Connecticut, known for its coastal cities and rural areas dotted with small towns, is a state that offers a broad range of living experiences. From bustling urban centers to serene countryside, Connecticut provides various options for renters on a budget. While the state is often associated with wealth and high costs of living, particularly in areas such as Fairfield County and the Greater Hartford area, there are multiple cities in Connecticut where renters can find affordable housing. Based on our analysis, the five cheapest cities for renters are East Hartford, Waterbury, Bridgeport, Willimantic, and Bristol.
East Hartford, CT
Located on the eastern bank of the Connecticut River, East Hartford offers affordable living with a population of 50,036 and a surprisingly high median income of $59,954. A renter can find a 2-bedroom apartment with an asking rent of $1,312, quite affordable considering the city’s median home value of $168,300. East Hartford is home to many parks like Goodwin Park and Wickham Park, and is in close proximity to points of interest such as the Rentschler Field Stadium and the historic Main Street District.
Waterbury, CT
Waterbury, with a population of 107,841, is another affordable city in Connecticut. Despite a lower median income of $46,329, the city’s 2-bedroom asking rent is $1,250, which is quite reasonable. The city, known as “The Brass City” for its rich industrial past, offers a wealth of historic and cultural resources like the Mattatuck Museum and Palace Theater. Waterbury is also near the Naugatuck State Forest, providing ample opportunities for outdoor fun.
Bridgeport, CT
With a population of 145,014, Bridgeport is the largest city in Connecticut and one of the most affordable for renters. The city’s median income is $47,484, close to Waterbury, and the rent for a 2-bedroom apartment stands at $1,200. Filled with historical spots such as the Barnum Museum and beautiful seaside parks like Seaside Park and Pleasure Beach, Bridgeport offers a rich mixture of urban and outdoor delights.
Willimantic, CT
Willimantic is a smaller city of 18,669 residents nestled in Eastern Connecticut. Despite a lower median income of $35,630, the asking rent for a 2-bedroom apartment is $1,460, still within reach for many. Known for landmarks like the Willimantic Footbridge and the Mill Museum, the city carries a charm that’s distinctly New England.
Bristol, CT
Bristol, with a population of 60,039 and a median income of $68,485, offers a 2-bedroom apartment for a reasonable $1,410 rent. Home to the famous ESPN headquarters and the historic New England Carousel Museum, Bristol offers a blend of urban amenities and historic charm. This, coupled with easy access to beautiful parks like Rockwell Park, makes Bristol an affordable and desirable city for renters.
Methodology
The cheapest cities in each state were ranked based on its median home price and median asking rents for studio, one-, two-, and three-bedroom units. Prior to ranking, inputs were normalized, and weights were applied using a 1.25:1 ratio of asking rents to home prices. Data on home prices are from the U.S. Census 2016-2020 American Community Survey 5-year estimates. Data on asking rents are from Rent. Cities without data for one- or two-bedroom asking rents or a population of less than 10,000 were removed from this ranking. Any other missing values were zeroed and did not impact the final score.
Wow even the most hard-to-buy-for with these best-in-show finds for the home.
From space-savers to suit your culinary aficionado and gadgets even your handy father-in-law hasn’t heard of, these rental-friendly home gifts are sure to please even the most particular renters.
Take a look through our home gifts, where we have curated the best items to organize, decorate and add interest to their apartment. You might just find something here for yourself, while you’re at it.
No outlet, no problem – this modern and sleek cordless lamp looks luxe but exudes utility.
4.8 out of 5 stars – 43 ratings
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Light up your space with this sleek cordless lamp that’s not just stylish but also super practical. It’s the modern solution for a well-lit and wire-free atmosphere.
4.5 out of 5 stars – 370 ratings
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Forget the usual throw pillows – knot your way to cozy perfection with this unique gem. It’s not just a pillow; it’s a conversation starter that adds a touch of flair to your chill-out zone.
Storage ottoman that doubles as darling decor – done and done.
