Renting in Atlanta? Discover the 11 most affordable Atlanta suburbs to rent in 2024.
Atlanta, the vibrant capital of Georgia, boasts a rich blend of Southern charm, cultural diversity and popular sports teams. As more people move to the city, you might wonder, how much does rent cost in Atlanta? For example, the average monthly rent is $1,662 for a studio, $1,912 for a one-bedroom unit and $2,487 for a two-bedroom unit. Fortunately, you’ll find some affordable Atlanta suburbs to keep costs reasonable in The A.
If you’re an Atlantan searching for a more affordable place to call home while still experiencing the city’s unique culture and opportunities, you’re in the right place. We’ll show you 11 of the most affordable Atlanta suburbs to consider signing your next lease in. These suburbs offer a cost-effective way to enjoy the best of Atlanta, from its Southern hospitality to its culinary delights and famous attractions.
#1: Jonesboro
Average rent for a studio: $850
Average rent for a one-bedroom: $1,079
Average rent for a two-bedroom: $1,221
Distance from Atlanta: 17 miles
Apartments for rent in Jonesboro
The first spot on our list of affordable Atlanta suburbs is Jonesboro. This area is located about 17 miles south of Atlanta, so you’re not too far from the city center. The average rent for a one-bedroom in Jonesboro is about $850 less than in Atlanta, making this area a great option to consider renting in.
Jonesboro is a small town with lots of history. You can explore the Road to Tara Museum, dedicated to the life and legacy of Margaret Mitchell, the author of “Gone with the Wind.” Additionally, Jonesboro is home to Stately Oaks, a historical museum. The city also hosts various community events and festivals throughout the year.
#2: Conyers
Average rent for a one-bedroom: $1,175
Average rent for a two-bedroom: $1,338
Distance from Atlanta: 25 miles
Apartments for rent in Conyers
Conyers is 25 miles southeast of Atlanta and is the second suburb on our list. The area is home to about 17,500 residents, and the average rents are much less than in Atlanta. If you plan to rent a two-bedroom unit, the monthly cost is approximately $1,338. On the other hand, a two-bedroom unit is about $2,487 in Atlanta.
In Conyers, you can explore the picturesque Georgia International Horse Park, a venue for equestrian events during the 1996 Summer Olympics. It’s a fantastic destination for horse enthusiasts and outdoor activities. Olde Town Conyers Historic District has plenty of charming shops, local restaurants and well-preserved architecture.
#3: Stone Mountain
Average rent for a studio: $1,168
Average rent for a one-bedroom: $1,300
Average rent for a two-bedroom: $1,405
Distance from Atlanta: 15 miles
Apartments for rent in Stone Mountain
For those on the hunt for budget-friendly suburban living near Atlanta, Stone Mountain takes third place. The average rent for a one-bedroom unit is $1,300, compared to Atlanta’s $1,912 rent, which is a considerable savings. The small town of Stone Mountain has a lot to offer its residents.
You can experience the natural beauty of Stone Mountain Park, with hiking trails, a scenic gondola ride and the iconic carving on the mountain’s face. The city also hosts laser shows at the park, a must-see for anyone living in the area.
#4: Norcross
Average rent for a studio: $1,376
Average rent for a one-bedroom: $1,322
Average rent for a two-bedroom: $1,667
Distance from Atlanta: 25 miles
Apartments for rent in Norcross
Norcross, though a little farther from Atlanta, about 25 miles to the northeast, offers an affordable option for renters. With the average rent for a one-bedroom costing about $600 less than in Atlanta, Norcross may be the suburb for you. You can explore the charming downtown area, known for its historic buildings, unique shops and a vibrant arts scene.
#5: Roswell
Average rent for a studio: $1,210
Average rent for a one-bedroom: $1,360
Average rent for a two-bedroom: $1,770
Distance from Atlanta: 25 miles
Apartments for rent in Roswell
About 25 miles north of Atlanta, you’ll find the suburb of Roswell, another great area to add to your list. Roswell has about 92,500 residents – a great alternative to Atlanta’s bustling atmosphere.
In Roswell, you can visit the historic Roswell Mill, where you can explore the ruins, take a stroll along the scenic Vickery Creek Trail, and learn about the area’s rich history. The city is also known for its art galleries and public art installations, providing an opportunity to appreciate the local arts scene.
#6: Marietta
Average rent for a studio: $1,030
Average rent for a one-bedroom: $1,547
Average rent for a two-bedroom: $1,762
Distance from Atlanta: 20 miles
Apartments for rent in Marietta
Securing the sixth spot on our list, Marietta is a familiar Atlanta suburb. This community has close to 61,500 residents, making it feel more like a small town. You can immerse yourself in Georgia’s history by visiting the Marietta Cobb Museum of Art, the Marietta History Museum, and the Marietta Gone with the Wind Museum, dedicated to the iconic novel and film. The city also hosts the Glover Park Concert Series, featuring live music and entertainment during the summer months.
#7: Smyrna
Average rent for a studio: $1,770
Average rent for a one-bedroom: $1,584
Average rent for a two-bedroom: $1,984
Distance from from Atlanta: 15 miles
Apartments for rent in Smyrna
Next on our list of renter-friendly and affordable Atlanta suburbs is Smyrna. It’s only about 15 miles northwest of the city center, making it a great option for renters planning to commute.
Smyrna is home to the picturesque Silver Comet Trail, perfect for walking, jogging or cycling along a scenic route. The city also features Jonquil Park, a serene green space with playgrounds and walking trails. Or you can head to Truist Park to watch an Atlanta Braves game.
#8: Dunwoody
Average rent for a studio: $1,749
Average rent for a one-bedroom: $1,611
Average rent for a two-bedroom: $2,127
Distance from Atlanta: 17 miles
Apartments for rent in Dunwoody
If you’re an Atlanta local, you’re probably familiar with Dunwoody, one of our favorite picks among affordable Atlanta suburbs. One-bedroom units in Dunwoody typically rent for an average of $1,611, while two-bedroom units cost around $2,127.
In Dunwoody, you can explore Brook Run Park, known for its beautiful green spaces, walking trails and dog park, making it a great spot for outdoor activities and picnics. The city also hosts the Dunwoody Art Festival, an annual event showcasing a variety of artworks, live music, and local culture.
#9: Kennesaw
Average rent for a studio: $1,650
Average rent for a one-bedroom: $1,635
Average rent for a two-bedroom: $1,964
Distance from Atlanta: 30 miles
Apartments for rent in Kennesaw
Moving to Kennesaw provides a more laid-back lifestyle for renters looking to escape Atlanta’s bustling atmosphere. If you’re considering moving to this affordable Atlanta suburb, Kennesaw has plenty to do.
You can visit the Southern Museum of Civil War and Locomotive History to explore the history of the Civil War and view historic locomotives. The city also features Swift-Cantrell Park, offering playgrounds, sports fields and ample space for outdoor activities.
#10: Decatur
Average rent for a studio: $940
Average rent for a one-bedroom: $1,704
Average rent for a two-bedroom: $1,475
Distance from Atlanta: 7 miles
Apartments for rent in Decatur
Decatur secures the 10th position on our list of affordable Atlanta suburbs to consider for renting an apartment this year. This suburb has a population of 24,600 and is roughly 7 miles east of Atlanta.
In Decatur, you can discover the charming downtown area, known for its local boutiques, diverse dining options, and vibrant arts scene. You can also spend the day outside at Glenlake Park. There’s always something to check out while living in this charming town.
#11. Sandy Springs
Average rent for a studio: $1,483
Average rent for a one-bedroom: $1,717
Average rent for a two-bedroom: $2,101
Distance from Atlanta: 15 miles
Apartments for rent in Sandy Springs
Sandy Springs is the 11th and final affordable Atlanta suburb to make our list. You’ll find Sandy Springs situated about 15 miles north of Atlanta. Commute times can vary depending on traffic, but you’ll still save on rent costs. Sandy Springs has plenty of outdoorsy activities, such as exploring the scenic Chattahoochee River National Recreation Area, with its beautiful riverside trails and spots for picnicking and birdwatching.
The city also features the Heritage Sandy Springs Museum, where you can learn about the local history and culture. If you’re looking to leap from renter to buyer, make sure to also check out the most affordable Atlanta suburbs to buy a home.
Methodology
Affordability is based on whether a suburb’s one and two-bedroom rent was less than Atlanta and under 30 miles from downtown Atlanta. Average rental data from Atlanta rental market trends on October 26, 2023. Population data sourced from the United States Census Bureau.
Investing in real estate is some of the oldest and most reliable financial advice in the books. Few other assets can compete with real estate’s vast array of benefits. These benefits include tax advantages, appreciation, relative impunity to market shifts, and even the potential for passive income.
But even if you have every intention of investing in real estate, it can be challenging to get started. After all, even a modest home usually requires a substantial down payment. And it can take years to save up those five-figure sums. The term “real estate investor” may bring to mind a multi-millionaire who manages several properties, leaving you feeling overwhelmed enough to give up the ghost entirely.
Fortunately, it is possible to invest in real estate with little or no money, even if you aren’t swimming in discretionary income. For instance, with an Opportunity Fund or REIT (Real Estate Investment Trust) you can get your foot in the door even if you can’t afford to purchase an entire property. There are also a host of ways to leverage your own home. These include house hacking, renting vacation space on Airbnb, and more.
In this post, we’ll break down everything you need to know about how to invest in real estate. We’ll go over some of the most common types of real estate investing. We’ll also break down how they can help you make money. And we’ll explain how you can begin, no matter how much capital you have in hand.
Why Invest in Real Estate?
Before we dig into the meat of the post, let’s take a moment to backtrack. Why is real estate investing such a well-worn piece of financial advice?
You’ve probably heard that diversifying your portfolio of real estate investments is essential. But your “portfolio” doesn’t just have to live on the stock market! Real estate investing gives you, as the name suggests, a real, tangible asset. And it’s much less vulnerable to the capriciousness of the market.
Real estate investing can help you not only build home equity but also generate passive cash flow. Both through the process of appreciation and the more intentional, hands-on approaches we’ll study further below. And owning your own home can help you reap financial benefits while simultaneously providing for one of your most basic needs.
How to Invest in Real Estate with Little Money
When a down payment might cost as much as $60,000, it’s understandable that many first-time property shoppers feel overwhelmed. They say you have to spend money to make money. Yes, but that’s quite a hefty figure for the average American earner.
To be sure, some real estate investment strategies require a good deal of cash upfront to be workable. But there are other tactics that don’t necessitate such a large lump sum to begin with. This means you don’t have to be a real estate mogul to be a property owner. We’ll break down various strategies at both ends of the spectrum below.
Types of Real Estate Investing
Let’s get into the nitty-gritty. What types of real estate can you invest in?
There are three main types of investment properties available to real estate investors.
Residential properties are probably the ones you’re most familiar with. They are exactly what they sound like: buildings used by individuals and families as residential living spaces. These properties include single-family homes, duplexes, apartments, condominiums, and townhouses, and multi-family homes (so long as they’re being used residentially and don’t exceed four units).
Commercial real estate are properties used to conduct business. They may include offices, storefronts, retail spaces, farmland, and large multi-family houses or apartment buildings.
Industrial real estate are properties that serve industrial business purposes, such as factories, power plants, or storage and shipping warehouses.
Furthermore, there are both active and passive forms of real estate investing.
Active investing is, well, active. It requires a good deal of time, energy, and commitment from the investor. Active investing may become a part- or even full-time job for the investor. They usually share ownership with few (or no) other people and thus bears a lot of responsibility for the success of the investment.
Passive investing, on the other hand, allows the investor to reap the benefits of investing without taking on the pressure and responsibility of full ownership of a tangible property. In most cases, passive investing involves supplying capital to a larger investment pool. You earn capital gains on loan interest through dividends paid to shareholders.
We’ll go into it all of this in more detail, including specific ways you can invest in real estate, both active and passive.
How Real Estate Investing Can Help You Earn
Before we break down the specific ways you can get started investing in real estate, let’s talk about how it can help you make money. (After all, that’s the whole point!)
You can invest in real estate in several ways, depending on what type of investing you’re participating in.
Equity and appreciation
Purchasing real estate equips the owner with a “hard asset”; the tangible property or building. Owning this kind of asset confers equity, or value. It isn’t as vulnerable to the fluctuations of the market as stocks, bonds, and other securities. Furthermore, property has a longstanding history of increasing in value over time, or appreciating.
On the contrary, other types of purchases (like automobiles) depreciate, or lose value. Thus, purchasing a property may allow you to earn income passively simply through the process of appreciation. It more or less ensures that the cash value of your home is a safe and stable part of your overall net worth.
Rental income
Chances are, you’ve had to pay rent to a landlord at some point in your life. Well, if you become the landlord, someone’s paying you the rent. And as long as that rental price eclipses your total expenses, including your mortgage and maintenance costs, the rest is profit!
Aside from managing the investment property, you can also collect rental income by sharing your space on platforms like Airbnb or house hacking, which we’ll explain below.
