If you’re a first-time renter, you must be very excited. After all, you’ll enjoy the freedom to live on your own and decorate your living space accordingly. However, a rental has its share of challenges, especially the cost.
Although renting an apartment can appear prohibitively costly, it’s possible to examine your monthly expenses and calculate a budget that won’t strain you excessively.
Remember, knowing the amount you can afford is a vital part of any rental search. If you’re looking for a new rental but aren’t sure about the amount you should spend, check these guidelines.
Create a Budget
First, you must evaluate your income by establishing the amount you earn yearly, with any bonuses, salary, or other means of revenue. If you aren’t sure of where to begin, you can calculate your budget easily using simple budget calculators.
You should anticipate spending approximately 60% of your budget above the three items for most families-food, transportation, and housing. Don’t go too far over this figure because you’ll also require money for entertainment, emergency funds, retirement plan, insurance, and other expenses.
Generally, your rent should be around 30% of your revenue. Although some people can stretch that digit a bit, for most individuals, 30% is a prudent range that will permit them to meet other entertainment and living expenses.
Furthermore, you’ll still be able to save for retirement or put money aside in case an emergency arises. To establish the amount that would originate from 30%, take your joint annual revenue and divide it by 40.
Meanwhile, you must consider various factors. For instance, you shouldn’t make the calculation with your income but with what you take home. In case of huge taxes or other monthly withholdings from your check, that implies that disposable revenue is less than what your supposed income might make you believe.
Secondly, this figure must cover all housing expenses, not merely rent. When proceeding with this figure, consider factors like insurance, utilities, and other house-related costs as part of it.
Consider the Market Where You Intend to Rent
It’s important you consider the market in which you desire to rent. For instance, there are numerous large American cities where rent is higher than other cities. Some of the cities with a challenging rental market include New York and San Francisco.
Renters in these cities should anticipate exceptionally high median rent costs at $3, 175 and$ 3, 285 respectively. Therefore, it’s imperative you conduct research about the place you intend to rent and examine the rentals that seem to be within your cost range.
In the event that you don’t find a place that fits your budget, you may need to expand your search parameters or examine your budget and allot more finances to your housing costs and fewer finances to other things you may have planned for originally.
As you search for a rental, consider the extra expenses you’ll probably incur when calculating. Bear in mind that utilities can add a huge amount to your monthly payment, even if the nominal rental fee is affordable.
When you think about a particular apartment’s cost, consider whether you’ll pay for renter’s insurance and whether other essential bills will be part of your costs.
Recognizing what you want in a rental is very easy: location, storage, space, etc. However, finding all these things within your budget can be slightly more difficult. If you’re new to renting and don’t know how to calculate the amount you can afford, this guideline will prove invaluable.
For more information on how to calculate the apartment you can afford, contact us at Apartment Agents or leave a comment.