Whether you’re getting your first apartment or just need to make sure your budget can handle your new apartment, there are a few things you can do to make sure that you can afford your new apartment. Of course, the obvious thing is to make sure that you can afford the rent payment. However, there are many other things you should consider when choosing an apartment to decide if it’s right for you.
Can I Afford The Rent?
How much do you think you should budget for your rent? Let’s say you make $2,000 a month. How much could you spend on rent? I’m guessing a lot of people would say $1,000, but this is too much. The rule of thumb that is most common for this is only 25-30%. That means that you should really be looking for an apartment in the $500 – 600 range.
I think the biggest problem that people make when budgeting for an apartment is to assume they can pay more rent than their income allows. The same could be said for many people that are in the market to buy a new house. If you can’t come close to the 30% rule of thumb, you could still consider getting a roommate, a smaller apartment, or looking in a lower cost area to help you meet your budget needs.
What Other Expenses Come With the Apartment?
While the rent is the main expense, you should think long and hard about other expenses. To start with, find out what utilities are included and whether the apartment building has low or reduced rates on Internet or TV that may help you justify the rent. Some apartments include heat while most do not. Find out the average cost of utilities for the apartment by calling local utility companies.
And don’t just think about the costs that are directly related to your apartment, think about other costs that result from the apartment you choose. For example, moving to an apartment that requires an extra hour of commuting each day can easily cost you more in gas than the money you save on your monthly rent. Besides that, consider the money you will spend by your apartment. For example, a few years back I rented an apartment next to a pub and grill. As you can guess, I spent way more money on the convenience of being next to a bar and pub than I saved on rent.
Also, if you can find an apartment that you can use public transportation or walk to work from, it can save you not only gas, but also hundreds of dollars in parking fees each month (depending on your location). Another thing to think about is the size of the apartment. Bigger apartments mean you’ll need to spend more money furnishing it, heating and cooling it, and probably more in rent each month.
Take all of these factors into consideration before making a decision.
Negotiate Your Rent
Don’t forget that nearly all rents are negotiable. The longer the unit has been available, the more negotiating power you have. In fact, when I used to rent apartments on craigslist I would automatically raise the price an extra $200 because I knew that the people from craigslist are looking for a “deal”. There is almost always a deal to be found. And if the property manager or landlord won’t offer a rent reduction, they may throw in a few months of free rent or something to help you make the decision. Show the owner or manager that you are responsible and courteous and they will likely be more willing to negotiate.
Don’t Buy the Upgrades
Looking for an apartment is a lot like looking for a new car. While you start with humble beginnings, it is very easy to keep wanting “upgrades”. Instead of better wheels or a more expensive base model, apartments will offer extra bedrooms, offices, granite countertops and fireplaces to try to get you to pay more each month. Don’t buy these upgrades. Stick to your housing budget and don’t start looking at better aparments than you can comfortably afford. If you do, you will always prefer the more expensive units. However, if you are in the market for luxury, consider these Yorkville condo rentals, or these apartments for rent in Winnipeg.
What Other Blogs Say
These are our thoughts on what you should do before you rent. Let’s look at what another blog has to say. We visited Smart Renter, and read Derek’s article about five tips to help you budget for your apartment. Here is what he had to say:
- Do your budgeting before you start to search. All too often, people won’t actually figure out what they can afford, and then they’ll wander into an apartment where rent is too high. The next thing you know, you’re in over your head.
- Get a feel for the marketplace before you book an appointment. There are plenty of ways to get a sense of what rents are like in your neighborhood. Do some research upfront, and see what are the pros, cons and rent levels of different Madison neighborhoods.
- Make sure your rent doesn’t exceed 25-30% of your monthly income. It’s better to be conservative when you’re setting your rent levels. Give yourself some wiggle room; you don’t want to be homebound because your rent money is gobbling up your entertainment budget.
- Remember that the advertised rent is just part of the picture. When you take a look at an apartment, make sure you see all the expenses that are involved. Think about the utilities, such as electricity, gas, water/sewer, phone, Internet, and cable.
- Ask a landlord for help before you budget. Generally, landlords have estimates of monthly utilities, and may be able to provide you with cost estimates for things beyond rent. A good landlord will also be a good resource for budget.
The rest of this post can be found at 5 Tips on How To Budget for an Apartment.
Derek’s tips are very close to the examples we also provided above. Particularly, I like his idea about budgeting before you start your search. After all, determining how much money you can spend on an apartment is a financial decision, not one that requires looking at apartments to make that decsiion.
Have any thoughts about what helps you find an apartment? Leave them below.