Determining how much rent you can afford is crucial before beginning your search for a rental home as a renter. Examining your household budget in detail is the most successful approach to determining exactly how much rent you can afford. It is possible to more confidently search for a rental home that is compatible with your lifestyle and budget by obtaining accurate income and expense numbers.
However, different property management companies offer various types and variations of rental properties, so it is wise to stay versatile and keep your selections open during your rental home search.
Assess your monthly income and expenses
Typically, rental experts advise that you should be spending no more than 30% of your gross income on rent each year. That is your gross income before taxes and other deductions, not your take-home salary. In this case, if you make $40,000 annually from all sources of income, your best maximum rent amount is $1,000 per month.
Indeed, this is a somewhat oversimplified strategy for figuring out how much rent you can afford. There are often other expenses that must be examined.
As an instance, if you have a lot of debt or make large monthly payments that are inevitable, these expenses ought to be included in your calculations. Also, your budget should contain a detailed list of two types of expenses: fixed and variable. Other essential expenses including meal, transportation, medication, utilities, should be included in the “fixed expenses” group. Entertainment, vacation travel, and other options would be included on the “variable” (a.k.a. optional) list.
After knowing how much you’re spending and where, you can more easily come to a realistic estimate of how much rent you can actually afford. In areas with high rent, adhering to the 30% rule may prove challenging. It may be necessary to adjust other expenses to better afford your rent.
How to approach landlords or property managers
It is evident that the amount you believe you can afford to pay is only one component of the equation. When applying for a rental home, it is possible that property management companies and landlords have varying standpoints on what defines an appealing 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.
Despite your best efforts, there may be instances where the rental home you desire is leased to someone else. In such situations, it’s essential to stay positive and continue to manage or improve your financial situation. Keep in mind that the absence of a specific rental home doesn’t necessarily indicate that you’re not a strong candidate for another property. As long as you’re applying for rental homes within your affordability range, the right one will be found.
Are you looking for a new rental home in Rochester Hills or the surrounding area? Help is available from Real Property Management Silverstone! View our available listings and feel free to reach out with any questions.
Originally Published on Jan 10, 2020
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