Sale profit
This happens when you buy a home with the intention to fix it up and sell it down the line (also known as “house flipping”.) It’s the difference between your sale cost and your purchase cost (minus all the expenses put into maintenance and improvements) is pure profit.
Loan interest
The interest charged on home and property loans can increase the value of real estate investments made through REITs, investment platforms, and private equity firms.
Ways to Invest in Real Estate
Now we know a bit about the different types of properties available to investors and how those real estate investments stand to help you earn cash.
So, what are the specific ways to go about real estate investing? There are several in both the “active” and “passive” categories.
Active:
House flipping, or rehabbing, is when an investor purchases a property with the sole intent of fixing it up to sell it later on.
Wholesaling is similar to flipping houses, but less work intensive. Wholesaling occurs when an investor purchases a property they believe is underpriced, so they can quickly sell it to another investor at a profit.
Rental properties give investors a long-term way to draw profit from their investments, though they do require lots of hands-on management and maintenance over time.
Airbnb, Vrbo, and other vacation rentals can often be listed for substantial per-night prices. They can be especially lucrative in high-demand travel destinations.
Passive:
Private equity funds pool the assets of many investors, which creates a larger, more powerful investment fund. These funds are usually overseen and allocated by a dedicated manager. They may have high minimum investment thresholds and requirements to join.
Opportunity funds also pool investors’ assets, but with the specific purpose of making investments in qualified Opportunity Zones. These are low-income, up-and-coming communities that would benefit from private investments and economic development.
REITs are companies that invest in commercial properties. Private investors can purchase shares of the company and earn income on capital gains in the form of dividends.
Online REIT platforms can make real estate investing accessible to beginning investors, often carrying no net worth or accreditation restrictions. They may allow you to invest in specific properties or in pre-built, diversified portfolios of real estate.
We’re going to break down these different investment options in even more detail below. But first, let’s start a bit closer to home—literally.
Starting with Your Own Home
One of the most straightforward ways to invest in real estate is probably already on your financial to-do list, anyway: purchasing your own home.
Purchasing a home of your own allows you to kill two birds with one stone. You’re taking care of the basic need of shelter, while also leveraging the purchase to reap a host of financial benefits.
Here are just a few ways that owning a home can help you save and earn money.
Build equity: As discussed above, property ownership confers relatively immutable equity to the purchaser—that is, your home is a fairly safe, tangible asset to add to your overall investment portfolio.
Receive tax benefits: Certain homeowners’ expenses, including real estate taxes and home mortgage interest, are tax-deductible. And if you sell your home, you may exclude up to $250,000 of capital gains (or $500,000 if filing jointly) from your taxes.
Take advantage of appreciation: Even accounting for the 2008 crisis, the cost of homes and other properties have steadily increased over time for the past 50 years. So, the home you purchase today will likely be worth more than the price you paid for it in the future.
Stop paying rent: Although you’ll likely still have a mortgage payment and other expenses to cover as a homeowner, you won’t be paying rent to live in another person’s property. It’s a cost that is essentially entirely wasted, since you aren’t building home equity in the rental property.
Keep the value of your home improvements: When you own a home of your own, any improvements you make will add to the property’s total value, beefing up your asset as well as beautifying your living space.
House Hacking
Another way to make money by purchasing your own home is known as “house hacking“. It’s a real estate investment strategy wherein you leverage rental income from your primary residence to live there cost-free.
The term was originally coined by entrepreneur and author Brandon Turner, who wrote “The Book on Investing in Real Estate with No (and Low) Money Down” and “The Book on Rental Property Investing.”
House hacking may be done, for example, by purchasing a duplex. The investor rents out one unit at a price that covers the mortgage cost while living in the second unit. Some homeowners have also used space-share platforms like Airbnb to offset their housing costs in the same manner.
Real estate investors can use this strategy to pay off the property and even create a profit margin. This will eventually allow them to invest in more rental properties. Thus, house hacking is a great way to combine the personal financial benefits of homeownership with the long-term earning potential of other types of property investment.
Buying a Home Without a Huge Down Payment
Given the recent trends in the housing market, you may feel daunted by the prospect of becoming a homeowner. In 2023, the U.S. housing market experienced significant challenges, with home prices rising to near-record highs.
But there are many incentives and programs designed to make this large investment more feasible for first-time home buyers.
FHA (Federal Housing Administration) Loans may allow borrowers to purchase a home with a down payment as small as 3.5% of the purchase price and with credit scores as low as 580. (You may also be approved for an FHA loan with a lower credit score, but your minimum down payment may be higher.)
The USDA also offers low-cost loans to low- and moderate-income households purchasing homes in qualified rural areas.
Down Payment Assistance Programs offered by local governments and private firms can provide grants, loans, and educational materials to prospective home buyers
Many other financial institutions and organizations also have special incentives for those purchasing their first homes or low-income families in the housing market. Make sure you check with your local housing authority to learn more about what’s available in your area.
Active Investment Opportunities
Want to get hands-on? Here are the details on some of the most popular and accessible active real estate investment opportunities.
House Flipping
If you’ve ever watched more than thirty minutes of HGTV, chances are you’re at least passingly familiar with the idea of flipping houses. It’s basically where you purchase a home with the express intent of fixing it up and selling it (at a higher cost) later.
House flipping is a great way for investors to earn a significant profit. However, they do need to know how to complete the flip successfully without incurring too many costs. Expenses can quickly eat into the investment’s return.
Finding a Home to Flip
House flippers have to be able to recognize a home that may be slightly undervalued but would be able to sell well given the proper upgrades. This involves both an understanding of the area’s desirability and the types of improvements that generate increased home value.
House flippers are responsible for the entire cost of the home purchase. They must also pay for all the upgrades, which they may either do themselves or hire out to professionals.
Either way, flipping houses incurs a hefty up-front cost, and it does come at a risk. Even after you make all the improvements, it’s possible that the house will languish on the market.
This can mean racking up maintenance, taxes, and other expenses for the real estate investor. However, a properly executed, short-term flip can create a substantial profit margin in a relatively small period of time.
Wholesaling
Like house flippers, wholesalers purchase homes with the intent of selling them quickly. But, they aren’t planning to do any heavy lifting along the way.
Instead, wholesalers find properties that are undervalued for their market. They scoop them up and resell them to other investors at a price closer to their true value. Thus, earning the difference as a profit.
Rental Properties
While managing rental properties may seem like a straightforward and reliable way to earn income, it’s one of the most work-intensive approaches on this list. It does require enough up-front capital to purchase the property (or properties) in the first place. However, landlords do stand to see substantial and steady returns in exchange for the work and effort they put into their properties.
After purchasing a viable property, which needs to be well-maintained, in a desirable location, and well-advertised, landlords are responsible for filling that property with qualified tenants. This can involve a time-consuming and labor-intensive screening process.
After all, as a landlord, you’re giving your renters the keys to your investment—literally! It can be a very risky move if you don’t take the time to ensure your tenants are well-qualified.
Finding & Qualifying Tenants
Along with running a standard background check, landlords may also conduct interviews with and request credit reports from prospective renters, all of which takes time. And don’t forget: every month your rental property is unfilled is a waste of potential income.
Once you do find qualified tenants, you’ll be responsible for a host of obligations unless you hire a property management company. You’ll need to provide maintenance and repairs. You’ll also need to stay on top of rent collection and record-keeping. It can quickly become unwieldy once you have several properties.
You’ll also need to be sure you’re in compliance with all the renters’ rights that exist in your jurisdiction, including laws that regulate the eviction process. Of course, you’ll need to put in the work to find good renters and a well-maintained property in the first place. When done so, managing rentals can provide a smooth and steady source of income for relatively little active work.
Seller Financing
Want to buy an investment property with no money down? Look into seller financing or a land contract. This is where the seller acts as the bank. You make your mortgage payments, including interest, to the seller.
After a few years or so, you will have enough equity in the home to get a bank loan. You can then make a lump sum payment to the seller.
Private & Hard Money Lenders
Private money lenders generally charge between 6% to 12% on the money borrowed. Hard money lenders usually charge 10% to 18%. Hard money loans are not from banks. They are from individuals or businesses aimed at financing real estate investments for a return on their money.
Hard money loans are used by investors who don’t qualify for conventional financing. They are typically used to fund renovations. Once the house is finished or has some equity in it, the borrower then refinances to a conventional mortgage with a lower interest rate.
Airbnb, Vacation Rentals, and Space Sharing
Managing a traditional property, wherein renters sign a multi-month lease, is not the only way to make money from an investment property. Platforms like Airbnb have revolutionized the real estate market. They allow homeowners (and sometimes even renters) to make money by renting out their space on a temporary, per-night basis as a vacation rental.
What’s more, you don’t necessarily have to rent out an entire home or unit to participate. A private room, or even a couch in a shared living room, is acceptable for some travelers using these services.
Airbnb and other vacation rental platforms make it simple for a novice renter. You don’t need to have a huge amount of know-how to start earning money this way. In fact, you don’t even necessarily have to “invest” in any property at all. Some landlords may allow their renters to list their housing on Airbnb as a sublet.
Airbnb Laws
However, as this new form of investment property has expanded, it’s created housing crunches in some cities. It’s resulting in “Airbnb laws,” or short-term rental legislation. These laws may limit your ability to use your housing in this way.
Always check your local regulations before you list your space on Airbnb or another of these types of platforms. If you don’t own the space, ensure that short-term sublets are allowed. Check your lease or ask your landlord directly.
Real Estate Investing Groups and Passive Investing
You may have noticed that many of the active real estate investment opportunities listed above do require substantial upfront capital to get started. You can’t wholesale or flip a house if you can’t purchase the house in the first place!
Furthermore, these active strategies generally involve a high level of skill, effort, and responsibility. It may not be feasible for those committed to other full-time careers.
Fortunately, there are still other ways to get involved with real estate investing, even if you don’t want to own or manage tangible property. (Or if doing so is out of financial reach for you right now). These passive investment tactics can help you glean the benefits of real estate investing without taking on quite as much of a fiscal and physical burden.
Private Equity Funds
A private equity, or PE fund, pools contributions from various investors to make larger investments. They’re often limited liability partnerships. That means there are fixed periods during which investors do not have access to their holdings.
Instead, PE funds allow investors to earn gains on debt and equity assets passively, without putting in much active work or research. Asset allocation and investments are managed by a dedicated individual or group. They earn money through annual fees as well as profit sharing.
PE funds come in various types, including the following:
Core equity funds generally invest in established commercial properties. They don’t carry risks like needing major improvements or experiencing losses for lack of consumer demand. The core strategy is simultaneously the least risky among PE funds and, typically, the least gainful.
Core plus equity funds generally follow the core strategy, but take a few more risks on properties that may require minor upgrades. This leads to a higher risk-return ratio on average.
Value added equity funds may invest in commercial properties that require substantial upgrades or new management to operate at their full potential. They may also seek to sell the property after improvements are made to create an additional profit margin.
Opportunistic equity funds offer the highest potential rewards, along with the highest risk. Investment properties purchased via these funds may need new construction or even land acquisitions. The payoff of such a new business venture is all but guaranteed. Furthermore, these developments take time, which means your investment capital may be tied up for longer. However, when they pay off, opportunistic equity funds see some of the best returns of the bunch.
Although PE funds are powerful real estate investment engines, they do often have high minimum investment requirements, generally not less than $100,000. Some funds may also be limited to accredited or institutional investors who can demonstrate available means.
Opportunity Funds
Opportunity funds operate on a similar model to private equity funds but are specifically used to make investments in qualified Opportunity Zones. These are economically distressed areas designated by the state and certified by the Secretary of the U.S. Treasury. Opportunity funds are legally required to invest 90% of their assets into properties in these Opportunity Zones.
Because these areas tend to be up-and-coming (and because tax benefits can incentivize investors to support them), opportunity funds often see substantial capital gains for their investors. And taxes incurred on those gains can be deferred until December 26, 2026.
That means the longer the investment is held before that date, the lower your overall tax liability will be. And opportunity fund investments held for at least ten years prior can expect their capital returns to be permanently excluded from capital gains taxes.
Of course, this strategy requires parting with your investment capital for a significant period of time. It’s best for those who can afford to put down the money to play the long game. If you can, however, investing in one is a great way to see substantial returns for almost zero effort.
Real Estate Investment Trusts (REITs)
A real estate investment trust(REIT) is a company that invests in commercial properties. As an investor, you purchase shares of this company just as you would any other. You earn income through its debt and equity assets in the form of shareholder dividends.
REITs operate similarly to mutual funds. They provide an excellent way for the average earner to experience the benefits of real estate investing. You don’t have to have a huge amount of capital to get started, as minimum investment requirements may be quite low.
However, they may carry high investment fees, especially in the case of private REITs (i.e., those not publicly traded on the stock market). Fees at these companies may run as high as 15%. REITs may also be illiquid and keep your money locked up for longer periods of time.
