There are lots of factors to consider when choosing a home to rent. You have to weigh the amenities, how many rooms it has, its location, and more. But before you even start your apartment search, you have to calculate how much you can comfortably spend on rent. Knowing your budget before you start looking helps you narrow down your options so that you can find the perfect, affordable home.
Although there’s plenty of advice on calculating how much money you can safely budget for rent, the truth is that it takes more than a simple formula. There are multiple factors to consider to help you narrow it down. Here are some important things to consider.
Methods of Establish a Rent Budget
The first task is to determine exactly how much income you have. Add your salary, bonuses, and income from side jobs together. Be sure to add any support payments you may receive or subtract any of these payments you make. Once you have an accurate number, you are ready to begin figuring out how much you can budget for rent. There are a few methods you can use.
The 30% Income Rule
This rule is as simple as it sounds. You can reasonably expect to be able to pay 30% of your income in rent. Keep in mind that this is a guideline, not a commandment. You know how you typically manage your money. Do you keep your expenses low?
You may be able to comfortably increase this amount. On the other hand, if you usually find yourself scraping by at the end of the month, you may want to opt for the less expensive end of the spectrum.
Three Times the Rent
This amount is a common method landlords use to determine if an applicant can afford the rent. They assume you can afford the apartment if your monthly, pre-tax income is at least as much as the rent times three. This method is a good way to calculate what you can afford and determine if your application will be approved.
This guideline is a great option if you want to construct a budget to help you achieve your financial goals. Plan to spend 50% of your income on fixed costs like rent, utilities, food, and transportation. 30% should be used for daily expenses, such as eating out, entertainment, and shopping. The remaining 20% is used to meet your financial goals. This money is budgeted to pay off debt, fund retirement accounts, or build up savings.
The Big Question: What Are You Comfortable With?
Ultimately, you’re the one who has to live with your budget. It’s important to balance your goals with your ability to stick to your financial plans. To get a complete picture of how much you can afford to spend on rent, it’s important to factor in other things.
Factor in Other Costs
As you consider your budget, remember that rent is only part of your housing costs. There are other expenses to keep in mind, and they can either add or subtract from what you spend on a home.
What About Additional Fees?
Unexpected fees can be a huge blow to your budget. These fees include security deposits, first and last month’s rent, application fees, and a broker’s fee if you’re working with an agent. When you’re figuring out if an apartment fits into your budget, it’s vital that you factor in any extra fees that might be tacked on.
Anderson Communities will never spring hidden fees onto you. In fact, we offer many amenities such as free cable, internet, and laundry.
Weigh Amenities into The Rental Budget
Some of the expenses of a new apartment could be offset by the amenities they offer. Does the community have an on-site gym? Will your home have a washer and dryer? If you can eliminate a gym membership or time-consuming, costly trips to the laundromat, you should be able to afford a little more rent.
If you find an apartment with Internet and cable included, that could save you a substantial amount.
Can You Cut Costs Elsewhere?
If the perfect home is just out of your reach, it is worth seeing if you can make a difference by reducing other expenses. Consider canceling monthly subscriptions that you don’t use much, such as streaming services in which you’ve lost interest. You can also save significant money by shopping around for insurance.
Looking for a New Apartment in Kentucky? Consider Anderson Communities
If you are in the market to rent a new home, look at what we offer. We have a range of beautiful communities positioned near wonderful schools, parks, and shopping areas.
You don’t have to buy a home to find your place in an Anderson Community. We have several rental options, including conveniences such as free cable, Internet, and washers and dryers in the home. We will never spring hidden fees on you. For more information about the rentals we offer, contact us today.