After living with your parents or in the dorms, the freedom of having your own apartment is exciting, but you may be worried about how to get your first apartment, especially if you’ve never had to budget your own living expenses.
The average national rate for apartment rentals in July 2018 was $1,409, according to Yardi Matrix, an apartment information industry service. Although the costs vary widely by geography, the same rules apply for creating your first apartment budget, no matter where you live.
Start by Calculating Your Income and Expenses
We asked several experts for first apartment tips, and the general recommendation was to use this common formula: Spend no more than 30 percent of your income on rent.
“However, if you can spend even less by renting a smaller place or finding roommates, your financial situation will undoubtedly reap benefits,” says Leslie H. Tayne, Esq., a New York attorney with the Tayne Law Group, P.C. and an expert on consumer and business debt.
“When considering where you plan on living, take into account your other expenses, such as car payments, cell phone bills, student loans, and groceries, and remember that some bills like electricity and car insurance can vary in price based on where you live,” she says.
Expenses that first-time apartment renters may overlook include:
- Utilities: Some rental fees include water, power, and garbage, but in many cases, you will pay for electricity at minimum, as well as any extras you want like cable, internet, and a landline.
- Discretionary spending: Everything from your daily caffeine stop to your movie streaming and music subscriptions needs to be calculated, along with occasional expenses like gifts.
- Food: If you’re starting a full-time job, then you may not always want to take your lunch, so make sure to estimate what you plan to spend on eating out.
- Clothing: You may need an entirely new wardrobe based on your profession.
Tayne recommends opening a separate account to actively save toward your rental goal. “Typically, when you get an apartment, you have to pay upfront one to two months’ rent, plus a security deposit — unless you are a credit risk, in which case it could involve more,” she says.
All those discretionary expenses you were tracking? Those are all areas that you can cut if you need more wiggle room for affording the rent. But there are other ways to meet the price tag.
Nancy Simmons, president of Apartment Detectives, an apartment search and corporate service in Washington, D.C., says that after the budget, location is the next priority for renters to consider. “Once you’ve established a realistic budget, you need to figure out what area you can be in,” she says.
That’s where you may be able to save a little. If you don’t mind a commute — and if commuting doesn’t add a major expense — then consider living a little farther away from the city core. But if you do, make sure you’re within walking distance of public transportation, Simmons says. If you drive a car, you have to factor in gas, insurance, and parking costs.
Many first-time renters opt for a roommate in order to rent a nicer place, and Simmons says an alumni network may be a good resource. But don’t rent with a complete stranger, recommends property manager Carolyn Cannella. “You never really know someone until you’ve lived with them,” says Cannella.
She says that renting with someone you don’t know could cause a relationship to fall apart. And if the roommate moves out, you have to figure out how to make ends meet while paying the full rent.
First Apartment Essential Checklist for Renters
When you’re searching for the right apartment, keep these things in mind:
- Landlords typically require a non-refundable application fee (usually around $25 to $100). Make sure you get all your questions answered and the apartment is your top choice — application fees can quickly add up.
- A reservation fee is standard industry practice, Cannella says. The fee holds the apartment while your application is being processed, and it’s refundable if you’re not approved.
- Don’t be surprised if you’re not asked for a reservation fee. Simmons says that in D.C., for example, it’s not uncommon for property managers to accept multiple applications. “In this market, a lot of rental properties can rent quickly, and some are first-come, first-serve,” she says. Find out how the application process works.
- Part of the application fee goes toward a credit check. “Landlords typically want to see bill-paying history, but having no credit doesn’t rule you out,” Simmons says. If you have no credit, then you may be asked for a co-signer or guarantor. She recommends asking a relative ahead of time and having the guarantor in place before your apartment hunt.
- Make sure you understand all the lease terms. Cannella says it’s especially important to watch for a lease that renews automatically. Know what kind of notice you need to give if you don’t want automatic renewal.
If you’ve found an apartment that’s on the high end of your budget but has everything you want, be creative. .“Perhaps think about skipping that expensive latte each day and brew your coffee in your snazzy kitchen. Be clear what’s important — and look for sometimes obvious ways to save money.”
For more tips and tricks like this, feel free to keep exploring the Homestyle Suites blog!