Looking for a new apartment is exciting, and may feel like a real-life version of “House Hunters.” Whether it’s your first time living away from home or a short-term solution while you’re looking for a place to buy, one of the most important considerations is how much it’s going to cost you. Here’s what to keep in mind to ensure you can afford your dream place.
Monthly income: Without a doubt, this is the most important consideration. The general rule of thumb is to spend no more than one-third of your income on rent. To be safe, base this on your monthly take-home pay. So if you make $2,100 per month after taxes, you can afford to spend $700 on your share of the rent.
Other expenses: For some people, the one-third rule works perfectly. But if you have a lot of other expenses – like student loans, car payments or child care – you may need to set your sights on a slightly cheaper place. Also find out how much cable, Internet and utilities like gas and electricity are going to cost you by asking the current tenants or landlord for an estimate.
Roommates’ income: While your roommates don’t need to know your annual salary and you don’t need to know theirs, they may have different ideas of how much they can afford. If your roommate is eyeing places that fall out of your price range, ask if she’d be willing to pay a little more to have the bigger bedroom, for example. If you’re worried her eyes may be bigger than her checkbook, suggest making a budget together so you can be realistic on your search.
Quality of living: Some people are perfectly content sharing bedrooms, not having a dishwasher or parking on the street, while others want a building with a doorman and on-site gym. Make a list of your must-haves and wants, and have your roommate(s) do the same, then share the results. Hopefully you’ll be able to find compromises that work for everyone.
Emergency funds: Hopefully you won’t have to use them, but you should take stock of how much money you have stowed away in case you lose your job, wreck your car or wrack up big medical bills. Having your bank account go to zero every month is never advisable, and your living expenses are a big part of that equation. Leave some wiggle room in your spending and put the extra in savings every month so you won’t fall short on rent in case the unforeseen happens.