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House Hunting Tips: Know What You Can Afford

A wallet containing cash positioned next to a pen on a piece of paper, representing budgeting.As a renter, it is crucial to determine how much rent you can afford prior to initiating your search for a rental property. The greatest way to see exactly how much rent you can afford is by thoroughly examining your household budget. Searching for a rental home that is affordable for your lifestyle and budget can be a lot easier if you have accurate income and expense numbers.

On the other hand, different property management companies offer numerous sorts and variations of rental properties, so it’s wise to maintain an open mind and be flexible during your rental home search.

Assess your monthly income and expenses

Usually, according to rental experts, you should be spending no more than 30% of your gross income on rent per year. That is your gross income before taxes and other deductions, not your take-home pay. In other words, if you make $40,000 per annum from all sources of income, your appropriate maximum rent amount is $1,000 per month.

Of course, this is a very simplistic way to figuring out how much rent you can afford. It is common for other expenses to pop into the equation.

To be specific, if you have significant debt or make large monthly payments that you cannot change or reduce, these expenses ought to be included in your calculations. Moreover, your budget should entail a detailed list of two types of expenses: fixed and variable. Include in the “fixed expenses” category things like food, transportation, medicine, utilities, and any other essential spending. Entertainment, vacation travel, and so on would go on the “variable” (which means they are optional) list.

Once you’ve established how much you’re spending and where, you can more easily come to an accurate estimate of how much rent you can actually afford. Complying with the 30% rule in areas with high rent may be difficult. This may require adjusting some other expenses to better afford your rent.

How to approach landlords or property managers

Of course, how much you think you can afford to pay is only one-half of the equation. When applying for a rental home, different property management companies and landlords may have different ideas about what constitutes a desirable tenant. Even if you can demonstrate that you can afford the advertised rental rate, some property managers or landlords may hesitate to offer you a lease for various reasons.

No matter how diligent you are, there may be times when the rental home you desire is leased to someone else. In such scenarios, you have to stay positive and continue to manage or improve your financial situation. Don’t forget that not acquiring a particular rental home doesn’t necessarily mean you’re not a strong candidate for other opportunities. As long as you’re applying for rental homes within your affordability range, the perfect one will come along.

Is Jerome or the surrounding area where you’re seeking a new rental property? Let Real Property Management Magic Valley assist you! For further information, please take a look at our available listings.

 

Originally Published on Jan 10, 2020

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