First, have a ballpark figure of what works best for your wallet. Don't ask, "How much should I spend on rent?" Ask, "How much can I afford?" As a rule, around 1/3 or 30 percent of your after-tax income should go to rent. Here's an easy shortcut: Take your combined annual income and divide by 40 — that will give you the 30 percent divided across 12 months.
For example, let’s say you make $72,000 per year: 30% of $72,000 = $21,600; $21,600 ÷ 12 = $1,800
(Use the Rent Affordability Calculator before you start your apartment search to decide what you can afford to pay each month.)
What’s Your Lifestyle?
Another huge factor is your lifestyle. Your lifestyle can determine the amount you should pay towards rent. For example, if you love staying home and watching Netflix, you may want to pay 30-35 percent to enjoy a nicer apartment. For those who are home a little less often, spending between 20-30 percent is ideal. And if you just need a place to shower and sleep, you may only want to pay as little as 15 percent.
What’s Included in Your Rent?
It’s not just rent that you need to consider; what about utilities? When inquiring about an apartment, be sure to ask if utilities like gas, water, and electricity are included. If the property manager does not include utilities in your rent, you will be responsible for those payments. Don’t forget that trash and waste management is another “utility fee” that may or may not be included.
And what about those “hidden costs?” Unseen expenses, like application fees, security deposits, and other community fees can catch a new apartment hunter off guard.
What Fees Should I Be Aware of?
An application fee is charged when the property manager needs to run a credit check, background check, or any administrative process required to qualify you for the apartment. This fee is usually nonrefundable and can range in price.
A security deposit is usually one or two months’ rent. This should be stated in the apartment description or when you inquire with the property manager. The earlier you know the deposit price, the easier it will be to move along with the renting process. The security deposit is used to cover any damages the property may receive during your tenure. This is not a hidden fee, but knowing how much you need to pay to move in and how you can get your security deposit back when you move out should be a priority.
If you’re a pet owner, the security fee comes into play… as does the pet deposit and monthly pet fee. Pet fees can range in price. However, you can expect a monthly fee or one-time deposit to move a pet in with you. The price could increase if more than one pet is moving in. The fee is to cover any wear and tear the pet may do to the rental in addition to your security deposit.
Community fees add up, too. When moving to an upper-level property, you may have to pay to reserve an elevator. This fee is used to reserve the elevator and for any damage the elevator may receive when moving in or out. There may also be fees associated with your parking spot, parking sticker, and parking permit. A covered parking space or a parking garage could run a fee, as well.
Extras like storage rentals can be paid with a one-time fee or as a monthly payment. The extra storage costs can range in price, but the extra storage space for seasonal items and additional furniture may be worth it.
One add-on you want to avoid is a late fee. If you pay your rent late, you might have to pay an additional percentage of your rent. The rental agreement should include charges, if any, for late payments.
What Amenities Are Included with My Rent?
Sometimes, amenities have fees attached. For example, a community may charge extra to use the fitness room, pool, conference room, business center, or sauna. If this is the case, decide if the extra cost is worth it — will you take advantage of these amenities or would you be throwing money away?
If there is a laundry room on the premises, it’s typical to have to pay to use the facilities. Usually, this is done by a coin-operated washer and dryer. This may lead to a maintenance fee, as well. This expense can be easy to overlook when moving into an apartment. Maintenance can include lawn care, outside pet cleaning, and onsite trash pickup.
With preparation and patience, you may end up finding the apartment you’ve always wanted.