4.8 out of 5 stars – 130 ratings
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Meet the superhero of storage! This ottoman not only stashes your stuff but also doubles as decor. Decluttering has never looked this good – it’s the ultimate multitasker for a stylish living space.
4.5 out of 5 stars – 275 ratings
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Keep it classic and cozy with this timeless black & white throw. It’s the no-fail accessory for a comfy movie night or a stylish nap – because you can’t go wrong with a classic.
4.8 out of 5 stars – 2,166 ratings
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Add a touch of whimsy to your jewelry game with this white elephant holder. It’s not just a jewelry holder; it’s literally the perfect white elephant gift.
4.7 out of 5 stars – 1,625 ratings
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Sleek, smart and bedside-friendly – this docking station is a game-changer for your devices. Say goodbye to messy cords and hello to a stylish charging solution for the modern age.
4.5 out of 5 stars – 94,007 ratings
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Make meal prep a breeze with this 9-in-1 Veggie Chopper; it’s your secret weapon for slicing, dicing and conquering the kitchen with ease.
A counter-saving Cord Organizer to curb your cord conundrums.
4.4 out of 5 stars – 2,711 ratings
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Tame the cord chaos with this counter-saving cord organizer and keep your electronics in check without sacrificing style.
A bookend vase filled with“Tulips” for your black-thumbed but well-read friend.
4.6 out of 5 stars
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Combine literature and blooms with this bookend vase. Add a faux floral touch to bring your bookshelf to life – the perfect gift for your well-read, black-thumbed friend.
Whimsical (yet removable) wall decals.
4.6 out of 5 stars – 151 ratings
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Personalize your space without commitment with these whimsical, removable wall decals. Show your personality without risking your deposit!
16 tools, one handy gift.
4.6 out of 5 stars – 374 ratings
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Be the everyday hero with this 16-in-1 Multi-Tool, or should we say, toolbox, that fits in your pocket, ready to tackle whatever life throws your way.
Don’t forget the Command Strips.
4.7 out of 5 stars – 134 ratings
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Rebel against boring walls with this tin skeleton artwork. It’s lightweight enough for Command Strips but heavy-metal enough for even your most rebellious friend to rock.
Under Bed Storage to make the most out of that unused space.
4.8 out of 5 stars – 236 ratings
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Maximize your space with this under-bed storage solution, the ultimate secret weapon for making the most out of that underutilized space beneath the bed.
Enjoy the essence of a candle without the flame with this Black Cherry Diffuser.
4.4 out of 5 stars – 3,158 ratings
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What a scent-sational addition to your space! Create a cozy ambiance without the need for an open flame with this luxurious home gift featuring a unisex fragrance.
An apartment-friendly bar cart for your cocktail connoisseur.
4.7 out of 5 stars – 282 ratings
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Shake up your home entertaining with this apartment-friendly bar cart. Stylishly display all of those mixes, glasses and liquors to make mixing up the perfect cocktail in tight spaces a breeze.
Wall-safe decor or throw organizer? This ladder rack is both!
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Hang in there with this ladder rack that’s both wall-safe decor and a functional throw organizer. Say goodbye to crumpled piles of throws, and hello to style.
All the hot sauce, pantry space not required.
4.5 out of 5 stars – 6,125 ratings
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Turn up the heat without cluttering your pantry with this Hot Sauce Sampler. Do we see a fiery taste testing in your future?
Or for the adventurous type, try this DIY hot sauce kit.
4.6 out of 5 stars – 2,258 ratings
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Did you say more hot sauce? This DIY Hot Sauce Kit is an adventure waiting to happen – the perfect home gift for the bold and adventurous in your life.
Super absorbent, washable doormat for our fellow pet-loving clean freaks.
4.7 out of 5 stars – 215 ratings
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Keep it clean and cute with this super absorbent, washable doormat. It doubles as a dirt catcher – so pets get most of that outside muck off their feet before they prance through the apartment – and as a warning to incoming guests that they’re about to be loved on by something furry and sweet.
Space-saving smart lamp so your vibey friend can properly set the mood.