Online Real Estate Investment Platforms
In this digital, all-sharing-all-the-time age, most of us have already heard of crowdfunding. Real estate investments are no exception to the rules of the new millennium.
Online real estate investment platforms have begun springing up. They can make real estate gains achievable for average investors who may not have the towering net worth or accreditation status necessary to buy into more formal funds. Depending on the specific company, you might be able to choose specific investment properties to fund or buy into a diversified portfolio of investments.
Fees and minimum investment requirements are relatively low on real estate crowdfunding platforms. For instance, Fundrise lets you get started with just $500. That is much less than you’d have to pay to get in on most types of active investments! Check out our full review of Fundrise here.
Ready to Get Started Investing in Real Estate?
As you can see, there are several ways to start investing without saving up a five- or six-figure sum. And if you do it right, your investments can actually help you reach those high savings goals. You can then fund other types of investment projects!
However, as with any financial objective, planning and strategizing is key. Saving up as much capital as possible will help you get the best return on your investment once you’re ready.
You can’t allocate your assets without first keeping track of them, and to achieve that, you need to create a budget. If you’re in debt, aggressively paying it off will free you of a weighty financial anchor, so check out these powerful debt relief options.
Finally, if you intend to purchase property either to live in or as an investment opportunity, your credit score matters. It’s as simple as that. If your credit score isn’t quite where you want it to be, take these steps to raise it. Doing so will allow you to get the best interest rate once you’re ready to make the big purchase.
A condo is a privately owned unit in a community of other units, often with shared areas or amenities. If you’re considering whether to buy or rent a condo, you’ll want to think about the costs, benefits, and responsibilities of each option.
Of course, those who are deciding whether or not to rent have much less riding on their choice, but it’s still worth delving into the pros and cons of this kind of property and if it suits your needs.
Here, you’ll learn about the characteristics that define condos, the pros and cons of these units, and what it’s like to rent or buy a condo.
What Is a Condo?
As noted above, a condo is a privately owned unit that is part of a community of other units, whether that means there are a couple of other residences or dozens. Typically, a condo owner only possesses their unit, unlike the situation with a single-family homeowner, who owns the home and the land under it.
You may be familiar with condos that are rented out for income. If you’ve ever rented an apartment in, say, a complex by the beach, with a shared pool and patio, there’s a chance you’ve been in a condo. Real estate investors often buy condos and rent them out in this way. 💡 Quick Tip: You deserve a more zen mortgage. Look for a mortgage lender who’s dedicated to closing your loan on time.
Characteristics of a Condo
Individual condo units are owned by private owners, while common areas are owned and maintained by an association or organization. This might be called a condo association (CA) or a homeowners association (HOA). These groups are not identical, but they do manage a multi-unit residential community.
Your ownership rights may be limited to the space within your condominium, as is the case with most condo high-rises, or you may own an entire standalone structure within a larger community. In a condo situation, the CA or HOA owns the land. In a planned unit development, the homeowners own their lot and share the common area.
Maintenance and Finances of Condos
Condos are popular starter homes, thanks to their low maintenance, relatively cheap purchase price, and general convenience. They may also appeal to investors and people who are downsizing.
With detached single-family homes, you’re on the hook for the bill if any repair issues arise, whether it’s a broken water heater, leaky roof, or malfunctioning air conditioner. This generally isn’t the case with condos, as the property management company employed by the CA or HOA maintains common areas and shared amenities.
Convenience comes with a price, though. Condo owners share maintenance costs, and the expense of a master insurance policy, by paying dues monthly or quarterly. It’s important to budget for these costs. HOA fees,for example, have recently been rising 10% per year. Atop those fees, special assessments can be levied if the HOA needs to pay for a major project.
Condos tend to appreciate at a slower rate than traditional single-family homes, but they cost less. So buyers may want to take both realities into consideration when deciding on house vs. condo.
Recommended: First-Time Homebuyers Guide
Types of Condos
Condos vary widely in structure and appearance, ranging from high-rise buildings to communal developments. Take a closer look:
Condo Developments
These are communities of standalone homes where maintenance of both the interior and exterior are carried by the condo owner, but services like the maintenance of common areas and snow removal are typically handled by a property management company.
All properties within a condo development are bound by the rules of the CA or HOA, so it’s similar to a traditional neighborhood with fixed rules and less upkeep.
Condo Buildings
These are high-rise apartments consisting of individual condo units. The maintenance of the structure, shared utilities, and common areas are the responsibility of the property management company.
If you’re looking at buying or renting an apartment in a large metropolitan area, make sure you understand what it means to choose between a condo and a co-op.
High-rise condo buildings are more common in urban areas and may have higher fees in order to cover the greater costs of maintaining an apartment building and often the salaries of full-time maintenance staff members and doormen.
Pros and Cons of Condos
Next, take a look at the pros and cons of a condo.
Pros of Condos
Here are the upsides of condo life:
• Less maintenance since the CA or HOA is responsible for many aspects of upkeep.
• Affordability. Since you don’t own the land, the price can be lower.
• Possible investment opportunity; can use a condo for rental income.
• Security. Some people appreciate having a condo staff and neighbors nearby.
• Social life. You’re part of a community and will likely know and connect with your neighbors to some extent.
• Amenities. There are often such features as gyms, pools, dog run, coworking space, party rooms, and other perks to enjoy.
Cons of Condos
Next, consider the potential downsides of a condo:
• Association rules. You have to adhere to the guidelines of the community, which may or may not suit you. This can include everything from the appearance of your home’s exterior to when and for how long you may rent your place out.
• Higher interest rates. If you are shopping for a condo to purchase, you may find that the mortgage rates are somewhat higher than what you’d be quoted if you were buying a single-family home.
• Investment risk factor. If you are buying a condo, its value could depend to some extent on other residents and how well they maintain their property.
• Lack of privacy and land. You will have neighbors…so the experience is different from being in your own single-family home on your own land. And you likely won’t have acres of property to plant and use as you wish.
• Rising costs. Your association payments can rise considerably, and assessments are possible as well. That can throw a wrench in your budget.
Recommended: Most Affordable Places to Live in the US
Buying or Renting a Condo: Which Is Better?
Whether you’re better off buying or renting a condo — or any of the other types of houses, from modular home to manufactured home, tiny house to townhouse — depends as much as your own circumstances as it does the cost of buying vs. renting in an area.
• Buying: Assuming you’ve decided to settle down in an area for the next three to five years, you might be better off buying a condo if you have a stable income stream and can cover the down payment and closing costs without emptying your emergency fund.
Given how real estate values have risen in the past few years, buying a condo may be a good choice if you’re looking for long-term investment and a chance to build home equity over time.
• Renting: You may be better off renting if there’s a chance you’ll need to relocate within the next few years, or if any upcoming life events might require you to upsize your residence, like having children.
Here’s a closer look at these scenarios.
Pros of Renting a Condo
Renting a condo gives you all of the benefits of living in a private condo unit without the long-term commitment and upfront costs.
• Few maintenance responsibilities: If you’re renting a condo unit in an apartment building, the association is responsible for maintenance, or in the case of an individually owned HVAC system, the owner is.
• More leeway for negotiation: Reliable renters are hard to come by; some condo owners may be more willing to negotiate your monthly rent than professional property managers are.
• Flexibility to end or extend your lease: As a renter, you can often decide whether to end or continue your lease. This makes it easy to cut ties if needed.
Pros of Buying a Condo
Taking out a mortgage to buy a condo more or less freezes your living costs into the future. This will help you avoid rising rents, though association fees can certainly rise.
• More affordable than single-family homes: The price of a condo is usually lower than a single-family home in a given area. This makes it attractive to homebuyers on a budget.
• Freedom to make it your own: Owning a condo gives you more freedom over such features as the appliances and color palette than you’d likely have with a rental.
• Rental potential: Depending on the rules of your association, you may have the right to rent out your condo to generate income.
Finding a Condo
If you’re ready to go out and shop for a condo, you’ll want to assemble a list of must-haves to narrow your search. This applies whether you’re looking to rent or buy.
Are you looking for a more affordable apartment condo or something with more space like a community development? Browse local listings for condo units that match your requirements.
For those seeking to buy a condo, it’s a good idea to find a real estate agent who’s well versed in condo sales. They know the area and can obtain vital info regarding association rules and financials. It’s important to review the rules and fees, and check for any special assessments and their frequency over the years.
Condo Tips
A few more suggestions as you start your hunt:
• If you are planning to buy, it’s also a good idea to thoroughly understand mortgage basics and have financing lined up with a mortgage company so you’re ready to make a bid on a property.
• Know your budget. A mortgage calculator is an excellent tool for helping you figure out your costs.
• Consider checking this HUD site for FHA-approved condos as your primary residence if you are seeking financing with an FHA loan.
💡 Quick Tip: Keep in mind that FHA home loans are available for your primary residence only. Investment properties and vacation homes are not eligible.1
The Takeaway
What is a condo? A condo is a privately owned unit within a community that can be a good starter home or a place to downsize. Or it might be a wise investment property that can bring in rental income. If you’re able to rent a condo, it’s much like renting an apartment, except your landlord may be the owner.
If you’re interested in buying a condo, realize that condo buyers are able to access the same kinds of loans available to buyers of single-family homes, though rates may be slightly higher.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
FAQ
What’s the difference between an apartment and a condo?
A condo can be a kind of apartment, which is a residential unit that’s part of a larger building. An apartment can be owned or rented, as can a condo. However, a condo is a specific kind of unit ownership in which there are communal facilities and shared maintenance charges.
What is the difference between a condo and a townhouse?
With a condo, you own your unit but not the land under and around it. You pay for your unit (rent or mortgage). Association charges cover maintenance and repairs, and property taxes apply to owners. With a townhouse, the property includes the residence and the land it sits on and that surrounds it. You will pay your rent or mortgage and real estate taxes, but may not be part of an association or obligated to pay those fees.
Is a condo the same as a flat?
Many people use the terms condo, apartment, and flat interchangeably. While an apartment and a flat are the same thing, a condo refers to a style of ownership of a dwelling unit that’s part of a community. It may be an apartment, but the way it’s bought or rented can differ.
Photo Credit: iStock/Edwin Tan
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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During the tenant screening process, landlords often need to sift through tons of applications from potential renters. With so much competition, how do you make yours stand out?
One way is by knowing exactly what essential information to fill out so you can complete the application quickly and correctly. You don’t want to leave anything out and risk your application being delayed or rejected. There are only a few pages to give the landlord a complete picture of you and what you bring to the table as a tenant. You need to show them that you’re a responsible and honest tenant who won’t cause property damage or fall behind on rent. Knowing how to fill out an apartment application to rent an apartment lets you prepare ahead of time. The faster you get your completed, well-rounded application in, the faster you may be in your new home.
Everything you need to include on a rental application
All rental applications are going to look slightly different, from the formatting to how the different sections are organized. But all rental applications should cover the following complete information.
1. Personal and contact information
Typically, the first section on a rental application will be for personal and contact information from the prospective tenant. It’s also an easy section to complete before diving into the rest of the application.
There will likely be a section for the day’s date for you to fill in. Then you can move on the rest of the personal information about the applicant: you.
Your full name
Current address
Phone numbers (include both your home and cell phone number)
Email address
Date of birth
Social Security number
Driver’s license number
If you don’t have a driver’s license, any kind of official, government-issued ID will do.
Other occupants
Most applications give you a section to add the name, age, and contact info for the other people you’ll be living with. But each person who is going on the apartment’s lease needs to fill out their own separate application with their own personal information. If you’re signing the lease with roommates or a partner, you’ll be submitting multiple applications.
This also helps the landlord follow proper health and safety laws and regulations in your area. They can’t have five people living in a one-bedroom apartment. It’s unsafe and against the law.
Know your rights
It’s also important to know what sensitive information a potential landlord legally cannot ask you. During the rental application process and listed on the rental application itself, you cannot be asked about:
Race
National origin
Sex or sexual orientation
Religion
Disabilities
2. Apartment information
Some landlords may include sections or lines for information about the specific rental property or unit. This could include the address, unit number, size of apartment or square footage. But it also may cover monthly rent, upfront costs and pet fees (if applicable).
Oftentimes, the landlord can or will fill in this section themselves to avoid mistakes or errors. After all, they’re the landlord and know all the essential information about the unit. If you do have to fill out this section yourself, just be sure to double-check that all the details are correct. You can also ask the landlord to look it over for verification.
This way, both you and the landlord or property manager are on the same page about exactly which rental property or unit you’re interested in leasing.
3. Employment history
One of the most important sections of how to fill out an apartment application focuses on your employment history. After all, your prospective landlord wants to make sure you can pay the rent on time and in full each month.
In this section, add details about your current employer or work situation. Include information like your job title, work address and how long you’ve worked there. You’ll also want to provide contact information for your employer. Landlords and property managers typically contact employers to verify the employment of a potential applicant.
