Nothing is better than having the keys to your own house in your pocket. Once you’ve gotten excited about this idea – it is time to consider different options on how to turn your dreams into reality. Before you start browsing several listings, you should understand the size of your budget, in other words, how much rent you can afford. It is not a problem at all if you cannot answer this question right now as we have prepared helpful tips for you on this topic.
Plan your budget
Despite the fact that dozens of other methods exist, we recommend that you use the 50/30/20 Rule, according to which 50% of your income is designed for fixed costs and needs like rent, transportation, utilities, and groceries; 30% – personal expenses such as dining out, entertainment, shopping, and 20% – individual savings for the long-term such as paying debt.
Try not to spend more than 30% (40% in a pinch) of your income on rent
Our experts advise you to always keep this number in mind and make a decision in accordance with this ratio. For instance, if you earn $60,000 per year, you should not pay more than $18,000 for rent and insurance—or $1,500 per month. It is also acceptable if the sum of rent including utility payments, renters insurance, and loans will comprise 40% of your income. In some high-demand markets such as New York or Los Angeles, you might not even fit into 50-60% boundaries. In addition, landlords commonly require proof that the tenant’s income is 40-50 times greater than the monthly payment.
Do not take money from other segments of your budget
Sometimes people cover their rental fees with money from retirement funds, or from savings and emergency accounts. Don’t do it! If you find yourself in a situation where you are choosing between shopping for groceries and paying for rent, it is time to reevaluate your options.
Stay realistic about your budget
Of course, everyone wants to live in a place with a great range of amenities, a stylish design, and an amazing oceanfront location. Sometimes, people can significantly exceed their budget while chasing their dreams and eventually fall into a debt trap. To avoid these problems you just have to stay objective and plan your budget rationally.
Expect extra costs on decoration and furniture, as the property might not have it
What a pity it would be to see an amazing apartment unfurnished and without decorations. Buying brand new cabinets might significantly destabilize your financial situation. What you can do is check your local message boards to see if other people are selling or giving away items that you can snag and repurpose.
Communicate with landlords to find out their expectations
Sometimes, asking a few questions can help resolve problems and significantly facilitate a stress-free life. You should not feel shy about asking your landlord, leasing agent, or broker relevant question like what are their expectations for your income-to-rent ratio, whether someone is permitted to cosign with you, and whether you’re allowed to share the property with other tenants. If you do not meet their expectations – don’t worry, you have just saved yourself a lot of time.
If you still feel uncertain about budget planning and cannot choose the right property after you have read these tips, call us or write us an e-mail, and we will give you more details! Choosing our team, you choose qualified specialists who will navigate you through all the steps and provide necessary assistance.