site staff would review. Then the staff would process the application and schedule the move-in.

“At time of move-in, we would need to verify that our future resident is the person that applied, given the ID that was uploaded,” says Goldfarb.

Digital signature software

Under the Electronic Signatures in Global and National Commerce Act of 2000, digital signatures are legally binding, just like written signatures. Digital signatures allow tenants to sign leases no matter where they are located. Any updates on changes are automatically sent to both parties.

“Digital leases that are state-specific automatically update based on real-time changes to the laws, and can be signed digitally, doing away with the process of printing and faxing documents—or the need to sign a lease in person amid the pandemic,” says Jankelow.

He says the largest risk isn’t the online process of leasing, but rather fraudulent landlords who don’t really manage or own the property. He says renters need to be certain that they’re talking to the real landlord before they sign a lease or pay any money.

“When it comes time to pay the first month’s rent or deposit, never, ever wire money. Wires are nonreturnable. Instead, paying with ACH or credit card, or through a secure, online platform for landlords, is probably the best option,” says Jankelow.

Some common and secure online tools renters use to pay rent and deposits include Yardi, Buildium, AppFolio, and Avail.


6 Situations When Breaking Your Lease Makes Sense

While breaking a lease is generally a big no-no, sometimes there’s no way around it. Life happens, and certain circumstances might warrant getting out of your rental situation.

Breaking a lease can be complicated, and it can be costly,” says Dylan Lenz, CEO of Naborly, a modern-day property management software for landlords. “The lease agreement from your landlord and local regulations will have specific details around how to break your lease, what penalties you’ll be tied to, and which situations allow for it.”

Each state and city has its own set of regulations for terminating a lease, so do some research before moving forward. You should also read your rental agreement to see what it says about breaking your lease. Doing so will help you avoid a slew of issues, including a lawsuit by your landlord to recover outstanding rent, debt collectors, damaged credit, and problems finding new housing.

Is it really time to break your lease? Here are six situations where it may make sense to do so.

1. New job

Yes, relocating for a job is a fully legit reason to break a lease. But tenants should be well-prepared before they talk to their landlord.

Since you’re still legally on the hook for rent payments lasting the duration of your lease, broker Bill Kowalczuk of Warburg Realty in New York says to minimize the chance of losing too much money,  tenants should try to find a new tenant on their own. And they should do so before telling their landlord they need to break the lease.

“I just had this happen with a property I represent,” says Kowalczuk. “The existing tenant found someone new to move in, who would pay $150 less than what they were paying. So the tenant who was leaving made up the difference for the amount of time left on her lease. Everyone was happy.”

2. Financial hardship

A significant change in your financial situation is reason enough to break a lease. The hope is that your landlord will take your circumstances into account and won’t charge you a penalty for breaking the lease—so documenting evidence of your hardship is important.

“The pandemic has rocked our economy, and we’re seeing a surge of layoffs and furloughs,” says Lenz. “People are in difficult financial situations right now and are making big decisions because of it, like moving back home or opting for a small, cheaper apartment.”

If you’ve experienced financial difficulties from unexpected job loss, you can always try to negotiate a deferred rent payment plan with your landlord instead of breaking your lease.

3. Bad landlord or unit

Several states have constructive eviction laws that allow renters to move out without penalty when a landlord does not provide habitable housing.

One example: “A tenant is entitled to break a lease where a unit is unwarranted (illegal) and does not have a certificate of occupancy on file with the city,” says Joseph Tobener, a tenant rights lawyer at Tobener Ravenscroft in San Jose, CA.

Tobener says another justified reason to break a lease is the landlord hasn’t provided repairs and the broken amenities are substantially interfering with the tenancy.

“To break a lease for substantial interference, the issues have to be serious, like no heat, sewage overflows, constant late-night noise issues, or cockroaches and rodents,” says Tobener.

4. Buying a new house

You’ve dreamed of owning a house since forever, but you’re stuck in a lease. Still, the promise of homeownership may be too good to pass up (hello, low interest mortgage rates!) and you have to break your lease. So what penalties would you face?

If you are thinking of buying a home, keep the lines of communication open with your landlord. You may be able to work out a cash payment to buy your way out of a lease. Some leases have “home-buying” clauses, which allow tenants to jump ship early for a small fee.

