July 29th, 2014
Not sure how much you should spend on rent? Most financial analysts will tell you that rent and utilities should be no more than 30% – 40% of a household’s income. Depending on how much money you make, this could narrow the geographical market for your rental possibilities quite a bit.
Last month, Trulia’s Rent Monitors showed that rent increases outpaced wage increases in all of the 25 largest metros, including Miami, Oakland, San Francisco, San Diego, and Denver. In places like Chicago, rent percentage of income rose to 36%, which is a 7.3% increase in rent prices, year-over-year. That can make affordability pretty tight!
Calculate your costs before signing
No matter how incredible an apartment may seem, it is always important to take the time to evaluate whether or not your bank account will allow you to sign on the dotted line. This seems pretty obvious, but when you’re out on the hunt, it’s easy to lose sight of what you can comfortably spend. Don’t worry—we’ve got your back. Each Trulia rental listing includes an affordability calculator that asks four questions to help determine if you can afford it:
– Your monthly income (less tax)
– Your monthly debt payments (cars, loans)
– Your monthly expenses (groceries, entertainment, etc.)
– Your payment type or tolerance (conservative, moderate or high)
Trulia uses that info to give you an estimate of how much you can afford, telling you whether or not that place is in your budget.
How to make ends meet in an expensive market
While trying to make ends meet in these tough markets, it is important to remember that all is not lost when it comes to renting. There are many ways to save money, even if you live in an expensive market. Here are a few:
– Consider splitting your rental payments with roommates. These days, more and more people are opting for roommate situations to cut down on expenses, even if they are living with their spouses. Extra tip: split the grocery bills and divvy up cooking responsibilities for even more cost savings.
– Try negotiating with your landlord before you sign your lease. Depending on your location (this could be difficult in places like New York City and San Francisco), the landlord may be up for making a deal.
– Forget living in a city’s center and opt for a nearby suburb instead. You will most likely save quite a bit per month, even if you are forced to commute.
– Watch your utilities. Turn off lights when you leave a room, open a window instead of using air conditioning and get a few extra blankets for the winter.
Happy renting!
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