When looking for a new place to live, the many considerations you’ll face range from amenities and location to square footage and move-in fees. But, as excited as you feel to jump right in and start calculating your commute or finding your new local dive, figuring out how much you should spend on rent is a critical first step. Too often, renters find themselves locked into a lease only to realize too late that their budget runs a little tighter than they wanted.
Some surprising factors can influence not only how much rent you can afford, but also the final price tag of your apartment. For instance, a unit that would regularly come in over your budget might become affordable if you factor in the “2 months free” deal you could get.
Looking for your dream apartment? Reach out to AptAmigo. You’ll get 1-on-1 help from a local expert who can find you the perfect place within your budget.
Related: Where to Buy Apartment Home Decor Online
How Much Should You Spend on Rent?
The traditional rule of thumb states that your rent should equal one-third of your total income. Although this ratio generally serves as a useful suggestion, some apartment complexes actually require your monthly take-home pay to be at least 3X the cost of rent. So, if you sign a lease on a $1,400 unit, you might be required to submit pay stubs that show a monthly income of over $4,200.
In some cases, landlords or leasing staff do not require proof of income. If you’re self-employed, earn income through investments, or otherwise don’t receive “provable” paystubs, this can work out better for you. However, the one-third rule still holds as an excellent guideline for calculating how much you should pay. If you bring home (after taxes) $3,600 per month, then spending $1,200 on rent should feel comfortable and should not infringe on your “fun money.”
Figure Out What You Can Afford
The one-third rule offers a great place to start, but does it actually mean you can afford that much rent? Being alive is expensive, and taking the time to add up your other monthly costs will help you avoid unnecessary stress. Do you have a car payment? Or a phone bill for the latest iPhone? How much do you spend on groceries and dining out? Don’t forget about seemingly insignificant charges like Netflix, BarkBox, and the like. They add up quickly.
Don’t Forget About Miscellaneous Charges
You’ll also need to consider miscellaneous charges that come with your apartment. The standard water, gas, electricity, and internet probably won’t surprise you. But, $20 for valet trash, $200 for parking, $5 for pest control, and $20 for sewage will all add to your monthly rent payment.
Excluding parking, prepare to pay at least an extra $50-$150 per month in various apartment-related expenses.
Parking fees introduce a whole different consideration. In some neighborhoods and cities, you don’t need to worry about parking. If street parking is ample, or if your rent includes a parking spot, GREAT! However, parking spots are a hot commodity in many densely-populated areas. If you live in the heart of downtown in Denver or Chicago, one parking spot can easily cost over $200 per month. With parking added to the previously mentioned apartment-related expenses, your actual rent payment can quickly amount to $300 higher than what you originally expected.
It’s a good idea to factor in 10% of your total rent for these miscellaneous charges. Based on our previous example: if you bring home $3,600 per month after taxes, one-third of your income leaves $1,200 for rent, and then 10% of rent means roughly $120 in miscellaneous charges. If you get lucky and your miscellaneous charges add up to less than your expected budget, then at least you end up with a financial cushion (or a new date night fund).
How to Afford a More Expensive Apartment?
If you do the math and realize that your favorite neighborhood or luxury apartment would push you over your budget, don’t give up just yet. You might find some sneaky deals that bring the total cost of rent back into your price range. Here are some insider tricks that our own team members use to get great deals for their clients, as well as their own apartments.
Sign Your Lease in the Winter
Most people don’t know how drastic seasonal rent fluctuations can be. Generally speaking, no one wants to move in the height of winter. The holidays grow hectic, heavy snow makes moving furniture more difficult, and the school year is well underway. For these reasons, apartment complexes sometimes struggle to fill vacant units in the winter months. If you don’t mind the inconvenience, signing a lease in the winter could mean that you end up paying $300-$700 a month less than your neighbor for the exact same unit. You could save a whopping $8,400 a year just by signing a lease in December.
Find a Roommate: More Bedrooms = Less Per Person
It might seem obvious, but living with roommates is another easy way to bring down a high price tag. One-bedroom units typically receive the highest demand, and the price tag reflects that economic reality. For example, in Chicago’s South Loop neighborhood, one-bedroom units average $2,000, while two-bedroom units average $3,500. Based on these numbers, a single person living in a one-bedroom unit will pay the full price of $2,000, but two single people living in a two-bedroom unit will each pay about $1,750. That’s a big difference.
Find “Concessions”
One final, sneaky way to bring an expensive apartment back down into your price range is to monitor rent specials (also called “concessions”). Whether you get a lease-up at a new building or a seasonal special, apartment buildings offer concessions to entice renters, and they can work to your advantage. Oftentimes, a building will offer one, two, or even three months of free rent. Occasionally, they might include free parking, $0 move-in fees, or a Visa gift card upwards of $1,000. When you factor these concessions into your entire 12-month lease, you can save hundreds each month.
Related: Apartment Touring Checklist
Example: Our team recently saw a Chicago building offer 2 months free, plus a $1,500 bonus on a one-bed that they listed for $1,690. The concessions applied to the entire 12-month lease, reduced the monthly rent to $1,283.
Next Steps: Find Your Dream Apartment
Now that you know more about how much rent you can afford, how much you should spend on rent, and how to get a great deal, it’s time to find your dream apartment. Reach out to AptAmigo today, and we’ll not only help you find a great deal, but also give you VIP-level service that will make your search stress-free. With our local insight, apartment expertise, and access to the best deals on the market, apartment hunting has never been easier. All you have to do is send over your preferences, and we’ll do the rest! The best part? It’s completely free.
* The original version of this article was first published on October 28, 2020.
Rebecca is a freelance writer over a decade of journalism experience. She graduated with a BA in Communications and a minor in journalism. She currently bartends in downtown Chicago and spends her free time exploring the city and making connections.