This section also includes one of the most essential pieces of info for landlords: your income. After all, you need to prove that you have a steady stream of income from some source so you can afford rent. Depending on the application, it may ask for your hourly rate, annual salary or monthly income. It may also ask if you’re part time or full time. As proof of income, you’ll need to provide recent pay stubs or bank statements as part of your application. Requesting two to three months of pay stubs or bank statements is the norm.
If you have a big savings account, you can also provide evidence of this. If you’re between jobs, just started somewhere new or are self-employed with a variable monthly income, having a good nest egg assures landlords. You can also provide more employment history by attaching your work resume. This is only a good idea if your previous work history reflects well on you. If you tend to leave jobs quickly or aren’t on good terms with former employers, it can hurt your case.
It’s also OK if you don’t have a previous employer or just started a new job. There are other ways you can prove you’d be a reliable, trustworthy tenant.
Other sources of income
If you have other sources of income apart from a routine job, you can also give that information to the landlord. Other sources of income can include:
Inheritance
Annuity
Severance payment
Unemployment
Disability
Social security
This can help bolster your claim that you make enough money each month to cover rent.
4. Rental history
Landlords want to ensure that a potential tenant is responsible and reliable. As such, nearly every rental application will have a section where you can fill out your residence history.
You usually only need to provide information about your last one or two rentals, including your current one. Add details about the address, the cost of rent and your move-in and move-out dates.
You’ll also need to list the contact information for current and previous landlords. References from past landlords are one of the best ways landlords vet potential tenants. For that reason, it’s always a good idea to stay on good terms with your previous landlord, because they become potential references once you move out. A good recommendation from a property manager or current landlord who liked you can go a long way. It shows you paid rent on time, took good care of the property and are an upstanding tenant.
If you don’t have any rental history, don’t worry. You can ask a family member or someone you trust to act as co-signer. Some applications may have a brief section where you can indicate if you’re having a co-signer or who they are. Otherwise, mention it to the landlord so they can loop the co-signer in and send them any relevant documents.
5. References
Along with the landlord references, some applications let you provide character references to vouch for you as a person. Professional and personal references from colleagues, friends or co-workers help verify that you’re a reliable person and help the landlord get a good sense of your character. Most landlords won’t accept references from family members. This section should ask for reference names and contact information.
Not every landlord requires or adds this. If they don’t, you can sometimes attach signed letters of reference directly to the application. You can also attach a rental cover letter or renter resume to add a little more depth.
6. Extra details
Not all rental applications will need these extra bits of information, as it depends on the rental property and landlord.
Emergency contact
Just in case, some landlords ask for emergency contact information upfront. If you’re approved, they’ll add it to your file later. It also comes in handy if they can’t get in touch with you during the rental application process.
List an emergency contact’s name, phone number and their relationship to you.
Pets
Lots of renters these days have pets, so you’re likely to see at least one reference to whether or not you have pets on a rental application.
If you do, the landlord usually asks for more background information about the animal such as breed and weight. That way, if they don’t allow the particular animal, they’ll let you know sooner and save you and themselves the trouble.
In addition to knowing how to fill out an apartment application, having a pet resume is a good idea for these situations. Similar to a work resume, it covers all the essential information a landlord would need to know about your pet. Add details like the pet’s name, species, breed, weight and gender. Make sure to include updated vaccine information as well.
Vehicles
If the apartment has on-site parking available and the rental unit has a parking space, you can provide your vehicle information upfront. List the make, model, color and year of each car, in addition to the license plate numbers.
Smoking
Many landlords have strict rules regarding smoking on their properties. If they do, they’ll likely have a small section asking if you smoke or not.
7. Credit and background check permission request
As part of how to fill out an apartment application, landlords need to run a background check and credit check on prospective tenants. There should be a specific section for you to sign, giving the landlord permission to run these checks.
Prior to the credit and background check section, you may also be asked if:
You’ve ever been convicted of a crime
Broken a lease
Declared bankruptcy
Been evicted
These are all potential red flags for renting, but don’t always mean an immediate “no.” Having a heads-up they’ll appear on the background check is helpful. It also shows the landlord that you’re honest about your past.
8. Bank information for the application fee
To cover the costs of running background checks and getting a credit report, most landlords and property managers charge application fees. These fees also cover any administrative costs incurred while processing the application. Within this section, list relevant information such as:
Bank name
Bank address and phone
Bank account number
Credit obligations (loans) with a monthly payment
Some applications will have a list of these fees. That way, you know what to expect.
9. Sign on the dotted line
Rounding out how to fill out an apartment application form is the signature section. Both you and the landlord should sign and date it. The signatures validate the document and serve as proof of payment.
This section wraps up the application. Congratulations, you’re done and have officially applied to a new apartment! Now comes the waiting to see if you beat out the other applicants and are the right tenant the landlord is looking for.
Completing the rental application process
After you’ve filled out rental applications with all the requested information, it’s time for you to sit back and wait to hear if your application has been accepted. During this time, the landlord does their screening reports. The tenant screening can take anywhere from two to three days. Sometimes it takes longer if it’s taking the landlord a while to verify some of your information.
Being accepted to your new apartment
Once you hear the good news that you’ve been accepted, you have a few final steps to follow before hiring movers.
Pay the security deposit and the first month of rent payments
As you finalize the rental process, you’ll need to pay for the security deposit, first month’s rent and any move-in fees.
Generally, writing personal checks is the easiest way to handle this transfer. But increasingly, modern-day renters prefer the ease and convenience of online portals. That way, they can pay rent, review the lease agreement, request maintenance repairs and more in one place.
Sign the lease
Once you’ve reviewed the lease and everything is in order, officially sign the lease to make the apartment yours (temporarily).
A rental application form template
To give you an example of what some apartment applications may look like, check out our sample template. You can also download this PDF or Word document template if you want to practice or get all the information in one place.
Know what to expect when filling out a rental application
Renting a new apartment can be a hassle. But by knowing how to fill out an apartment application, you can prepare in advance to help the process go smoothly and efficiently.
The information contained in this article is for educational purposes only and does not, and is not intended to, constitute legal or financial advice. Readers are encouraged to seek professional legal or financial advice as they may deem it necessary.
What can you do if you’re buying or living in a home that’s considered “high risk” because of its location or other factors, and you can’t find the insurance protection you need? In some states, including Florida and California, where insurers are limiting their coverage or exiting the market altogether, it can be challenging to find a renters or homeowners policy. You may even find the insurer you’ve had for years is no longer willing to provide coverage.
There’s no need to panic just yet, or give up on your efforts to get the policy you want or need. There may be options you haven’t thought about that are just a few computer taps away.
What Makes a Home, Area, or State High Risk?
There are a few different factors that can make a home, neighborhood, region, or state high risk when it comes to getting insurance coverage. Some of these factors may affect homeowners only, while others can affect both homeowners and renters.
Sometimes a home is determined to be high risk because it’s fallen into a state of disrepair. The insurance company may say, for example, that the home needs a new roof, the foundation is unsafe, or the plumbing or electricity needs updating. If that’s the case, following through on those repairs may make it easier to keep or qualify for a traditional homeowners policy.
It’s also possible that the way the home is constructed — with certain types of building materials or a roof style that doesn’t meet the insurer’s underwriting standards — is making it harder to get insurance. Or it could be that the home is in an area that makes it more vulnerable to certain crimes, such as burglary or vandalism. Sometimes, a person’s own history (a criminal background, bankruptcy, or too many past claims) could lead an insurer to cancel a policy or say no to a new one.
Increasingly, it’s the propensity for serious, damaging weather that can cause an entire region or state to be considered high-risk. In California, wildfires are one reason insurers cite for pulling out. In Louisiana, it’s flooding. And in Florida, insurers are leaving the state because of the expensive damage hurricanes and tropical storms can cause. 💡 Quick Tip: A basic homeowners insurance plan doesn’t cover floods, earthquakes, or sinkholes. If you live in an area prone to natural disasters, you may want to look into supplemental coverage.
What Can You Do If You’re Denied Coverage?
Though homeowners and renters insurance policies aren’t mandated by any state or federal laws, mortgage lenders and landlords can and often do require a certain amount of coverage. Even if yours doesn’t, you may find it makes sense to get a policy to protect yourself, your home, and/or your belongings.
It can be frustrating and scary to find out you’ve been denied the insurance you want or need, or that the policy you have is being canceled. Here are a few things you can do to find protection:
Shop Around
There are many insurance companies out there, so don’t feel as though you have to give up just because the carrier you wanted won’t cover you. You may be able to find a similar or better policy online, or you could search the old-fashioned way and call around. While you’re looking, try not to limit your options based on brand names or because you have car insurance or another type of policy through a certain company.
If you’re buying homeowners insurance: Before you start shopping, consider how much and what types of coverage you need and what your lender requires. Depending on where you live, you may need to buy additional protection for flooding, earthquakes, sinkholes, etc. This coverage is usually not a part of a basic homeowners policy.
If you’re buying a home, you may want to ask the current homeowners or your new neighbors what coverage they think is necessary.
If you’re buying renters insurance: Keep in mind that even though your landlord might have insurance that covers the building you’re living in, that policy won’t cover your possessions should they be damaged or stolen. And the landlord’s policy probably won’t pay for additional living expenses if you need to move out while your unit undergoes repairs.
As you shop renters policies, it’s important to compare apples to apples, and to be sure you’re getting the renters insurance coverage you might need in a worst-case scenario. Remember: Most renters policies won’t cover damage from flooding. To be sure you’re protected, you’ll likely need to purchase a separate renters policy from the National Flood Insurance Program, which is managed by FEMA.
Use a Broker or Independent Insurance Agent
If you don’t have the time to shop for a policy yourself, you may want to hire an insurance broker or independent insurance agent to get quotes from multiple insurers for you. Before you get started in this process, it’s a good idea to be clear on how your insurance professional will be paid (fee, commission, or both), and how broad or limited the policy search will be.
Contact Your State Department of Insurance
The consumer division of your state insurance department can provide you with a list of insurers that are writing policies in your area. And they may be able to help you work with your current provider regarding a nonrenewal — that is, if the company isn’t pulling out of the state altogether.
Ask Your Current Insurance Professional for Advice
If your current insurance company is leaving your region or state and you need to change your homeowners insurance, your representative — who is familiar with your policy needs — may have suggestions for which companies you could try next.
Consider a FAIR Plan
Many states have Fair Access to Insurance Requirements (FAIR) plans available for homeowners who can’t get a traditional homeowners policy. FAIR insurance coverage is different for each state, but generally, these are bare-bones policies provided by a pool of insurance companies. They often do not include personal liability coverage, and you may have to make upgrades to your property to get or keep your policy.
A FAIR plan may be your last resort if you can’t get a policy anywhere else. Still, it’s important to be clear on what you are getting — and what your premium will be — before moving forward.
Look into Beach and Windstorm Plans
If you live in a coastal state that is prone to wind and hail damage, you may want to look into getting a beach and windstorm insurance plan. These plans are similar to FAIR plans and can provide coverage to homeowners in areas that aren’t insured through the voluntary insurance market.
Recommended: Renters and Homeowners Insurance Definitions
Can You Go Without Insurance If You Can’t Get Coverage?
Although you aren’t legally required to purchase a renters or homeowners policy, you may not have a choice. If you’re renting, your landlord might say it’s a must. And if you’re buying or still owe money on your home, your mortgage company will let you know how much homeowners insurance you need.
If you can’t get a policy, or if the coverage is deemed insufficient, your mortgage company might buy “force-placed” insurance for your home. With force-placed insurance, the lender typically pays upfront for the insurance, then adds the premium cost to your monthly mortgage payment. You won’t have control over the type of coverage you get, or the policy limits, and it might be more expensive than the policy you would purchase for yourself.
You also may be required to have homeowners insurance if you live in a condominium or co-op.
Recommended: Is Homeowners Insurance Required to Buy a Home?
What Are the Downsides of Going Without Coverage?
Even if you don’t have to get insurance, you may want to seriously consider the downsides of going without coverage. You might discover that the security a policy can offer is worth the extra effort or cost involved with finding coverage.
If you’re a homeowner: It’s quite likely your home is your biggest asset, and insurance can help you protect that investment and your overall financial wellness. Your homeowners policy doesn’t just cover the structure you live in; it also insures your belongings and provides liability protection in case of an injury or property damage.
If you’re a renter: Your personal property (furniture, electronics, clothes, jewelry, etc.) may be worth more than you think, and renters insurance can help you pay to replace belongings that are damaged or stolen. Renters insurance also typically includes coverage for property damage, or if a guest is accidentally hurt, or if your pet bites someone.
Worried about how much renters insurance costs and if it’s worth it? Usually, renters insurance is much less expensive than homeowners insurance, so you may want to at least check the price before passing on coverage. 💡 Quick Tip: Next time you review your budget, consider making room for additional insurance coverage. Think of it as an investment that can help protect you from a major financial loss.
