How much should your rent be? This is a question that every renter should ask themselves while apartment hunting. Though the question can mean two very different things! How much should your rent be according to your area? And how much should your rent be, according to your income? Discovering the answer to both of these can help you find the right apartment and we are here to provide some guidance!
Average Rent For Your Area
The rental market for your area is dictated by a number of factors; demand, supply, competition, and the location of the apartment will all determine the market rate of local apartments. The size of apartments and features the community offers will also affect the cost. The same size apartment between two apartment communities could be at drastically different prices depending on the neighborhood if it offers more features, amenities, or additional services. In addition to features, size, and location, there are a number of specialty factors that can affect if an apartment is higher or lower than the average market rate.
Income Based Apartments: Income-Based, Subsidized, or “Affordable” apartments will typically be offered at lower than the average rent in a given area. However, the renter must prove their income is at or below a certain threshold in order to qualify for these apartments. This helps low-income earners afford housing where the rental market has become too expensive for their income.
Luxury Apartments: Luxury Apartments typically offer more features and larger apartments than the average community. This will be reflected in a higher rent than a standard community offering the same amount of “bedrooms”. Luxury apartments are usually catered towards ‘renters by choice’, those who prefer renting over owning, because of the convenience renting offers.
Student Apartments: Apartments offered directly to students can usually be found in any city near a large university. These apartments will sometimes offer features such as shorter leases, close distance to the school, and the ability for roommates to split the apartment. Their rent will usually be set near the housing allowance or dorm costs of the local university. This may be higher or lower than the market rate depending on your town. If you are a student, be sure to research apartments in your university town that are not marketed as “student apartments” as well, especially if you will be living there all year instead of just during the semesters. You might find a more affordable apartment if you are willing to drive to school and pay a full year’s lease.
Senior Apartments: Similar to student apartments, Senior or 55+ Apartments are offered to older adults who meet an age requirement. These apartments will typically offer features geared towards older adults and the benefit of all your neighbors being in your age range. Some senior apartments may be more affordable for those in their retirement age, while other communities may be more expensive if they offer additional services such as meals, transportation, or scheduled community activities.
There are other types of specialty apartments as well, though we’ve tried to cover the most common ones you will see. When searching for an apartment it’s important to look into the application process and see if you need a special qualification before deciding on it.
Rent For Your Income:
The “30% Rule” is usually the general rule for how much your rent should be, based on your income. Ideally, you should budget 30% of your gross monthly income (IE before taxes) to be spent on your monthly rent and utilities combined. This rule might also be used by your landlord when you apply for the apartment. They may ask for your income on the application to ensure you can afford the apartment you are applying for.
But for many renters, it can be impossible to find an apartment within that rule. More and more renters are choosing apartments that are 40%-50% of their income, or even higher! Especially if you are in a high market rate area, but do not qualify for affordable apartments. If you find yourself in this situation, here are a few ways to help make this work!
Save On Your Apartment Utilities: Reducing your utility’s cost is one of the best ways to help reduce your monthly housing cost. You could also forgo optional utilities such as cable tv to help save hundreds a year. Check out our Saving On Your Apartment Utilities blog post for lots of tips for reducing your costs!
Share The Space: Whether this is through a spouse, long term partner, or a roommate, having someone else share the rent and utilities can make them more affordable. However, it’s important to ensure any person over 18 living in your apartment is on the lease! Subletting or getting a roommate without telling your landlord can be in violation of your lease. It’s best to sign the lease together before you move in. But if you decide to have someone move in after you’ve signed your lease, ask your community’s management about adding a second person to your lease so you know how to do it legally.
Pick Your Location Wisely: The location of your apartment dictates more than just your rent payment, but also the conveniences you are near. An apartment outside of town will be more affordable but will require you to commute to work or to school. An apartment near your work or school might be more expensive, but if you can walk or take public transport, you can save on needing a car and gas expenses. If your apartment is close to a lot of takeout places or far away from a grocery store, you might be more tempted to order food, instead of saving money by cooking from home. Consider the pros and cons of each location to help you decide!
As with many things, your rent payment depends on you! What do you need and what can you afford? Figuring out these factors first can help you narrow down your choices and find the best apartment for your budget!