5. Divorce

Divorce can get sticky, especially when it comes to working out all the details, including living arrangements.

If living together to ride out the lease isn’t an option, experts suggest working with a legal representative to draft and sign a lease transfer agreement that places all the tenant obligations, such as full payment of outstanding rent, to the spouse still residing in the unit.

6. Military assignment

You just moved into a sweet pad, but three weeks later you receive orders for a new military assignment. Fortunately, a federal law called the Servicemembers Civil Relief Act is on your side and allows active-duty members to break their lease for official military orders.

Active-duty members must provide their landlord with a written notice of their plans to vacate and a copy of their official military orders for a change of station for more than 90 days. They will typically have to continue to pay rent for the remainder of the month and the next month.

“The most important steps to take are to be aware of what’s in your lease agreement and spark an open line of communication with your landlord early to get the best result for both parties,” says Lenz.


Trying To Find a Renter? How To Show Your Apartment and Make a Great Impression

If you’re a landlord who owns an investment property (bravo, by the way!) and are looking for a new tenant, you need to get your rental space up to snuff—and you need to know your facts. Luckily for you, we’re here to help! Here’s the lowdown.

How much notice is required?

What are the rules for showing an apartment if someone is currently living there?

Typically, you must give your existing tenant at least 24 hours’ notice for an apartment showing.

Real estate agent Mihal Gartenberg, of Warburg Realty in New York City, says that most leases just state “reasonable” notice, but 24 hours is a good rule of thumb since “reasonable” can mean different things to different people. There also might be a city or county rental law that stipulates a certain amount of time, so be sure to check that as well as the current lease (if there is one) before scheduling any showings.

Kate Ziegler and Jack Romano, real estate agents with Arborview Realty in Boston, note that doesn’t mean last-minute showings shouldn’t be considered, though. If prospective renters request showings on short notice, you can always run that request by the current tenants to see if that fits into their schedule.

Check renters laws

Nearly every municipality has its own slate of rental regulations, and provides reference materials to renters when they move into a new place. Here’s something to keep in mind: Your renters don’t have to allow showings if they don’t want to.

“Tenants have the right to quiet enjoyment of their home and do not have to collaborate with the landlord unless it is in the contract,” Gartenberg says. “Even if it is, the tenant can prevent showings, so it’s best to maintain a good relationship with them.”

Also, remember to comply with all Fair Housing rules and regulations.

Ziegler and Romano recommend reading up on Fair Housing and local regulations if you’re planning to take on your own tenant search.

Even turning down a showing, let alone a rental application, based on race, religion, voucher status, or other protected classes can be a major liability for an owner or an agent.

Should the apartment be vacant or occupied for the showing?

This depends on whom you ask. Ziegler and Romano note that if an apartment is empty, it’s easier for potential tenants to imagine themselves in the space. But, Gartenberg says, an empty apartment can sometimes look smaller than it actually is.

“Just this weekend, I was showing an empty bedroom that has space for a king-size bed with nightstands,” Gartenberg says. “When one of the prospective tenants said the bedroom was small, I thought he was being sarcastic. It helps to show how and where furniture can fit inside a room.”

That being said, if someone lives there, you don’t have a choice in the matter. Luckily some tenants are neat and clean, and use the space well. But if they’re messy or have furnishings and decorations that overwhelm the space, it’s better to wait to show the space until they’ve moved out.

How to make an apartment look more appealing

There are a few tips to make an apartment look more appealing for showings. First and foremost, make sure it’s clean and uncluttered. That includes windowsills, baseboards, and bathrooms.

“A neat home and a clean home are not the same thing,” Gartenberg says, so make sure you’ve got both bases covered. You don’t want potential tenants to have to worry about hiring a cleaner the moment they move in.

The same goes for the exterior of the apartment or building. Clean up any trash, vacuum the entry hall, and make sure the lawn is manicured and the walkway is clear.

If you can show the apartment on a nice day, try to do that. If it’s winter and dreary outside all the time, make sure you take top-notch pictures for the listing. Open the blinds and turn off the lights, keep your reflection out of images, and capture multiple shots for each room.

“Remember that prospective tenants will first see the home on a screen,” Ziegler and Romano say. “First impressions and good images matter more than ever.”