The Takeaway
It can be frustrating and stressful to learn that you can’t get the insurance coverage you need for your home and belongings, or that you’re losing the coverage you thought you could count on. But just because one company won’t offer you a policy doesn’t mean you don’t have other options. You may have to spend a little extra time searching for the right policy, though, or get a little help finding the appropriate amount of coverage at an affordable price.
When the unexpected happens, it’s good to know you have a plan to protect your loved ones and your finances. SoFi has teamed up with some of the best insurance companies in the industry to provide members with fast, easy, and reliable insurance.
Find affordable auto, life, homeowners, and renters insurance with SoFi Protect.
FAQ
Is homeowners insurance required to buy a home?
While homeowners insurance isn’t required by state or federal laws, if you’re financing the home, your mortgage lender will likely require that you have a certain amount of coverage.
Is renters insurance required?
Renters insurance isn’t required by law, but your landlord or property management company may require that you purchase a renters policy.
How much renters insurance do I need?
To determine how much renters insurance you should purchase, you may want to do a quick inventory of what you own, including clothing, jewelry, electronics, artwork, furniture, etc. Then, using receipts if you have them, estimate how much it’s all worth.
How much homeowners insurance do I need?
If you’re financing your home, your mortgage lender will likely require a certain amount of insurance coverage. But you may want to purchase additional coverage based on your assets and the types of protection you want. Your insurance company can help you determine the appropriate amount of coverage.
Photo credit: iStock/svetikd
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Inside: Ever wondered how much rent you can afford on a particular hourly wage? Use the rent calculator to see what you can afford on $22 an hour. Find out from the experts in this guide.
Honestly, this is something most people don’t think about until after they get themselves in a troubling situation.
Determining rent affordability is paramount in your financial planning. It’s important to strike a balance between comfortable accommodation and fiscal responsibility to avoid financial strains down the road.
There exists a direct correlation between your income and the rent you can afford to pay. Higher income opens doors to pricier accommodations while lower wages might enforce budget constraints. Understanding this relationship is crucial.
It guides your housing decisions and helps maintain a stable financial footing.
By calculating your rent affordability, you can set a clear budget, establish your housing needs, and navigate the real estate market with ease.
How much rent can I afford making $22 an hour?
If you make $22 an hour, based on a standard 40-hour work week, your gross income would come up to approximately $3,813 per month.
If you follow the 30% rule, this means you should allocate a maximum of $1144 each month for rent.
$3813 x 30% = $1144
However, remember this is a rough estimate and your specific expenses and financial obligations should also be taken into consideration before deciding on a rent budget.
What Percentage of My Income Should Go to Rent?
This is a good question to consider.
Even better when you are trying to figure out how much to save before moving out.
The 30% Rule Explained
The 30% rule is a simple guideline suggesting that one should allocate no more than 30% of their gross (before taxes) monthly income toward rent.1
This rule of thumb has been widely adopted as a measure of rent affordability. The beauty of the 30% rule lies in its simplicity and ease of use, allowing for quick budgeting while maintaining room for other essential expenses.
Be Conservative and Stick with 20%
According to Money Bliss budgeting percentages, adopting a more conservative approach to budgeting by allocating only 20% of your income towards housing costs can be more beneficial.
If you follow the 20% rule, this means you should allocate a maximum of $762 each month for rent.
$3813 x 20% = $762
This strategy helps to account for additional expenses such as utilities, unexpected repairs, and other costs that often accompany home ownership or renting.
This reduced allocation promotes being smart with your money to avoid unnecessary financial stress.
When to Consider Stretching the 30% Rule
At times, it might be necessary to stretch the 30% rule particularly in high-cost areas or during short-term situations. It’s crucial, however, to understand the potential ramifications and adjust other spending habits to compensate.
A temporary overshoot could be justifiable if it leads to significant future benefits, like proximity to a well-paying job. Always remember, that this should be an exception rather than the norm.
How Does the Rent Calculator Work?
A rent calculator is a practical tool that aids in estimating the rent you can afford. You don’t want to be forced to live on a shoestring budget.
This simple calculator is based on your hourly income and spending either 20-30% of your gross income on rent.
Fine-tuning your budget is possible by adjusting the percentage you wish to spend on housing. Remember, the final number serves as a guide and may require adjustments based on your financial situation.
Breaking Down Your Monthly Budget
For savvy budgeters, adhering to the 50/30/20 rule can provide a clear framework for managing your expenses and growing your savings. While at Money Bliss, we went a step further to define it as the 20-50-10-20-0 budget rule. (save-basic expenses-give-fun spending-debt).
This approach gives a precise breakdown of your monthly budget, ensuring that you are living within your means while also setting funds aside for future financial security.
Housing Costs
The basic 50/30/20 rule suggests dividing your monthly net income into 50% for necessities such as rent and groceries, 30% for personal wants like clothing or travel, and designating the remaining 20% for savings goals or debt repayment.
By adding these to your housing budget, you get a realistic picture of your monthly accommodation costs.
When budgeting for rent, one must account for other housing costs. These may include utilities like gas, electricity, and water, as well as internet, cable TV, and trash collection. You might also need to factor in the renter’s insurance and potential parking fees.
Essential Living Expenses
In addition to housing, remember to consider essential living expenses in your budget. These include food, transportation, health insurance, and childcare.
In addition, we advise our readers to put aside about 15-25% of their net income for savings. Accounting for these factors ensures you don’t stretch your budget to the limit solely on rent.
Discretionary spending
While you need to cover essential living expenses, it’s also important to allocate funds for discretionary spending – we call it FUN spending.
This category involves non-essential purchases like eating out, entertainment, vacations, and shopping. Using the 50/30/20 rule as a guideline, 30% of your net income can be put towards these wants, allowing you to enjoy your income while staying financially sound.
Factors Influencing Rent Affordability
Many factors impact how much you can spend on rent. As such, this will vary from person to person as situations vary. While these numbers are gross income, you need to realize the amount of money coming out for taxes. Many people don’t understand gross income vs net income.
Furthermore, the cost of living and rental prices in your chosen location can greatly impact how much you can afford. So, use the rent affordability calculator!
Location and Rent Prices
The location of a home greatly influences its rent prices. HCOL vs LCOL is a real thing!
Proximity to the city center, schools, parks, and shopping centers typically equate to higher costs. For example, renting trends in 2023 indicated an increase in prices the closer you get to these amenities.2
By choosing to live a bit further out, you may be able to find more affordable rent payments.
Areas with higher crime rates will have lower rents but these tend to come with more issues.
Size and Type of Housing
The size and type of your dwelling can also significantly affect your rent. Large houses with multiple rooms naturally cost more, whereas smaller apartments or studios are less expensive.
The type of housing also plays a role; for instance, a modern, furnished apartment might cost more than an unfurnished one. Tailoring your choice to your needs and budget allows for comfortable living without overspending.
If you have a pet, don’t forget it may cost more plus you have a pet deposit.
Lease Length Considerations
Lease length can directly impact your rent. Longer leases often equate to lower monthly rents, offering landlords a sense of security. On the contrary, short-term or month-to-month leases typically come with a higher price tag due to their inherent flexibility.
Assess your personal situation and potential need for flexibility before deciding on the lease term.
Also, the amount you need to put down as a security deposit can be negotiated.
Tips to Maximize Your Rent Budget
Plan your budget carefully taking into account factors like income, potential expenses, and the cost of living in your chosen location. So, if you are thinking $5000 is enough to move out, you may be surprised.
Use the 30% rule as a guide but be aware that in high cost of living areas, you may need to adjust this percentage. When searching for a rental, compare the cost and amenities of different apartments in your preferred areas and see if there are nearby neighborhoods with cheaper rental costs.
Also, you may need to embrace cost-saving measures such as cooking at home and shopping frugally to free up more income for rent.
You can learn more about those areas on our site.
Tip #1 – Reducing Costs and Saving
There are several ways to reduce housing costs and save more in this tough rental market.
Consider downgrading to a smaller place or moving to a less expensive area.
Negotiate a longer lease term for a reduced monthly rent.
Maybe even consider becoming a permanent housesitter to free up your budget.
Small changes can lead to substantial savings over time.
Learn how to budget on a low income.
Tip #2 -Planning for Future Rent Increases
Each year when your lease is about to renew, always factor in the possibility of future rent increases, which could be influenced by trends in the real estate market and inflation.
Ensuring your income can keep up with these increases is necessary for maintaining affordability. Continually reassess your rent affordability, especially during annual lease renewals or job changes.
Tip #3 – Get Roommates
Sharing your space with a roommate is a practical way to cut down on your living expenses substantially. By having one or more people to share the rental costs, utilities, and even groceries in some instances, you are likely to free up a considerable portion of your budget.
However, it’s important to clearly set boundaries and expectations to maintain a smooth living arrangement.
FAQ on Rent Affordability
Spending more than 30% of your income on rent is generally not advisable. It risks leaving you cash-poor, having insufficient resources for other important expenses like groceries, utility bills, health expenses, retirement savings, or emergency funds.
However, in certain scenarios like living in high-cost areas or prioritizing proximity to work (thus lowering your need for a car), bending the rule temporarily might be justifiable. Always reassess your budget to account for flexibility.
Yes, an increase in your hourly wage can slightly affect the amount of rent you can afford. The raise translates to an increased monthly income, which may enable you to comfortably afford higher rent.
However, it’s important to ensure this does not erode financial stability because lifestyle creep is real. Aim to maintain the key balance between comfortable living and responsible saving.
It’s recommended to reassess your rent affordability annually or when there’s a significant change in your financial situation.
Such changes could be a raise or decrease in income, new financial obligations, or plans to save for major future expenses. Regular evaluations ensure your housing budget aligns with your current financial realities.
Is $22 an hour a livable wage?
Given the average rent in the United States is $1702, $22 an hour is not a livable wage, especially in San Francisco or New York. As such, the maximum you should be spending on rent is $1144.
If workers are unable to afford to live in the communities they work in, it puts the whole system under stress. While there have been movements to create low-income housing, it is slow to happen and for many, difficult to apply.
Ultimately, whether this wage allows for a comfortable lifestyle depends largely on your financial habits, commitments, and where you live.
With good financial planning, including a solidly crafted budget that factors in rent, savings, and living expenses, a $22 hourly wage can indeed cater to a decent lifestyle.
Remember to reassess your budget regularly and adjust as necessary to meet changing financial landscapes.
Making wise financial decisions now can lead to a financially secure future. Now, do you have the habits needed to be financially stable?
Source
FiftyThirtyTwenty. “About.” http://fiftythirtytwenty.com/about.html. Accessed January 3, 2024.
Rent. “Rent Growth in Half of Suburbs Outpacing Metro’s Core City.” https://www.rent.com/research/suburban-growth-outpacing-core-city/. Accessed January 3, 2024.
Rent Cafe. “Average Rent in the U.S.” https://www.rentcafe.com/average-rent-market-trends/us/. Accessed January 3, 2024.
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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Wondering how to set financial goals you’ll actually follow through on? Have questions about how to avoid end-of-year financial regrets? The Nerds have you covered! Take your New Year’s Resolutions to the next level by establishing SMARTR financial goals that you can achieve in 2024.
Explore strategies for setting realistic goals in 2024 with hosts Sean Pyles and Elizabeth Renter as they discuss “regrets and resolutions” and share ideas to help you take your 2023 experiences in stride, learn from them, and use them as stepping stones for creating a stable financial future.
They explore some of the financial regrets that haunted many Americans in 2023, including overspending and saving too little, and provide tips for avoiding common financial regrets, such as taking on too much credit card debt. Sean also explains his SMARTR framework for setting and achieving goals, which you can apply to your New Year’s Resolutions or any other goal you have in 2024.
In their conversation, the Nerds discuss: SMARTR financial goal setting, financial regrets, setting realistic goals, budgeting, saving, credit card debt, large expenses, New Year’s resolutions, goal setting framework, emergency funds, and retirement savings.
Check out this episode on your favorite podcast platform, including:
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Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
Happy New Year, dear listener. I hope you’re recovering from any festivities that helped you bring in 2024. Did you make any resolutions? Here at Smart Money, we’re not really into those, but goals are okay, and so is looking back at the mistakes you made last year, so you hopefully don’t make them again.
Elizabeth Renter:
I like to think of my financial goals similarly to how I think about my health goals. I can’t do this all or nothing stuff. It’s totally unsustainable and it creates this very unhealthy pattern of extreme restriction and then indulgence. So not spending anything on takeout is very unrealistic for me, and I know that, just like totally giving up pizza.
Sean Pyles:
Welcome to NerdWallet’s Smart Money Podcast. I’m Sean Pyles.
Elizabeth Renter:
And I’m Elizabeth Renter.
Sean Pyles:
This episode kicks off our Nerdy deep dive into your money in 2024. In this special series throughout the month, we’ll be looking at everything from investing to the housing market to how to manage credit as you move through this year. Elizabeth, any money, hopes and dreams for 2024?
Elizabeth Renter:
Well, I am planning a lot of travel in the coming year, so I suppose the money, hopes and dreams of that would be finding the right flights and hotels to do it in style without overpaying. I’m actually planning the strategic opening of a new credit card account to help make this happen.
