9

I'm renting a room at $800 per month.

I've lived here 2 months and I have a contract of 12 months. So, I have 10 more months before the contract ends.

I have deposited $1300 as a security deposit.

Based on the contract, if I wanted to move out before the contract ends (this is allowed), I should either: 1. Find someone to replace me and continue the contract 2. Move out without taking back the deposit

I found a room at $500 per month which is $300 cheaper.

Finding a replacement is difficult and time-consuming.

So, I'm thinking to just move out without taking back the deposit so that I can save $300 per month for the upcoming months.

Is this action financially worth it for me? I'm thinking that, if I continue to live longer or if I'm taking too long time to find a replacement, I will lose more money amounted at $300 a month.

Of course there are some drawbacks like location and etc. However, after a thorough calculation, those drawbacks can be tolerated due to financial situation.

  • 11
    10 months: $3k savings or $1.7k if we take the lost deposit into account. Break-even is 1300/300, or about 4.3 months. These are the straightforward calculations. Are you looking for something more complex? (If so, please add it to your question using the edit link.) – Lawrence Jun 12 at 15:43
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    "Finding a replacement is difficult and time-consuming." If it takes you an hour a day for two weeks, that's nearly $100/hr. – Acccumulation Jun 12 at 16:23
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    What country/state is the apartment in? Have you reviewed the contact sections discussing damages related to breaking the lease? – mhoran_psprep Jun 12 at 16:27
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    If your contract indeed says that you can forfeit your deposit in lieu of paying any more rent after moving out the calculation is straight-forward (and says that you should move out). However, as some answers below say, this would be rather atypical, and I would make very sure that this is indeed what the contract says (otherwise you may be on the hook for 10 months of rent, or 8000$ - getting your deposit back would suddenly become the least of your problems). – xLeitix Jun 13 at 8:07
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    Put an ad on craigslist... easy. – SnakeDoc Jun 13 at 16:30
36

In the United States the security deposit is to cover damages you make to the apartment or common areas. It is not to allow you to skip out of the contract.

Frequently you are responsible for finding a person to take over the lease, but they still must be approved by the owner or their representative. If you do terminate the lease early you are generally expected to still pay the rent, though the landlord has an obligation to try and find a new tenant. If they are successful you damages due to breaking the lease will be reduced.

That $1300 security deposit will be treated separately depending on the condition of the unit. State laws specify the timelines and requirements for the security deposit.

  • 13
    It all depends on what the lease says. My lease, for example, says that I can terminate early with only 60 days notice, and paying an extra month's rent. But since I'd get the security deposit back, that extra month's rent has the same effect as forfeiting the security deposit. – RonJohn Jun 12 at 17:59
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    But if your landlord is ever contacted as part of renting a new place, they might not have nice things to say if you abandoned the unit and had them find a new tenant. – Azor Ahai Jun 12 at 18:56
  • It depends on the contract. Some can terminate with 1-2 month(s) notice. Others need to find someone to replace or move out without getting the deposit back. That's the security is for (in the cases) to cover the loss when there is no tenant after a sudden termination. – Aqee Jun 13 at 3:06
  • The part that most people overlook is that the detail about the landlord having a legal obligation to try and rent out the place even if you left with short or no notice. The only financial losses are if they are unable to find someone to fill the place, in which case you pay every month. However, they cannot neglect to try renting out the place at the same pace as any of their other rentals. – Xrylite Jun 13 at 19:15
  • @AzorAhai I wouldn't worry about that too much. They're in business, they should understand that being able to save $300/mo is a deal that's hard to turn down. The tenant is under no obligation to the landlord other than the terms in the lease, and it already has penalties for early termination. – Barmar Jun 13 at 19:38
18

Since $1300/$300 = 4.333, it'll take you a bit over four months to recoup the lost $1,300 deposit. So... all else being equal and you plan on living in the $500/month apartment for five months, it makes mathematical sense to move if you also have enough cash for the deposit on the $500 apartment.