Secure the space

If you have current tenants, make sure they’re aware of their belongings during showings. After all, you are going to have strangers poking around your home.

“Your tenants’ private things will be open to whoever comes into the home,” Gartenberg says. “Make sure they put away their valuables.”

Also, to give your current tenants peace of mind, tell them you’ll guide potential new tenants around the apartment room by room so you can keep an eye on them.


Rental Application Fees 101: The Lowdown for Apartment Hunters

While going through the process of renting a new apartment or house, you can expect to pay a few different fees. You’re probably prepared to pay a security deposit, but one fee that might come as a surprise to first-time renters is the application fee. Yes, landlords or property managers will charge you to determine your eligibility as a tenant.

“Rental application fees vary depending on location, but are most typically $35 to $75 per person,” says Sarnen Steinbarth, founder and CEO of TurboTenant.

While not all rental properties charge application fees, they are the norm in many large cities. Here are a few things you should know about application fees when you’re on the hunt for your next place.

What the rental application fee covers

If your heart is set on that two-bedroom apartment overlooking the beach, the next step to snagging that rental is to fill out an application form. With your completed application, your future property manager or landlord will run a credit and background check on you through a third-party service.

“Typically a rental application fee will cover the hard costs associated with performing a background, credit, and eviction check to ensure that a tenant is a good fit and meets the landlord’s requirements they have for a tenant, while also abiding by the Fair Housing Act,” says Steinbarth.

Steinbarth says the application fee may also cover “soft” costs for administrative tasks like calling past landlords to check references.

“Whether or not soft costs can be included in an application fee can vary from state to state,” he says.

Application fee ranges have limits

As we’ve stated above, rental application fees vary by state. Several states, such as California, limit by law the amount that can be charged.

“The law specifically states that the screening fee shall not be greater than the actual out-of-pocket costs of gathering information concerning the applicant plus the time spent, and lists an upper limit on the amount that can be collected,” says David Piotrowski, an attorney whose practice focuses on California evictions and interstate household goods transportation matters.

Steinbarth says renters should do a comparative analysis on application fees and ask the landlord what the fee will be used for.

Fees are charged to each person on the lease

Renters may also find, depending on the state, that some landlords or property managers require each person on the lease above the age of 18 to fill out a separate application and pay the fee.

“Typically, anybody who will be on the lease will need to go through the tenant screening process, regardless of their marital status, and therefore may be subject to the application fee,” says Steinbarth. “Because a husband and wife will have different credit and background histories, it is best practice to screen them separately. Many states have fair housing laws that govern this as well.”

Are application fees refundable?

Again, the rules are different in different areas, so before applying for an apartment, read the fine print regarding whether an application fee is refundable.

“There are many state and local regulations regarding fees, including if they are refundable or not. It’s best to communicate with the prospective landlord to understand if the fee is refundable,” says Steinbarth.

You can also do your own research on local rental laws.

Piotrowski says if the fees are more than what is allowed under law, or if the screening fee is used for nonpermitted purposes, “the tenant could request a refund or could take legal action through a small-claims action.”

He says landlords should provide a receipt for the fee paid with an itemized list of out-of-pocket expenses and time spent.

Red flags to avoid

Bear in mind that a landlord asking for a fee to tour a property could be shady business.

“Renters should be cautious of landlords desiring a fee in advance simply to view an apartment. This fee is not common in the industry, and renters should be cautious and use common sense to avoid rental scams if they are being asked for a viewing fee,” says Steinbarth.

Piotrowski says renters should be aware that, in most cases, a landlord or the landlord’s agent may not charge a screening fee if the landlord knows or should have known that no rental unit is available and no rental until will become available within a reasonable time.


7 Red Flags Renters Need to Know About Apartment Shopping During the COVID-19 Pandemic

It’s not a secret that the coronavirus pandemic has made renting a home or apartment stressful for both landlords and tenants.

About 12 million renters will owe an average of $5,850 in back rent and utilities by January, according to Moody’s Analytics, and rental rates in big coastal cities have fallen year over year as renters flee to the suburbs. But rents in fast-growing cities and spillover markets like Rochester, NY, and Tacoma, WA, are on the rise, according to’s September rent report.

But no matter where you’re renting—or how many times you’ve rented in the past—looking at and leasing a home safely during a pandemic is complicated. It requires forethought and consideration, taking into account your budget and additional safety measures so everyone involved in the process can stay safe.

