The rental price for apartments in the United States varies as much as the rental properties themselves, and can range from several hundred to a few thousand dollars a month. Depending on location, the rent for a 1-bedroom, 1-bathroom apartment can actually be double, triple, or quadruple the rent for a 3-bedroom, 3 bathroom rental property.
Also, you may have to separate your wants from your needs. A loft style apartment with hardwood floors, granite countertops, and stainless steel appliances sounds ideal, but those perks come at a steep cost. And an apartment with a skyline view from the 31st floor may be breathtaking, but the price could take your breath away. An apartment complex with a state-of-the-art gym, a doorman, or a spacious walk-in closet will also cost more.
In addition, a 2-bedroom, 2-bathroom apartment may appear to be a necessity so you can provide your guests with their own accommodations, but how often will you really have overnight visitors? Enough to justify paying several hundred dollars more a month in rent? For example, if your parents and your best friend from college each visit twice a year and spend one or two days each visit, it would be a lot cheaper to get a single-bedroom apartment and let them stay in a hotel.
Necessities that you should consider when choosing an apartment include making sure that the complex is located in a safe area of town. Also, the apartment complex should have a good reputation for being a secure, clean, well-maintained facility with an attentive management staff. In addition, you should factor in your transportation situation. While apartments that are not in the heart of the city are usually less expensive, you’ll pay more in gasoline costs if you own a car. And if you don’t have a vehicle, you’ll need to be close to public transportation, and you’ll also need to factor in the cost of taxicabs and other options.
Once you determine what’s important in an apartment, you can begin the process of evaluating your income, and factoring both rental and non-rental expenses into your budget. This will provide a clear picture of your ability to afford the monthly expenses of an apartment.
Your income is the most important determinant of whether you can afford to get an apartment or not. Your income amount will decide how much you can afford to pay in rent. While this money usually comes from a job, it may be income from other sources. Income stability is another crucial factor. For example, if you’re a freelance worker who gets paid sporadically, it may be more difficult to pay your rent on the same day every month – unless you have saved up a few months worth of rent to cover your infrequent pay dates.
Also, it’s probably not a good idea to base affordability on infrequent streams of income. While it’s great that you’re currently on a winning streak in Vegas, don’t count on Lady Luck to pay your rent each month.
According to Move.com, only 25 to 30 percent of your income should go toward your rent. Of course, this is a rough estimate, and your other financial obligations may determine if you need to spend less than this amount. While rent varies greatly by location, according to a January 2014 TransUnion Rental Screening Solutions industry report, the average rental price in America was $1,072.
The national rental prices for new, institutional properties averaged $1,244. Older, institutional rental properties averaged $1,047. Apartments in older, less desirable areas averaged $860, while those in older, less desirable areas that also needed renovations and updating averaged $693. However, in large, popular cities, rental costs are much higher. For example, rental costs in Chicago, Los Angeles, and New York averaged $1,411; $1,615; and $2,520, respectively.
The process of obtaining an apartment involves several costs. For example, with most properties, you’ll need to pay an application fee, a deposit fee, and perhaps a pet deposit. Also, most landlords require you to pay the first month’s rent and the last month’s rent in advance. There’s also the cost of hiring movers if free beer and pizza won’t motivate enough of your friends and family members to join the cause. Therefore, Move.com recommends saving up at least three months worth of rent to cover these expenses and to provide a cushion in case you have other unexpected costs.
If you’re moving into an apartment for the first time, you may encounter expenses that you are not accustomed to paying. For example, if you lived at home, your parents may have covered the cost of electricity, gas, phone, and Internet and cable, but now you’re responsible for those bills (however, many apartment complexes include the cost of utilities in your monthly rent.) Also, if your parents bought all of the family’s groceries and cooked all of the meals, you will need to factor in these additional expenses as well.
Renters also need to purchase renter’s insurance to cover personal property within the apartment. In addition, apartments may be furnished with appliances, such as a refrigerator or stove, but you are usually responsible for your own bed, sofa, dining room table and chairs, and other pieces of furniture.
In addition to rental expenses, when deciding if you can afford an apartment, you need to factor in other bills that you may have to pay. These include your car payment and car insurance, or the cost of daily transportation by bus, train or taxi. Also, factor in costs for your medical and dental insurance, as well as how much you spend on clothes, toiletry items, hair cuts and other hair services. And you can’t eat Ramen noodles every day, so you’ll need to budget for food. In addition, it’s important to contribute to a savings account on a regular basis.
If you determine that you don’t have enough money to comfortably considering moving into an apartment, there are ways to possibly decrease your costs. Former financial planner Gary Foreman suggests choosing a two-bedroom apartment that can be shared with a roommate. Foreman also recommends asking landlords if they will reduce your monthly rental amount in exchange for providing services, such as cutting the grass or doing repairs around the complex.