How Much Should I Spend On Rent?
There are many things to think about when you’re looking for a new place to live, from amenities and location to square footage and move-in fees. As excited as you are 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. There is nothing worse than locking yourself into a lease and later realizing that your budget is a little tighter than you wanted it to be.
Some surprising factors can influence not only how much rent you can afford but also the final price tag of your apartment. A unit that would regularly be over your budget might be affordable if you factor in the “2 months free” deal you got! Read on for our professional advice on how much you should spend on rent.
Looking for your dream apartment? Reach out to AptAmigo. You’ll get 1-on-1 help from a local expert who can help you find the perfect place— within your budget!
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 has generally been a friendly suggestion, it’s worth noting that many apartment complexes require your monthly take-home pay to be at least 3X the cost of rent. So if you’re signing 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 have “provable” paystubs, this can be a good thing. However, the one-third rule is still an excellent rule of thumb 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 is 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
Youll also need to consider miscellaneous charges that come with your apartment. The standard water/electricity/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 an extra $50-$100 per month in various “apartment-related expenses.”
Parking fees are a whole different consideration. Some areas and cities don’t have 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’re in the heart of downtown in Denver or Chicago, one parking spot can easily cost $200 per month. With parking added to the previously-mentioned “apartment-related-expenses,” your actual rent payment can very quickly be $300 higher than what you originally signed up for.
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 are minimal, then at least you have a financial cushion (or at the very least a new date night fund!)
How to Afford More Expensive Apartment?
If you do the math and realize that your favorite neighborhood or luxury apartment is over your budget, don’t give up just yet. You might be able to 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 have no idea exactly how drastic seasonal rent fluctuations can be. Generally speaking, no one wants to move in the height of Winter. The holidays are hectic, heavy snow is not ideal for moving furniture, and the school year is well underway. Because of this, apartment complexes have a difficult time filling 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.
More Bedrooms = Less Per Person
Living with roommates is another sneaky way you can bring down a high price tag. It might seem obvious, but one-bedroom units typically have the highest demand, and the price tag reflects that. For example, in Chicago’s South Loop neighborhood, one-bed units average $1,700, while two-bed units average $2,300. Based on these numbers, a single person living in a one-bed unit will pay the full price of $1,700, but two single people living in a two-bed unit will each pay about $1,150. That’s a big difference!
One final, sneaky way to bring an expensive apartment back down into your price range is to monitor rent specials (also called “concessions.”) Whether it’s a lease-up or not, these concessions are offered by apartment buildings to entice renters and can be used to your advantage. The most common offering is one, two, or even three months free rent— but occasionally include free parking, $0 move-in fees, or a Visa gift card that is often upwards of $1,000. When you factor these concessions into your entire 12-month lease, you can save hundreds each month.
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For 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. With concessions applied to the entire 12-month lease, the monthly rent was reduced to $1,283!
Shopping rent specials is our team’s favorite trick, but they can be challenging to find if you’re not an industry insider. We started keeping tabs on these deals for our clients, and ended up dedicating substantial man(and woman)-hours to our internal resource. Recently, we decided that it was too good to keep to ourselves, so we made the hottest deals in each market available for free. You can access it here!
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 our VIP-level service will make your move completely 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.
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