Sean Pyles:
Very Nerdy, Elizabeth. Well, I’m with you. I’d say my main financial hopes and dreams are to finish up school to become a certified financial planner professional. Still about 10 months to go on that. And as ever, I’m trying to tame the internal beast that is my desire for the impulse purchase.
Elizabeth Renter:
Well, congrats in advance on the CFP, Sean. I’m actually finishing grad school this year, so we will absolutely have to toast to achieving these goals when we get there.
Sean Pyles:
Absolutely, because I am sure we will need it then.
Elizabeth Renter:
100%, Sean. I like that we’re talking about hopes and dreams here instead of resolutions. New Year’s resolutions seem to be such an overdone hoopla at the beginning of the year, and it does give you some early motivation, but that motivation fizzles out by March. So we start each year with these huge new year, new me resolutions, and then life or the economy gets in the way and falling short feels really, really bad. Life happens to all of us and we really shouldn’t beat ourselves up with these regrets. But maybe instead look at what went wrong and how to adjust moving forward on any schedule, not just the calendar year.
Sean Pyles:
Totally. I mean, I’m all for goal setting and having a well-planned approach for accomplishing goals because in fact, goal setting is one of the most important things that we need to do in our financial lives because money is just a means to an end. And if we don’t know what we want from our money or how we will accomplish it, making meaningful progress in life can be quite difficult. But that said, the resolution framing can be overly rigid or lead people to make unrealistic goals that lead to self-flagellation when you don’t accomplish them.
Elizabeth Renter:
Yes, for sure, Sean. Listen, goals are my love language, my love language to me. When I whisper sweet nothings to myself, it seriously often involves big goals.
Sean Pyles:
Whatever helps you accomplish them, I suppose. But practicing self-care and self-love is important and we are going to follow that advice today, although we are going to look back at some regrets, but only in the way that we can learn from them going forward. And we’re going to call it Regrets and Resolutions because that just scratches the alliteration itch in my brain. But really it’s all about goals this episode. All right, well listener, we want to hear what you think too. Send us your financial hopes and dreams for 2024. Leave us a voicemail or text the Nerd hotline at 901-730-6373. That’s 901-730-NERD, or email a voice memo to [email protected]. Stay with us. We’re back in just a moment with some ways to plan a good year in money.
Elizabeth Renter:
Sean, I wish I ended the year with more in the bank, but I think that’s pretty true every year. I can’t really point to one thing and say I wish I would’ve done it differently. So maybe no true regrets. How about you?
Sean Pyles:
No “regerts.” Well, I regret that I have to pay my student loans again. But on the whole, I’m feeling pretty good about how I managed my finances last year, although I guess the real test will be when I go to file my taxes.
Elizabeth Renter:
For sure. Well, interestingly, about two thirds of Americans do have some money regrets from 2023. At NerdWallet, we commissioned a survey with The Harris Poll towards the end of last year. And one silver lining of all of those regrets is that 75% of those people say they’re going to use them to do better this year. And Sean, we had a lot of headwinds to contend with last year.
Sean Pyles:
Yeah, we started off 2023 with high inflation and then to combat that, the Fed kept hiking interest rates, and throughout the year, everything from credit cards to mortgages became more expensive. So Elizabeth, let’s talk about some of those regrets people had. What is the biggest one?
Elizabeth Renter:
Americans wish they had saved more in 2023. Almost one fourth regret not saving enough for their financial goals and 21% regret not saving more for emergencies.
Sean Pyles:
That makes sense. American’s personal savings rate or the amount of disposable income that we save went through the roof early in the pandemic, spiking as high as 32% in April 2020, but we’re saving a lot less now. In October 2023, the personal savings rate was a lot lower at nearly 4%. So is it possible to say how likely it is that people will be able to save more money this year?
Elizabeth Renter:
Well, it depends. As you said going into 2023, some households still had that excess savings from pandemic stimulus payments and student loan forbearances. So if you’re coming into 2024 with less in the bank and higher debt payments, it could be more difficult. That said, inflation is moderating. So the costs that were rising at a pretty considerable clip one year ago have slowed and wages in some cases have caught up.
Sean Pyles:
Okay, well, let’s give a few tips for fixing this regret.
Elizabeth Renter:
Sure. Well, I’d like to focus the biggest piece of advice on that one in five Americans who regret not saving for emergencies. That’s definitely where you should start. Ideally, you’ll have several months worth of living expenses set aside in case of emergencies, but that can be a very tall order, especially if you’re starting from zero. So start small, aim for a few hundred dollars and then up it to $500 and then $1,000 and so on. And whether you’re saving for emergencies or a home down payment, set specific benchmarks to help you get there. For example, that could mean setting up a direct deposit into a savings account for $100 out of every paycheck with the goal of having $1,200 by mid-year. So you’re setting specific dollar amounts and timelines and it’s automated.
Sean Pyles:
Love it. And we’ll talk later on about how important it is to take small steps when you’re trying to achieve big goals like building a solid emergency fund. So Elizabeth, what is next on the list of Americans’ money regrets from 2023?
Elizabeth Renter:
Overspending. 22% of Americans regret overspending on entertainment in 2023. So that includes dining out, going out for drinks, going to the movies and that sort of thing. Also, about 1 in 10 regret overspending on travel and 11% regret overspending on an event like a wedding or a graduation party.
Sean Pyles:
We had a lot of big events in 2023. I mean between Taylor Swift’s Eras tour and Beyonce’s Renaissance tour, there were some expensive events last year. Although I bet the folks who got tickets to those concerts do not regret spending a single penny on those experiences. Elizabeth, did you see any expensive concerts last year?
Elizabeth Renter:
Unfortunately, no. I currently live in a really small town with exactly zero venues. So had I gone to a concert, it definitely would’ve cost a pretty penny. What about you, Sean?
Sean Pyles:
Well, I did see Diana Ross when she came to town, but to be honest, I actually have no idea how much those tickets were because my partner bought them. I kind of just wanted to brag about seeing the boss on tour. Anyway, I guess the overspending regret isn’t totally surprising. Part of the reason people can’t save is that they’re potentially overspending.
Elizabeth Renter:
Yeah, for sure, Sean. Those things often go hand in hand, especially when prices are rising.
Sean Pyles:
And frankly, if you were overspending last year, you were part of the reason the economy kept humming along. So thank you, but maybe don’t do it as much this year. So Elizabeth, any ideas to make that happen or more to the point, not happen?
Elizabeth Renter:
Well, Sean, the answer to this regret is the very unsexy panacea: a budget. Listen, some people love a budget. They have spreadsheets outlining their spending limits and where all of their money is going. Here’s looking at you, Nerds. But you don’t have to go that far if you know that’s unrealistic for you. Instead, set a budget for the things you need budgeting help on. If you overspend on dining out, set a weekly limit for that. If you overspend on travel, set an annual travel budget. Sometimes the idea of a capital B budget is super off-putting, but you can benefit from these very specific targeted spending limits too.
Sean Pyles:
Yeah, people’s eyes, or I guess in the case of a podcast, people’s ears, can glaze over when you talk about budgets, but I like to think of them more as a conversation that you’re having with your finances. You are figuring out what money you have to work with, where you’re going to allocate it and determining how to live your values through your daily spending. And I find that really empowering, personally.
Elizabeth Renter:
Sean, as a Nerd, you would. That totally tracks.
Sean Pyles:
Yes. Fair enough. Well, let’s move on to regret number three.
Elizabeth Renter:
In 2023, 16% of Americans regret not reducing or paying off their credit card debt and 16% regret taking on too much credit card debt.
Sean Pyles:
And this is just perennial. I mean, this is something people struggle with and come to regret year in and year out. What would be your top things to keep in mind in 2024 if you’re struggling with this?
Elizabeth Renter:
Well, you’re absolutely right, Sean, but we did see credit card debt shrink during 2020 and 2021. So as we spent down that excess savings and embarked on revenge travel in 2023, we may have seen folks go back to relying on cards the way that they did before the pandemic, and now we have high interest to go with it. So if you’re taking on more debt, it could be more difficult to pay it off. So first off, if you’re hoping to pay down debt, I’d refer back to my earlier suggestion about making very clear targets, specific amounts and timelines. But if you’ve begun using credit cards in lieu of an emergency fund, the problem could be bigger. In that case, you may want to look into debt relief options like consolidation or debt management to help identify resources and formulate a plan to get your finances back on track.
Sean Pyles:
Well now that we’ve dealt with regret, how about some resolutions or let’s call them goals, even though I still love the alliteration of regrets and resolutions. Elizabeth, you mentioned earlier in the show that you don’t really like to make resolutions and I don’t really either, frankly. Can you talk a bit about why, especially in the realm of personal finance?
Elizabeth Renter:
Yes. So I like to think of my financial goals similarly to how I think about my health goals. I can’t do this all or nothing stuff. It’s totally unsustainable and it creates this very unhealthy pattern of extreme restriction and then indulgence. So not spending anything on takeout is very unrealistic for me, and I know that just totally giving up pizza. If I restrict myself this way, I won’t just fall off the wagon, I will absolutely crash the wagon and burn down the entire village. I’ll celebrate not having takeout for a month by splurging on takeout that costs twice as much.
Sean Pyles:
Yeah. One extreme to the other.
Elizabeth Renter:
Right, exactly. And then you’re dealing with the regret of all of it too. So I try to find balance between what’s going to get me closer to my long-term objectives while not making my life miserable.
Sean Pyles:
Yes, I am also all about going slow and steady while giving myself room to just be human and mess up every once in a while. Also, Elizabeth, something that our listeners might not know is that you’re a competitive powerlifter, so you know a thing or two about sticking to ambitious health goals.
Elizabeth Renter:
I try. I try.
Sean Pyles:
Yes. Within reason that you’re not lifting too much weight, hopefully injuring yourself. But going back to the resolution versus goal thing, I think the time box of a resolution as something that you focus on for only one year or realistically, maybe a single month before you totally forget about it, can be really limiting when it comes to financial goals. The resolution framing can lead people to expect huge and dramatic changes in their finances a lot faster than is actually possible. The truth is that it can take years to build up that solid emergency fund, not to mention how long it takes to save for retirement, but that is not to say that you can’t take steps today or tomorrow and the next day to better your finances. In fact, those steps that you do take today are in all likelihood the only things that will get you there.
Elizabeth Renter:
You’re absolutely right, Sean. Those incremental changes and growth really do build up over time, whether we’re talking about money or power lifting. You just keep plugging away and accept sometimes that that path is not going to be linear.
Sean Pyles:
Yeah, for sure. Well, we kind of went through some advice for not repeating the regrets we might’ve had in 2023. How do you think about that as different from goal setting?
Elizabeth Renter:
From my perspective, regrets and setbacks are really just things that happen on your way to a goal. You’re going to have periods of progress and periods that don’t go quite like you wanted. Sometimes those setbacks are your doing entirely and other times they’re not. But they generally don’t upend your ability to attain your goals altogether. Maybe I had to divert some of my monthly savings towards an unexpected car repair, or maybe I went over my travel budget. Does that mean I won’t hit my savings or spending goals? Not necessarily. It might set them back by a few months, but it doesn’t quash my goals. They’re still attainable.
Sean Pyles:
Yeah, it’s all about giving yourself grace and focusing on that long-term. All right, well let’s suggest a few financial goals that people could endeavor to achieve over the coming year. What would be your first suggestion?
Elizabeth Renter:
Well, Sean, I’m going to give the mom advice that we probably all need to hear, and that is try your best. Set a goal to just try your best, but don’t just give that lip service. Really try your best. And the thing I like about this goal is that it looks entirely different for different people. For some, setting aside, $50 a month for 6 months into a brand new emergency fund will be their baseline goal. And for others it might be bumping up their retirement contributions to, I don’t know, 12% of their salary. In either case, you could hit a tough month and have to adapt, but don’t in that situation just throw up your hands and exclaim, “Yeah, all bets are off. I guess I’ll try again next year.” Keep going. Just keep doing the best you can. What about you, Sean?
Sean Pyles:
Well, I touched on this earlier, but I’d recommend people spend time getting more acquainted with their relationship between their spending and their values. It can be easy to just spend in a way that’s not super thoughtful or not aligned with the values that we hope to embody each day. So going back to that budget conversation you’re having with yourself, think about what you want from your life and what kind of world you want to live in. And then ask yourself if you are directing your money accordingly. That’s a question that I try to ask myself a lot, and the answer isn’t always going to be yes, but it’s something to be mindful of. Okay, how about one more?
Elizabeth Renter:
Well, I like what you just said, Sean. Being more mindful of how you spend can help keep you from those overspending regrets. And building on that, I’d suggest taking steps to literally slow down when you’re spending. If you just loaded up a cart at an online retailer, make a practice or a goal of just walking away and coming back tomorrow. Give it a day before you check out. I do this and frequently find I’ve mindlessly thrown things in the cart that I really don’t want to spend my money on.
