Real Estate Investment 101: Getting Started

How Much Rent Can You Afford

If you want to move into your own rental apartment, one of the best steps you can take is determining how much rent you can afford. Once you know this, you will have an easier time narrowing down which apartments to view, and here are some tips to help you determine how much rent you could afford to pay.

Figure around 25% of your gross income

The first thing you should know is that you can use the standard equation of 25% of your gross income to determine an approximate amount you can afford to pay for rent. For example, if your gross income each month is $3,000, 25% of this is $750. Therefore, you can probably afford to pay rent that is $750 a month or less. This is just a basic equation, though, and you will need to figure in other things too if you want a more accurate amount to stick with.

Calculate this with your current income and expenses

A person without any debts of any kinds will most likely have an easy time paying 25% of their gross income for rent, but what happens if a person owes a lot of money on other debts? If you owe money on debts, you should figure this in as well. You may want to start by taking your net income amount, which is the amount after taxes, and then adding up all your expenses. This would help you find out if you could really afford to pay $750 a month for rent.

Make sure you find out what expenses you will have with an apartment

The other thing to find out is what expenses you will have with a particular unit you might want to rent. You might find out that the utilities for an apartment are much higher than you had expected, and this would be something important to find out before you sign a lease agreement. Additionally, if you thought the apartment came with free Internet services and then found out it doesn't, you might suddenly have an extra $100 expense every month to pay. Always find out the exact expenses you will have with any apartment you consider renting.

Moving into an apartment on your own is exciting, but you should always make sure you choose one you can afford. To view apartments that would fit in your budget, talk to a property manager today.