Before embarking on your search for a rental home, it is vital for renters to have a clear understanding of how much rent they can afford. One effective method to determine exactly how much rent you can afford is by meticulously examining your household budget. By acquiring accurate income and expense numbers, you can more comfortably search for a rental home that corresponds well to your lifestyle and financial situation.
Nevertheless, various property management companies provide a range of rental properties with various features and variations. Therefore, it is advisable to stay flexible and keep your options available during your rental home search.
Assess your monthly income and expenses
As suggested by most rental experts, you should be spending no more than 30% of your gross income on rent annually. This stands for gross income before taxes and other deductions, not your take-home pay. As a demonstration, if you make $40,000 per year from all sources of income, the suggested maximum rent amount is $1,000 monthly.
Of course, this is a more simplified procedure for figuring out how much rent you can afford. It is important to consider other expenses that may arise.
For example, if you’re burdened with significant debt or make large monthly payments that cannot be altered or decreased, these expenses should be included in your calculations. In addition, your budget should encompass a detailed list of two types of expenses: fixed and variable. Food, transportation, medicine, utilities, and other crucial expenses should be added to the “fixed expenses” group. Entertainment, vacation travel, and so on would fall into the “variable” (a.k.a. optional) category.
The moment you have a clear understanding of how much you’re spending and where, you can more easily come to a realistic estimate of how much rent you can actually afford. Sticking to the 30% rule in areas with high rent can pose difficulties. You may need to make changes to other expenses to better afford your rent.
How to approach landlords or property managers
Of course, how much you think you can afford to pay is only one-half of the equation. When applying for a rental home, several property management companies and landlords may have different stances on what qualities make an ideal tenant. Even though you can demonstrate that you can afford the advertised rental rate, some property managers or landlords may hesitate to offer you a lease for various reasons.
Unfortunately, there may be situations where the rental home you desire is leased to someone else. During such circumstances, it’s crucial to stay positive and continue to manage or improve your financial situation. Keep in mind that being unsuccessful in securing a specific rental home doesn’t necessarily imply you’re not a strong candidate for another property. As long as you’re applying for rental homes within your affordability range, you’ll eventually find the perfect one.
Are you seeking a new rental home in Hopkins or the neighboring area? Real Property Management Viking can be useful! Browse our available listings, and don’t hesitate to contact us with any questions.
Originally Published on Jan 10, 2020
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