Sean Pyles:
Yeah, I love that. And as a person of the ADHD experience, I can sometimes get hyper fixated on a purchase that I want to make, but if I build in that buffer of a day or two, I’ll find that I actually don’t want that thing after all. And if I don’t buy it, that means I have more money for things I actually do care about. So as we make these suggestions for resolutions/goals, how about we provide some advice for how to actually make them happen? What do you do on that front? Any personal tips, Elizabeth?
Elizabeth Renter:
Yeah. Well, for the big goals, I tell somebody, I have a seriously big fear of looking like I fell short. And by telling someone what I’m trying to achieve, I build in that accountability. Sean, I know accomplishing goals is something of a pet topic of yours. So what about you?
Sean Pyles:
Yes, I do also love an accountability partner. I’ve made my life partner, Garrett, my accountability partner for my CFP coursework. I’ll tell him that I’m going to do X assignment. And even if I don’t feel like doing it, just knowing that I told him that I would do it can push me to actually get that work done and do it in a way that’s meaningful. So I’m learning what I need to learn.
Elizabeth Renter:
Exactly. Sean, so you want to give us the rundown of how to actually accomplish goals this year?
Sean Pyles:
Yes, I would love to. So we use the SMART goal setting framework here at Smart Money, perhaps not totally surprising, and I add my own twist by making them SMARTR goals. So for those who are not familiar, SMART is an acronym for Specific, Measurable, Attainable, Relevant, and Time-Bound. And the extra R that I add at the end is for Rewarded. And I’ll explain why in a little bit.
Elizabeth Renter:
I’m excited to hear this, Sean. So walk us through how it all works.
Sean Pyles:
Okay, starting with the S, specific, make your goal very clear and tangible. For example, maybe you have a goal of investing more this year. Okay, great, but what does that really mean? Are you going to max out your IRA or 401(k)? Or get set up with a robo-advisor account? The more precisely you can envision your goal, the easier it will be to map out the path to get there.
Elizabeth Renter:
That makes perfect sense. You can’t accomplish a goal if you don’t know what it is.
Sean Pyles:
Yeah, exactly. So now onto the M, measurable, you need a way to quantify your goals and track the progress that you’re making. So to continue that investing example, if you want to max out your IRA, the maximum you can contribute in 2024 is $7,000 or $7,500 if you’re 50 and older. Figure out how much you would need to contribute each month to hit that goal.
Elizabeth Renter:
So quick mental math. Totally not using a calculator here. If you want to hit that $7,000 amount, you’d need to contribute about $583 each month and then track your progress throughout the year, maybe on a spreadsheet or in a journal.
Sean Pyles:
Yep. Okay. And that brings me to the A in SMARTR goals, attainable. For a lot of people contributing $583 a month into a retirement account just is not feasible. So in that case, what’s a more affordable option? Look into your monthly income and expenses, that whole budgeting conversation we’ve been talking about, and see how much you could actually contribute. Maybe it’s $200 a month, so you would contribute a total of $2,400 to your IRA over the year, which is still awesome.
Elizabeth Renter:
Very awesome. Okay, Sean, we have the specific, the measurable, the attainable. What about the rest? This is testing my spelling as much as anything.
Sean Pyles:
Yes. So the R and the T stand for relevant and time-bound. You want your financial goal to be something that’s actually relevant to your life goals, your passions, and your values. If you’re contributing to a retirement account because you think it’s what you should be doing and it’s not something you actually care about, you’re not really likely to meet that goal. And with time-bound, that is when you put a time box on your goal. So to round out this example, if you want to save a certain amount for retirement in the calendar year of 2024, you’d have the monthly steps that you take to meet your annual goal. And at the end of the year, guess what? You did it. Goal accomplished.
Elizabeth Renter:
Yay. Congratulations. But wait, Sean, you mentioned that R, your finishing touch. What’s that all about?
Sean Pyles:
Yes, I’m so glad you didn’t forget that, Elizabeth. The final R is for Rewarded. As the child of behavioral psychologists, I am a big proponent of positive reinforcement and making the process of accomplishing your goals as enjoyable as possible. Because the more you like doing something, the more likely you are to keep doing it. So build in rewards as you take the small daily or monthly steps towards achieving your goal.
Elizabeth Renter:
I love that idea. So when someone makes that monthly deposit into their IRA, maybe they go out for ice cream or do a shot of tequila, whatever makes them happy.
Sean Pyles:
Exactly. Yeah, just don’t go too wild. You don’t want to blow your retirement savings budget on that top shelf tequila. So that is the SMARTR framework, and it can be really helpful as you accomplish goals over the coming year. But also as you’re working away to save for retirement or whatever, I want to encourage you, listener, to give yourself grace if you’re not able to fulfill all of those goals this year. Like Elizabeth said, life happens. You might have a big expense one month that sucks up the money you would’ve put toward retirement. That’s okay. Take a breath, regroup, and just pick up the pieces next month. No matter what, just please don’t be harsh with yourself. It is simply not worth it. Try your best. That’s all you can do.
Elizabeth Renter:
Well said, Sean, do your best and keep going. You might not see other people struggling towards their goals, but they are. Remember all those Americans who had money regrets last year? This isn’t a linear process. Sometimes things are hard and sometimes they surprise you with how well they go.
Sean Pyles:
So what we’ve learned today is that A, lot of people have money regrets from 2023. B, you can use those to change habits in 2024. And C, make some SMARTR goals instead of resolutions when it comes to your finances.
Elizabeth Renter:
I like it, Sean. So what’s next for this 2024 look ahead series?
Sean Pyles:
Well, Elizabeth, we are going to take a look at what this year might bring in investing. Not that anyone can predict the markets, but that’s kind of the point.
Alana Benson:
If you have a well diversified portfolio and you’re investing for the long-term, like for retirement, there’s no real reason to stress about the ups and downs of the market in the short term. And yes, in this instance, again, one year is the short term.
Elizabeth Renter:
For now, that’s all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected]. Also visit nerdwallet.com/podcast for more info on this episode. And remember to follow, rate and review us wherever you’re getting this podcast.
Sean Pyles:
This episode was produced by Tess Vigeland and Elizabeth. I helped with editing. Kathy Hinson helped with fact-checking. Kaely Monahan mixed our audio. And a big thank you to NerdWallet editors for all their help.
Elizabeth Renter:
And here’s our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Sean Pyles:
And with that said, until next time, turn to the Nerds.
When you apply for a new job, you know that you’ll need to submit a cover letter and resume. It’s the best way to show your past work experience and qualifications. But did you know that you can also create a renter resume and rental cover letter as you hunt for a new place to rent?
That’s right! A renter resume is a great way to highlight your past rental history, detail your income and occupation and help the landlord get to know you better. Renter resumes help you stand out from lots of applicants. They also show your future landlord just how serious you are about wanting to rent a home from them.
When you find yourself looking to rent a new home and you want to better your odds of securing that lease, check out this sample letter to rent a house and draft up your own renter resume.
When to create a renter resume
Once you’ve decided that it’s time to move and find a new place to live, you’ll start the house hunt to find some new locations to rent. When you go to rent a new place, you’ll have to fill out a rental application, which is standard practice.
While a renter resume isn’t required, it’s a nice added touch to help the landlord know you better. Here are a few scenarios when you should create a renter resume:
It’s a competitive market
Just like dream jobs, your dream apartment may go up on the market and quickly get snatched up. A renter resume is a great way to stand out from other potential tenants in a hot market.
Your rental or job history is spotty
Landlords look at your past job and rental history to predict what kind of tenant to expect. Property managers want to rent to people who have a consistent income, will pay the rent on time and will become a good edition to the neighborhood and other tenants.
If your history has gaps, a renter resume is a great way to explain the circumstances surrounding it. This is your chance to vouch for yourself, explain your history and convince the landlord that you’re a worthy candidate for the rental.
You don’t have a rental history yet
In some cases, people like students or newlyweds who have never rented before will lack rental history. In these situations, you won’t have a rental history to highlight and show that you would make an excellent tenant.
Use a renter resume to explain who you are and why you’d be a great tenant.
What to include in your renter resume
If you think a renter resume is a good option for you, here are the details you must include:
Contact information: Include your contact information like your email and phone number so the landlord can easily reach you
Objective: Include two to three sentences that clearly state what you’re hoping to achieve and why it’s important to you. Make this a short and concise paragraph that outlines why you want to rent a new home.
Background and personal information: Include details like hobbies, interests or how you spend your free time. While you don’t have to include details like race, gender, religion, familial status or age — absolutely include things that’ll humanize your application and show your personality.
Rental history: Talk about where you last lived, why you’re moving and what you’re hoping to get out of the new location. This is your opportunity to talk about what kind of neighbor you are and how you’ll be as a future tenant.
Work or student history: Another important thing to include in your renter resume is your work or student history. If you’re currently employed, you can provide information about your job status. This shows you’re a steadily employed person who will pay rent on time. If you’re a student, showcase your dedication to education. Talk about how those qualities will apply to you as a tenant, too. Landlords want to rent to dependable, stable people so use your work history and ethic clear.
References: While you can put lots of good things about yourself on paper, a personal reference is incredibly important to see what other people say about you. When you include references, avoid listing family members. Instead, put people like your manager, past neighbors or mentors. If your landlord calls them and asks about you, these people will advocate for you.
Renter resume template
We’ve included a renter resume template to use as a sample letter to rent a house. Simply fill in the blanks with your personal information. You can also download the word document template here.
Your name Email address Phone number Current address
OBJECTIVE: Write two to three sentences explaining your goals and motivations for wanting to move to this location.
(Example: I am interested in renting this home from you as I’m looking for a home in a location that is closer to work, has more space and is located in a neighborhood where I can walk and enjoy my neighbor’s company. This location seems like the perfect fit as it meets my needs and would be a great place to settle down long-term.)
BACKGROUND AND PERSONAL INFORMATION: Write two to three sentences about who you are, what you like to do and why you’re a good tenant.
(Example: I was born and raised in Salt Lake City and am now looking for a home of my own to rent. I went to school at the University of Utah and graduated with a degree in marketing. My husband and I are looking for a home where we can raise our two children. We like to go on walks, visit new parks, picnic as a family and explore new places. The location of this home is perfect for us as it’s close to work and good schools. We are a friendly, outgoing family who is eager to rent in a safe, clean neighborhood full of good people.)
RENTAL HISTORY: Include three to four sentences about where you’ve previously lived and why you’re moving. This section is very important because it’ll indicate what type of renter you are.
(Example: Before looking for a new place to live, I rented an apartment and resided there for X years. The reason I’m looking to move is that I want a place with more space and a backyard. I always paid the rent on time, kept the place clean and orderly and was a courteous neighbor at my previous location.)
WORK HISTORY: Draft three to four sentences detailing your work history, proof of income and employment record.
(Example: I’ve worked at the same company for five years. I’m dedicated to my work and company, which shows stability. I’m a hardworking person who values my job, hard work and a good work-life balance. When switch jobs, I make sure my finances are in order beforehand and have other work options lined up so I can stay consistent with an income.)
REFERENCES: Include a list of two to three references, your relationship to them, their phone numbers, email numbers and the best time to contact them. Make sure you let the references know that you’ve listed them so they are not caught off guard if the landlord reaches out to them.
Use your renter resume to impress future landlords
Once you’ve found the perfect place to rent, it’s time to write the perfect sample letter to rent a house. A one-page renter resume lets you stand out from other applicants and delight your future landlord.
Take a little extra time to write a renter resume using our template. You’ll find yourself moving into your dream home in no time.
Sage Singleton is a freelance writer with a passion for literature and words. She enjoys writing articles that will inspire, educate and influence readers. She loves that words have the power to create change and make a positive impact in the world. Some of her work has been featured on LendingTree, Venture Beat, Architectural Digest, Porch.com and Homes.com. In her free time, she loves traveling, reading and learning French.
In 2020, there were 43 million renters. With a high demand for apartments and houses and limited supply, it is difficult to secure the exact place you want to rent. In a highly competitive rental market, how do you stand out from other renters and snag the perfect place? Write a rental cover letter.
Yes, you read that right! We suggest including a rental cover letter with your rental application to help your application shine compared to other potential tenants. We’ll explain why you should write a rental cover letter and we’ll even include a sample letter that you can use.
Why write a rental cover letter
Typically, you’d include a cover letter with a job application to summarize your past experiences, highlight your best qualities and advocate for why you deserve the job. Well, the same is true for the housing market. Including a rental cover letter can help you stand out from other applicants and leave a lasting impression with the landlord, especially in cities or neighborhoods where there are fewer rental vacancies.
While it’s not required to include a rental cover letter with your rental application, it’s an extra step you can take to show the landlord that you’re serious about wanting to rent from them and provide additional context about who you are and why you’d be a stellar tenant.