4.6 out of 5 stars – 3,453 ratings
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Light up your vibes with this space-saving smart lamp. It’s not just a lamp; it’s your ticket to setting the perfect mood without sacrificing precious space.
4.8 out of 5 stars – 15 ratings
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Cheeky friends will love this cheeky toilet topper. It’s a giggle-inducing and stylish way to bring a little fun to the smallest room in your home.
Whatever gift you give, have a (pillow) ball while giving it.
4.4 out of 5 stars – 41 ratings
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What we mean is to have a ball of fun with this playful Pillow Ball. Late-night pillow basketball, anyone?
The best home gifts for the holidays
While you most likely can’t afford to buy your friend or family member a new home for the holidays, you can find something in our list of home gifts above to make their space feel as cozy as possible. Even better: Our list above is all Amazon finds, so you can grab them at the last minute, too.
Kate Terhune is the Director of Brand at Rent. and leads the consumer brand, creative and event management functions for the organization. She has enjoys abstract painting and hanging with her family in her free time.
The average 30-year fixed mortgage rate just hit 8% for the first time since 2000, putting housing financing costs at historically high levels.
Given high prices and high interest rates, homebuyers must earn $114,627 to afford a median-priced house in the U.S., according to a recent report by Redfin, a real estate firm, which analyzed median monthly mortgage payments in August 2023 and August 2022.
The firm considers a monthly mortgage payment to be affordable if the homebuyer spends no more than 30% of their income on housing. At the time of the analysis, the average 30-year fixed mortgage was 7.07%.
The median U.S. household income was $75,000 in 2022, Redfin found. While hourly wages in the U.S. grew 5% over the past year, according to the real estate firm, that has not outpaced rising housing costs.
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Those current market trends have left homeownership out of reach for many people, experts say.
“Housing affordability is incredibly difficult for potential homebuyers,” said Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors.
How home affordability has changed
In August 2020, the typical monthly mortgage payment was $1,581, based on an average interest rate of 2.94%, Redfin found. At the time, the typical house cost roughly $329,000, and homebuyers would have needed an annual income of $75,000 to afford it.
However, those record-low levels were the result of “highly unusual events, like a pandemic and a nearly catastrophic financial crisis,” said Mark Hamrick, senior economic analyst at Bankrate.com.
Nowadays, the typical U.S. homebuyer’s monthly mortgage payment is $2,866, according to Redfin — an all-time high.
Phiromya Intawongpan | Istock | Getty Images
While the economy and the housing markets move through cycles, it’s unlikely for mortgage rates to decline substantially in the near term, especially as the Federal Reserve is expected to keep the benchmark rate high for longer, added Hamrick.
Additionally, the constrained supply of homes for sale is a “direct result of the lock-in effect,” said Hamrick. The low supply pressures prices upward as current homeowners are less compelled to move or put their houses on the market as they don’t want to trade their low-rate mortgage for one that is significantly higher.
“Higher rates are also increasing the cost and availability of builder development and construction loans, which harms supply and contributes to lower housing affordability,” Alicia Huey, NAHB’s chairman and a homebuilder and developer from Birmingham, Alabama, previously told CNBC.
‘This pain shall pass’
“People should know that this pain shall pass,” said Melissa Cohn, regional vice president of William Raveis Mortgage in New York. “In the next year or two years, interest rates will be lower, and people will have the ability to refinance.”
That said, competition for homes on the market is likely to be worse in a few years as interest rates cool, she said. There are many buyers who remain on the sidelines because of current high rates.
“When interest rates come down, everyone’s going to come back to the marketplace,” said Cohn.
How to decide: Buy now or wait?
The decision of purchasing a home is intensely personal and prospective homebuyers should tread with caution, experts say.
“When deciding to purchase a home, it comes down to personal finances, stability and the length of time they plan on owning,” said Lautz.
In addition to mortgage costs, prospective homebuyers should keep their other financial goals in mind, as well as maintenance costs, said Hamrick. The biggest regret among recent homebuyers was not being prepared for maintenance and other costs, according to a Bankrate survey.