HOWEVER "all else" is rarely equal! Why is the $500 apartment so much cheaper than the $800 apartment?

  1. Crime?
  2. Poor maintenance?
  3. You must supply your own appliances?
  4. Farther from work?
  5. Farther from family?
  6. Farther from other things you enjoy?
  7. Etc, etc, etc.

We can't answer those questions for you. Thus, it might behoove you to stay in the $800/month apartment. Or, it might behoove you to move.

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    The assumption that the cost of breaking the lease equals the security deposit is likely incorrect. The tenant is typically liable for remaining rent until the landlord finds a new tenant. – nanoman Jun 12 at 17:20
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    @nanoman typically is the key word. The EARLY TERMINATION paragraph in my lease agreement says to give the landlord 60 days notice + one month's rent. (Since I'd get the deposit back, it effectively means that I'd forfeit the deposit.) – RonJohn Jun 12 at 17:29
  • Well, the 60 days notice is an additional cost because it delays your ability to benefit from a cheaper rent elsewhere. – nanoman Jun 12 at 17:43
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    @nanoman you "cleverly" ignored the fact that it shows how not all leases make you pay rent until a new tenant is found. And that's my lease, in my circumstances. – RonJohn Jun 12 at 17:47
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    @nanoman I never said that my lease was merely forfeiting the SD. It was a example of how not all leases require paying rent until the landlord finds a new tenant. – RonJohn Jun 12 at 18:33
5

As others already mentioned, 1300 is quite a lot of money to just walk away from, especially for someone who would consider moving to an appartment that costs 'only' 500.

So, consider these scenarios for the next 12 months:

Find a new tenant now, then move

Total cost: 500*12 = 6000

Find a new tenant in coming month, then move

Total cost: 800 + 500*11 = 6300

Move, find a new tenant after 1 month (if agreement is flexible)

Total cost: 800+500*12 = 6800

Move, don't find a new tenant

Total cost: 1300+500*12 = 7300

Do nothing

Total cost: 800*12 = 9600


These are the numbers, here is some personal advice:

If it is somehow possible, try to get the new tenent in and move. Even if this means you need to wait 1 month with getting a new appartment it is still a rather attractive scenario.

If the 500 is WAY below the market (be wary of things that are too good to be true), then jump on it, and try to come to an agreement with your landlord that you get some deposit back if you bring in a new tenant.

Of course you can still consider the final two scenarios as well, but financially they are less attractive. Moving without a new tenant is still much cheaper than staying in your current place of course BUT don't underestimate the cost of moving.

If you plan to stay in your new place for only a short time and need to refurnish, any cost savings might evaporate instantly!

2

From financial point of view, you will be worse-off short-term but better off in a few months time, as you can see from some other answers.

But I think you fail to take into account that the time is ticking, and the room may not be available. Furthermore, it might come with its own issues which your current accommodation doesn't have. Should those issues show up, you won't have the money after just spending on your new deposit and the new rental. There is not much of a financial risk only if things work out, which they might not.

I suggest you at least give a go to finding a replacement tenant for a month or two, without going into the other property. If there is a room like that now, chances are that there is a room like this in a month's time as well. That way you secure yourself by not having to sacrifice your security deposit.

0

I think you haven't really thought this through. I don't know wher eyou live, but there are two possible scenarios: Too many flats or too many renters.

If there are too few flats available, as in many larger cities, finding a replacement should be quite easy. By the sounds of things it was hard to find the 500$ room, so I guess this is the case in your city. So go ahead and try to find a replacement. It should cost more than a few bucks to place an add and no more than an hour to make it. There are free and effective options in social media too.

If there are far too many flats to choose from, so you're unlikely to find a replacement, you may well be able to renegotiate a lower rent with your landlord, as your gain from swapping would be his loss.

0

If you decide to move, and it's so hard to find a replacement, you should consider paying someone to take over your lease. After all, you're saving $300 per month.

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