Criteria landlords look for
When landlords are sifting through rental applications, there are a few things they look for to help them decide who they should pick. Landlords look at:
Credit history
Employment history
Rental history
Income
References
Background check
Remember — landlords want to rent apartments or houses to someone who will pay the rent on time, keep the property in tip-top condition and be a polite neighbor. All of these things usually go into the rental application itself, but a rental cover letter is an extra opportunity for you to showcase that you’ll be an ideal tenant.
It’s especially important when renting because you’ll likely have your own yard to maintain and be living next to other renters or homeowners that you’ll want to impress.
Things to include in your rental cover letter
So, what exactly should you include in your rental cover letter? Here are a few things to consider including and how they may help you out in your hunt for the perfect place to rent.
Highlight your employment history
Because landlords want to rent to people who have a steady income and will pay the rent on time each month, providing more information about your employment history can help you out. For example, you could share how many years you’ve worked at the same place which will show that you’re a reliable, steadily-employed person.
Share your hobbies
To show a bit of your personality and humanize your application, you could include your hobbies and share what you like to do on the weekends and in your free time in your rental cover letter. This is appealing to landlords who rent houses and apartments because they’ll care about how you’ll interact with the other people in the neighborhood.
Discuss your philosophy on what makes a good neighbor
Everyone wants to live next to good neighbors. In your sample letter, you could include a story about how you’ve connected with neighbors in the past to showcase that you’re the ideal neighbor.
Explain why you want to live in this home and neighborhood
If this is the perfect home for you, share that in the rental cover letter. Share specific examples of why you chose this apartment or house and neighborhood. Those details will show that you truly care.
All of this is optional, but sharing these details will highlight who you are and help personalize your application. It’s also important to remember that under the Fair Housing Act, landlords cannot discriminate based on race, color, national origin, religion, sex, familial status or disability. You do not need to include any of this information in your rental cover letter.
Sample letter to rent a house or apartment
This sample letter is an easy-to-use template that you can use when drafting your own rental cover letter. Simply fill in the blanks and customize as needed.
Download a PDF of the cover letter template Download a Word Doc of the cover letter template
(Your name) (Address) (City, State ZIP Code)
(Date)
(Landlord or property manager name) (Address) (City, State ZIP Code)
Re: (Your name) Renter Cover Letter for (Address or property name)
Dear (Landlord name),
My name is (Your name) and I’m writing to you because I’m very interested in renting the home that’s available at (Address or property name). I was particularly interested in this place because (Reasons you want to rent there).
I currently am a renter at (Current address) but am eager to move because (Reason for wanting to move).
I’m sure you receive several rental applications each day, so I wanted to take some time to help you get to know me a little better and show you why I’m the best applicant for this vacancy.
(Highlight of employment history)
(Rental history highlight)
(Something about your hobbies, passions or interests)
(Note about how you’re a good neighbor and tenant)
(Quote from a reference about your character)
Based on these facts listed above, I think you’ll find that I’m a reliable, good neighbor and tenant who will pay my rent on time, keep the apartment in mint condition and communicate easily with you about any and all needs.
Please feel free to reach out to my references or to me personally with any questions or concerns you may have. I’m eager to rent from you and look forward to your decision.
Finding and securing a place to rent is difficult, so you want all the tips and tricks you can get. By writing a rental cover letter, you’ll be one step ahead of other potential renters and will be one step closer to moving into your new home.
Sage Singleton is a freelance writer with a passion for literature and words. She enjoys writing articles that will inspire, educate and influence readers. She loves that words have the power to create change and make a positive impact in the world. Some of her work has been featured on LendingTree, Venture Beat, Architectural Digest, Porch.com and Homes.com. In her free time, she loves traveling, reading and learning French.
Inside: Ever wondered how much rent you can afford on a particular hourly wage? Use the rent calculator to see what you can afford on $17 an hour. Find out from the experts in this guide.
Honestly, this is something most people don’t think about until after they get themselves in a troubling situation.
Determining rent affordability is paramount in your financial planning. It’s important to strike a balance between comfortable accommodation and fiscal responsibility to avoid financial strains down the road.
There exists a direct correlation between your income and the rent you can afford to pay. Higher income opens doors to pricier accommodations while lower wages might enforce budget constraints. Understanding this relationship is crucial.
It guides your housing decisions and helps maintain a stable financial footing.
By calculating your rent affordability, you can set a clear budget, establish your housing needs, and navigate the real estate market with ease.
How much rent can I afford making $17 an hour?
If you make $17 an hour, based on a standard 40-hour work week, your gross income would come up to approximately $2,946 per month.
If you follow the 30% rule, this means you should allocate a maximum of $883 each month for rent.
$2946 x 30% = $883.80
However, remember this is a rough estimate and your specific expenses and financial obligations should also be taken into consideration before deciding on a rent budget.
What Percentage of My Income Should Go to Rent?
This is a good question to consider.
Even better when you are trying to figure out how much to save before moving out.
The 30% Rule Explained
The 30% rule is a simple guideline suggesting that one should allocate no more than 30% of their gross (before taxes) monthly income toward rent.1
This rule of thumb has been widely adopted as a measure of rent affordability. The beauty of the 30% rule lies in its simplicity and ease of use, allowing for quick budgeting while maintaining room for other essential expenses.
Be Conservative and Stick with 20%
According to Money Bliss budgeting percentages, adopting a more conservative approach to budgeting by allocating only 20% of your income towards housing costs can be more beneficial.
If you follow the 20% rule, this means you should allocate a maximum of $499 each month for rent.
$2946 x 20% = $499.20
This strategy helps to account for additional expenses such as utilities, unexpected repairs, and other costs that often accompany home ownership or renting.
This reduced allocation promotes being smart with your money to avoid unnecessary financial stress.
When to Consider Stretching the 30% Rule
At times, it might be necessary to stretch the 30% rule particularly in high-cost areas or during short-term situations. It’s crucial, however, to understand the potential ramifications and adjust other spending habits to compensate.
A temporary overshoot could be justifiable if it leads to significant future benefits, like proximity to a well-paying job. Always remember, that this should be an exception rather than the norm.
How Does the Rent Calculator Work?
A rent calculator is a practical tool that aids in estimating the rent you can afford. You don’t want to be forced to live on a shoestring budget.
This simple calculator is based on your hourly income and spending either 20-30% of your gross income on rent.
Fine-tuning your budget is possible by adjusting the percentage you wish to spend on housing. Remember, the final number serves as a guide and may require adjustments based on your financial situation.
Breaking Down Your Monthly Budget
For savvy budgeters, adhering to the 50/30/20 rule can provide a clear framework for managing your expenses and growing your savings. While at Money Bliss, we went a step further to define it as the 20-50-10-20-0 budget rule. (save-basic expenses-give-fun spending-debt).
This approach gives a precise breakdown of your monthly budget, ensuring that you are living within your means while also setting funds aside for future financial security.
Housing Costs
The basic 50/30/20 rule suggests dividing your monthly net income into 50% for necessities such as rent and groceries, 30% for personal wants like clothing or travel, and designating the remaining 20% for savings goals or debt repayment.
By adding these to your housing budget, you get a realistic picture of your monthly accommodation costs.
When budgeting for rent, one must account for other housing costs. These may include utilities like gas, electricity, and water, as well as internet, cable TV, and trash collection. You might also need to factor in the renter’s insurance and potential parking fees.
Essential Living Expenses
In addition to housing, remember to consider essential living expenses in your budget. These include food, transportation, health insurance, and childcare.
In addition, we advise our readers to put aside about 15-25% of their net income for savings. Accounting for these factors ensures you don’t stretch your budget to the limit solely on rent.
Discretionary spending
While you need to cover essential living expenses, it’s also important to allocate funds for discretionary spending – we call it FUN spending.
This category involves non-essential purchases like eating out, entertainment, vacations, and shopping. Using the 50/30/20 rule as a guideline, 30% of your net income can be put towards these wants, allowing you to enjoy your income while staying financially sound.
Factors Influencing Rent Affordability
There are many factors that impact how much you can spend on rent. As such, this will vary from person to person as situations vary. While these numbers are gross income, you need to realize the amount of money coming out for taxes. Many people don’t understand gross income vs net income.
Furthermore, the cost of living and rental prices in your chosen location can greatly impact how much you can afford. So, use the rent affordability calculator!
Location and Rent Prices
The location of a home greatly influences its rent prices. HCOL vs LCOL is a real thing!
Proximity to the city center, schools, parks, and shopping centers typically equate to higher costs. For example, renting trends in 2023 indicated an increase in prices the closer you get to these amenities.2
By choosing to live a bit further out, you may be able to find more affordable rent payments.
Areas with higher crime rates will have lower rents but these tend to come with more issues.
Size and Type of Housing
The size and type of your dwelling can also significantly affect your rent. Large houses with multiple rooms naturally cost more, whereas smaller apartments or studios are less expensive.
The type of housing also plays a role; for instance, a modern, furnished apartment might cost more than an unfurnished one. Tailoring your choice to your needs and budget allows for comfortable living without overspending.
If you have a pet, don’t forget it may cost more plus you have a pet deposit.
Lease Length Considerations
Lease length can directly impact your rent. Longer leases often equate to lower monthly rents, offering landlords a sense of security. On the contrary, short-term or month-to-month leases typically come with a higher price tag due to their inherent flexibility.
Assess your personal situation and potential need for flexibility before deciding on the lease term.
Also, the amount you need to put down as a security deposit can be negotiated.
Tips to Maximize Your Rent Budget
Plan your budget carefully taking into account factors like income, potential expenses, and the cost of living in your chosen location. So, if you are thinking $5000 is enough to move out, you may be surprised.
Use the 30% rule as a guide but be aware that in high cost of living areas, you may need to adjust this percentage. When searching for a rental, compare the cost and amenities of different apartments in your preferred areas and see if there are nearby neighborhoods with cheaper rental costs.
Also, you may need to embrace cost-saving measures such as cooking at home and shopping frugally to free up more income for rent.
You can learn more about those areas on our site.
Tip #1 – Reducing Costs and Saving
There are several ways to reduce housing costs and save more in this tough rental market.
Consider downgrading to a smaller place or moving to a less expensive area.
Negotiate a longer lease term for a reduced monthly rent.
Maybe even consider becoming a permanent housesitter to free up your budget.
Small changes can lead to substantial savings over time.
Learn how to budget on a low income.
Tip #2 -Planning for Future Rent Increases
Each year when your lease is about to renew, always factor in the possibility of future rent increases, which could be influenced by trends in the real estate market and inflation.
Ensuring your income can keep up with these increases is necessary for maintaining affordability. Continually reassess your rent affordability, especially during annual lease renewals or job changes.
Tip #3 – Get Roommates
Sharing your space with a roommate is a practical way to cut down on your living expenses substantially. By having one or more people to share the rental costs, utilities, and even groceries in some instances, you are likely to free up a considerable portion of your budget.
However, it’s important to clearly set boundaries and expectations to maintain a smooth living arrangement.
FAQ on Rent Affordability
Spending more than 30% of your income on rent is generally not advisable. It risks leaving you cash-poor, having insufficient resources for other important expenses like groceries, utility bills, health expenses, retirement savings, or emergency funds.
However, in certain scenarios like living in high-cost areas or prioritizing proximity to work (thus lowering your need for a car), bending the rule temporarily might be justifiable. Always reassess your budget to account for flexibility.
Yes, an increase in your hourly wage can slightly affect the amount of rent you can afford. The raise translates to an increased monthly income, which may enable you to comfortably afford higher rent.
However, it’s important to ensure this does not erode financial stability because lifestyle creep is real. Aim to maintain the key balance between comfortable living and responsible saving.
It’s recommended to reassess your rent affordability annually or when there’s a significant change in your financial situation.
Such changes could be a raise or decrease in income, new financial obligations, or plans to save for major future expenses. Regular evaluations ensure your housing budget aligns with your current financial realities.
Is $17 an hour a livable wage?
Given the average rent in the United States is $1702, $17 an hour is not a livable wage, especially in San Francisco or New York. As such, the maximum you should be spending on rent is $883.
If workers are unable to afford to live in the communities they work in, it puts the whole system under stress. While there have been movements to create low-income housing, it is slow to happen and for many, difficult to apply.
Ultimately, whether this wage allows for a comfortable lifestyle depends largely on your financial habits, commitments, and where you live.
With good financial planning, including a solidly crafted budget that factors in rent, savings, and living expenses, a $17 hourly wage can indeed cater to a decent lifestyle.
Remember to reassess your budget regularly and adjust as necessary to meet changing financial landscapes.
Making wise financial decisions now can lead to a financially secure future. Now, do you have the habits needed to be financially stable?
Source
FiftyThirtyTwenty. “About.” http://fiftythirtytwenty.com/about.html. Accessed December 23, 2023.
Rent. “Rent Growth in Half of Suburbs Outpacing Metro’s Core City.” https://www.rent.com/research/suburban-growth-outpacing-core-city/. Accessed December 23, 2023.
Rent Cafe. “Average Rent in the U.S.” https://www.rentcafe.com/average-rent-market-trends/us/. Accessed December 23, 2023.
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