However, “homeownership is the primary means of wealth creation in this country,” said Hamrick.
The typical homeowner has $396,200 in wealth compared to the average renter at $10,400, added Lautz.
First-time homebuyers may consider tapping retirement funds or taking advantage of first-time homebuyer programs that may offer down payment assistance.Buyers can also consider temporary buydowns, which are paid by either the real estate broker or seller, to help lower the monthly payment, said Cohn.
However, it will be important for prospective buyers to work with professionals in the long run, experts say. Buyers should examine all options, consult with realtors about overlook areas and talk with mortgage brokers to consider all the possible loan options, said Lautz.
“This is potentially the most expensive transaction somebody will be associated with in their lifetimes,” said Hamrick. “It should be done as well as possible to the benefit of the buyer.”
Buying a home can at times feel like quite an uphill climb, what with socking away cash for a down payment and getting approved for a mortgage. One option that may promise to ease the path for some people is what is known as a rent-to-own arrangement.
If you enter into this agreement, you may be able to rent and then decide to purchase the property at the end of the lease. That can give you some time to build your savings and your credit. What’s more, while renting, part of your monthly payment may be earmarked for your down payment.
However, in addition to these positives, there are potential downsides, such as losing a nonrefundable upfront fee if you decide not to buy. If you’re curious about rent-to-own homes, read the following guide. You’ll gain important insights that can help you decide if this form of homebuying is right for you.
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What Is Rent-to-Own?
Renting vs. buying a home is a big decision, but in some cases, you may be able to do both. With a rent-to-own home, you lease a property and have the option to buy it at the end of that period. Your monthly rent (which may be higher than the going market rate) can include a portion that is earmarked as down payment money should you decide to buy.
A key benefit of rent-to-own agreements is that they can help make homeownership possible for people who might not otherwise be able to purchase a property. Someone who doesn’t have a hefty chunk of change saved for a down payment may be able to buy a home. Or it might give a prospective homebuyer a chance to build their credit history en route to applying for a mortgage a little later on.
In these ways, rent-to-own could put you on the path to buying a property while still renting.
💡 Quick Tip: Thinking of using a mortgage broker? That person will try to help you save money by finding the best loan offers you are eligible for. But if you deal directly with an online mortgage lender, you won’t have to pay a mortgage broker’s commission, which is usually based on the mortgage amount.
How Do Rent-to-Own Agreements Generally Work?
Now that you know what a rent-to-own home is, here’s a closer look at how they work. With these agreements (also sometimes called “lease with option to buy”), the renter typically commits to renting the property for a specific period of time, with the option (or obligation) to buy.
• In many cases, the renter pays an upfront nonrefundable option fee. This is what can secure the option to buy, and it typically ranges from 1% to 5% of the purchase price.
• Another feature of a rent-to-own agreement can be that a portion of the monthly rent goes toward the down payment at the end of the lease, should you decide to buy. So if the going rental rate is $1,700 in your area, you might pay $2,000 a month, with that $300 additional going toward the down payment. (You may have to hunt if you want a rent-to-own home with low monthly payments.)
• It’s important to note that there are two different kinds of rent-to-own arrangements. There’s lease-option, which means you will have the choice of whether to buy the property, and there’s lease-purchase, in which you are committing to buy the property in the future. The latter can be a legal obligation, so proceed with caution.
• With these rent-to-own or “lease with option to buy” deals, you can either decide on the purchase price upfront or agree that the sale will be contingent upon an appraisal at the time of purchase. It is generally recommended to get a home appraisal and inspection upfront before entering into a contract.
• The appraisal, if done up at the start, can set the market value of the home and can also give a rent schedule showing rents paid in the area for the same type of home. The rent schedule confirms the base rent charged is reasonable before any option to buy surcharge is added on top.
Benefits of Rent-to-Own Homes
Here are some of the potential advantages of a rent-to-own agreement.
