A rule of thumb I’ve read for rent is that your total housing costs shouldn’t exceed over 30% of your gross income. Total housing costs for us renters is the rent payment plus utilities. Personally, I also include the cost of internet access in my housing calculation because not having internet is not an option for me.
Since college graduation, I will have lived in three places: a 2-bedroom apartment shared with my college friend, a studio apartment by myself, and soon I will be moving into a 1-bedroom apartment with CB. In each of these instances, my housing costs stayed around 15%-20% of my total gross income. Here are some tips that helped me to keep my rent cost down:
1.Have a roomate: the more the merrier cheaper
This is probably the best and easiest way to save on rent. 2 (or 3 or 4) people living in one place means that not only your rent is decreased, but that all the utilities is shared. In addition, much of the cost of furnishing the new place is also split among the roommates. To avoid a roommate nightmare, however, it’s best to talk through your expectations (how the rent is split, who chips in for cable, do you share groceries, etc.) so that everyone feels good about the situation. If you are moving in with a significant other, it’s even more important to have clear expectations because many times it can be more awkward to talk about money with romantic partners than with roommates (why is that?).
2. Don’t pay for amenties that you don’t use
Our current apartment is somewhat of an anomaly in our area – it doesn’t have a pool or a jaccuzi. But I don’t care – I know we won’t be using those amenities, so I am glad that we won’t be paying for them. Along a similar vein, even if you know you won’t be going to the attached gym, or playing with its pool tables in the recreation room, understand that part of your rent each month will be going towards those perks.
3. Skip the nicest complexes: who needs travertine tile anyway?
Those units with travertine tile in the bathroom and granite on the kitchen countertops? Formica will serve as a counter just as well (or that’s what I keep telling myself…) Or the glossy hardwood floors and the new stainless steel appliances? You will be paying a premium for premium features, so make sure those features are really worth the money because you fall to a luxury apartment’s charms.
4. Trade services for a reduced rent
In some cases, it might be possible to engaging in a little bartering. If you live in someone’s house, perhaps you can babysit the landlord’s kids 3x a week for lower rent. Or if you are a gardener, maybe you can keep up the landscaping. A barter system can work well if both parties are clear about what services are required in exchange for what amount of rent reduction. It’s best to have everything in writing.
5. Be realistic about the market and your budget
If you are looking for a 1-bedroom in Midtown Manhattan, there’s no way you can score a place for under $2,000. It’s important to be realistic about both (1) the going price of real estate in your location, and (2) what you can comfortably afford while having enough money left over for your other goals / desires. CB and I found a gorgeous complex with an Apartment For Lease sign on the outside – once we found out that the price was $1,900 a month, however, we didn’t even bother to go in. Theoretically, we could afford the place, but we both had more pressing financial goals: saving for graduate school, paying off college loans, saving for retirement, and working on our Galapagos fund. And, we knew we could find something for much cheaper. Which we did, although of course it wasn’t as nice. But for $800 less? We’ll take it!
What’s the percentage of your housing costs compared to your gross income? What’s YOUR best tip for keeping your rent cost down?
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My housing costs (rent + utilities) are currently 33% of my monthly gross income. (It's over 41% based on take-home pay!) For me, obviously the easiest way to keep costs down is to live with roommates. My rent isn't as bad as NYC but it's definitely NOT cheap…it's the California sunshine tax!
We keep utilities low by negotiating with our cable company on our cable+internet package. Currently, it's $85/month total which is fantastic. Those are by far the two easiest ways I keep my costs down.
At our new place, living expenses will be approximately 24% of my gross income. Our current place is about 18%…but the new place is SO much nicer in every way (except proximity to public transit – though there are definite downsides to being across the street from the BART station, such as homeless people peeing in your driveway and loud people outside late at night). No great tips for keeping rent costs down…I've always lived in high-rent areas, so I'm pretty much just used to expecting high prices. I think you just have to keep looking until you find that near-perfect place.
My current place is 15% of my monthly take home (was 30% when SO was in school and I was covering the whole rent). I live in Boston, which isn't as bad as NYC, but certainly isn't cheap if you want to live anywhere close to downtown! In a year or two once we are both better established in our careers, we're hoping to move into a nicer place – stainless steel appliances and granite countertops – but still keep it below 20% of take home for each of us.
Another good tip is referrals.
Most of the places I've lived will give you up to a month free rent if you refer a friend to sign a lease in the same complex. The only question is whether to split the bonus with your friend or not.
My share of the rent is 18% of my gross income, which is pretty good for a beach community in Southern California. We looked for our apartment for a long time in order to find something that was in our price range and fit our needs. It includes half of a garage and we can tandem park behind the garage as well. It's also a 2-bedroom, has a dishwasher, and allows us to have a cat. I think we saved money by finding an apartment that's managed by it's actual owner, rather than a management company that takes a slice.
Also, we're contemplating asking for a reduction in rent because our neighbors just moved out and the posted rent is $45 less a month than what we pay.
I am actually a leasing agent for a luxury apartment, and we see people all the time doing everything they can to get into a high-end apartment, even when they really can't afford it. I LOVE having an attached garage, large square footage, granite counters, etc….but trust me, it's not worth it in the long haul if it means financial stress!! We don't think less of you–in fact, the only way I moved into these great apartments in the first place is with roommates–three of them, to be exact! __As far as tips for rent goes, try NOT to move during the summer. Summer is the busiest time of year for most apartments, so, though they advertise great savings during the summer, they'll be most likely to cut you a deal if you move during, say, February or November. It never hurts to ask, either–if what they're offering is just beyond your budget, be honest with your budget, and ask if they'll meet you. And BE NICE. Apartments are bound by Fair Housing laws, however, a little old fashioned niceness to a leasing agent who has probably already been yelled at for something that's not their fault does wonders!!
My total housing costs in NYC are 27% of my gross pay. It could be lower (around 20%) if I had a roommate, but I had roommates all through college and for four years afterwards, and I was just ready to live on my own. It's been a tiny bit of a stretch, but I'm still contributing to my 401k and my Roth IRA, in addition to paying my student loans and saving up a sizeable emergency fund, so it's doable. Would those savings add up more quickly if I had a roommate or two? Absolutely, but the trade-off is worth it for me.
I loved living alone, and now I think it'd be difficult to live with a roommate unless it was with a partner, so I completely understand. Having your own space can't be overestimated.
Our rent is 18% of our income.. which is pretty good for NJ town close to NYC… we have a 2 car parking , dishwasher, yard and heat is included so its not a bad deal at all..
Many of these same tips can be applied to seniors considering moving into various senior housing communities. They can choose to share a room with a roommate, they can eliminate services or amenities that they do not need as well as select a senior living option that fits their budget. Thanks for the list.