As a renter, distinguishing how much rent you can afford is imperative before commencing your rental home hunt. The most effective method of determining exactly how much rent you can afford is by strictly examining your household budget. To confidently search for a rental home that is compatible with your lifestyle and budget, it is essential to obtain accurate income and expense numbers.
Nevertheless, it is advisable to remain adaptable and keep open to options during your rental home search, as numerous property management companies offer various kinds and variations of rental properties.
Assess your monthly income and expenses
Rental experts generally recommend that you should be spending no more than 30% of your gross income on rent yearly. That is your gross income before taxes and other expenses, not your take-home pay. To be specific, if you get $40,000 annually from all sources of income, your recommended maximum rent amount is $1,000 per month.
Naturally, this is a basic method of figuring out how much rent you can afford. There are usually other expenses that need to be given consideration.
For example, if you have a substantial amount of debt or make large monthly payments that are unavoidable, these expenses should be included in your calculations. Additionally, your budget ought to be made up of a detailed list of two types of expenses: fixed and variable. Food, transportation, medicine, utilities, and other necessary expenses should be added to the “fixed expenses” category. Entertainment, vacation travel, and so on would go on the “variable” (a.k.a. optional) list.
Once you’ve identified how much you’re spending and where, you are capable of coming to a real estimate of how much rent you can actually afford. Sticking to the 30% rule in areas with high rent may be problematic. This may necessitate adjusting some other expenses to better afford your rent.
How to approach landlords or property managers
Of course, the amount you believe you can afford to pay is only one-half of the calculation. When applying for a rental home, different property management companies and landlords may have various views about what defines a desirable tenant. Even if you can demonstrate that you can afford the advertised rental rate, some property managers or landlords might be unwilling to offer you a lease for multiple factors.
Despite your best intentions, there may be cases where the rental home you desire is leased to someone else. In such scenarios, it’s crucial to stay positive and continue to manage or improve your financial situation. Take note that not obtaining a particular rental home does not imply that you’re not a strong candidate for a different property. As long as you’re applying for rental homes within your affordability range, the perfect one will come along.
Are you seeking a new rental home in Fayetteville or nearby? Real Property Management First Choice is available to help! Examine our available listings and take the opportunity to reach out with any questions.
Originally Published on Jan 10, 2020
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