With the pandemic still presenting a risk for apartment shoppers, here’s what renters should be asking about and what red flags should send you running.

1. Suspiciously low rent

Everyone wants a deal, especially in the face of economic challenges. But if you’re seeing a too-good-to-be-true deal, especially in historically high markets like New York City or San Francisco, be wary.

“These historic low prices aren’t going to last forever,” says Beatrice Genco, a real estate adviser with New York City’s Triplemint. “There are some properties giving away one, two, even three months free, but what does that mean for next year? Landlords are hurting and want to increase prices as soon as they can, so lock yourself into a longer lease or make sure you understand how much the landlord is going to increase the rent.”

2. No COVID-19 policies

Your potential new landlords should be able to share the ways in which they are keeping their community clean and healthy based on guidelines from the Centers for Disease Control and Prevention. This includes the measures they’re taking for disinfecting high-touch areas and enforcing social distancing. If this information is not presented to you up front, ask. Landlords should have a clearly outlined policy in place to safeguard tenants, and if they don’t, you may have to walk away from the deal.

It’s also important to find out what has been done to clean the individual unit you’re interested in since the last tenant vacated.

“Have the rugs been deep-cleaned?” asks Deidre Woollard, a real estate expert for the investing service Millionacres in Alexandria, VA. “Have all walls, floors, and countertops been wiped with bleach or antibacterial cleaning products? Have they replaced HVAC filters?”

3. Pricey shared amenities

Shared amenities like gyms, roof decks, and pools are normally a draw (and a justification for above-average rent rates) for larger apartment complexes. But during the pandemic-induced era of social distancing, many of these amenities have been closed or significantly limited.

Woollard reminds would-be renters to “find out what shared amenities are open and what precautions are being used to keep those spaces safe and clean. If a gym or pool is closed, will renters be compensated with a rebate?”

4. No social media presence

It’s almost 2021. Virtually every business and individual have a presence online, and that includes apartment complexes, brokers, and landlords. Part of a prospective renter’s due diligence should include checking out potential leasers on social media.

Greg Bond, president of Greater Orlando Home Buyers, warns that if you can’t find their social media accounts, that might mean they’re using a fake identity. These untraceable individuals are the same ones, he says, who “try to reel you in quick so you don’t notice the small details that can derail their shenanigans.”

5. Neglected maintenance

Whether they’re working with an agent or not, renters should consider conducting their own pre-leasing inspection of appliances and utilities in the apartment.

“As a renter, you need to make sure that everything in the property is in working condition before signing a lease,” says Max Cohen, CEO of Sarasota’s Florida Home Buyers. “A lot of landlords are dealing with cash flow shortages and are pushing off major repairs that can end up costing you. For example, an inefficient air conditioner can raise your electric bill significantly, and a slow-leaking toilet can cost you hundreds of dollars over the course or your lease.”

So before you sign on the dotted line, go ahead and turn on the air conditioner, turn on sinks, flush the toilet and let it fill up, open and close windows, run the shower and tub, inspect the microwave and other appliances, and switch on the oven.

6. Freshly painted wood

A newly painted trim may seem like a welcome sign of diligence on the landlord’s part, but it may actually be hiding a problem.

Rotting wood can require extra effort and cost to replace, so landlords often paint over it. This hides it temporarily, but by move-in day, the problem is often visible.

Paige Nejame, a Boston-based house painter who sees this a lot, suggests pressing or poking freshly painted wood to check for soft spots, especially near the seams and edges of rooms where water can gather.

7. The landlord won’t show you the apartment

Be on the lookout for property owners or agents who won’t let you tour the space, citing fears over COVID-19 as the reason. If your city or state is on lockdown, you may be forced to delay touring the apartment. However, there are ways to tour an apartment safely; some properties are offering self-guided tours while others give the option of a socially distanced tour with face masks and gloves.

“Many owners are trying to rent out units sight unseen, saying they want to limit in-person interactions,” says Ashley Romiti, a senior associate at Vantis Capital Advisors in Irvine, CA. “But photos and virtual tours can be misleading.”

If you’re adamant about touring the apartment before leasing, say so.

“If they refuse to accommodate your requests, you have probably dodged a bullet,” Romiti says.