• A rent-to-own property may offer a way to get into your dream house before you’re totally ready to buy. Perhaps you don’t have enough money saved for a down payment and don’t see a path to accruing enough to buy a home in today’s market. Rent-to-own could open a door to home ownership.
• Another benefit of renting to own is that it buys you time to build your credit. Maybe you’re still cleaning up a past credit problem that’s keeping you from qualifying for a mortgage. Renting first could give you time to accomplish this.
• You can potentially save money on repairs. With a rent-to-own arrangement, a landlord and tenant often split the cost of repairs. In some situations, the landlord agrees to cover larger expenditures. This can be helpful to those trying to save money to buy a home.
• There’s flexibility. You get to try on homeownership of a property by living there as a renter first. At the end of the rental period, you can choose to buy or move. That is, unless you’ve entered into a lease-purchase arrangement, in which case you can be legally obligated to buy.
💡 Quick Tip: You never know when you might need funds for an unexpected repair or other big bill. So apply for a HELOC (a home equity line of credit) brokered by SoFi today: You’ll help ensure the money will be there when you need it, and at lower interest rates than with most credit cards.2
Some Problems with Rent-to-Own Agreements
There are usually pros and cons of buying a starter home, but doing so via a rent-to-own arrangement can have its own set of considerations. Now that you know the potential upsides of renting to own, consider these potential disadvantages before you sign on the dotted line.
• Selection may be limited. If you have your heart set on a certain neighborhood or home style, you might be out of luck. Unless you can find a seller in your target neighborhood who’s willing to do a rent-to-own or lease arrangement, you’ll likely have to stick with the conventional choice of renting or buying.
• You could lose money if you decide not to buy. That option fee discussed above is often nonrefundable, and any surcharge you pay on the monthly rent (to go toward a down payment) may not come back to you either. The bottom line: If you walk away at the end of the lease, your finances could take a hit, which could be a significant homebuying mistake.
• What’s more, if you’ve signed a lease-purchase document, it can be legally binding in terms of having to buy at the end of the rental. If you can’t or don’t want to purchase when the time comes, you could be in a very difficult spot.
• If you agree to a purchase price at the beginning of your rental term, there is the chance that the home’s value could drop with market fluctuations. Then, when it’s time to exercise your option to buy, you might be faced with an overpriced property.
• Just because you have entered into a rent-to-own agreement doesn’t mean you will qualify for a mortgage at the end of the rental term. Yes, you may have more money set aside for a down payment or you might have built your credit, but again: There are no guarantees that a lender will approve you to move ahead with the purchase.
• If the owner stops making payments and the property goes into foreclosure, you may be out of luck. And you may not have much say if the property isn’t maintained to your standards.
Recommended: Is Now a Good Time for Buy a House?
Do These Contracts Compare to Qualifying for A Mortgage?
A rent-to-own home may seem helpful if you are not quite ready to buy a home outright; say, you might need more time to accumulate a down payment or build your credit history. Or perhaps you think you want to buy a property, but you’d like to live in it before committing 100%.
Keep in mind, however, that signing a rent-to-own agreement doesn’t mean you’ll necessarily qualify for a home loan. At the end of your rental term, if you decide to buy, you will still have to apply and be approved for a mortgage. Your financial credentials will be reviewed in depth to determine your creditworthiness.
If you’re serious about becoming a homeowner, a traditional home purchase along with a mortgage may offer a wider array of options. With a traditional mortgage, you take out a loan to cover the purchase price of your new home minus your down payment. A mortgage loan allows you to immediately purchase your home, as opposed to renting first.
In addition, there may be some tax benefits to owning right away vs. renting first; you might talk with a tax advisor to get more details.
If you don’t feel ready to put down as much money as you’d like, you might consider conventional loans that let you put down as little as 3% to 5% down or government-backed loans that may even allow you to buy with no money down. You could also look for down payment assistance programs you might be eligible for in your area. These can help make a purchase more affordable.
Recommended: Quiz: Should You Buy or Rent a Home?
The Takeaway
Rent-to-own homes can offer a way to buy a home after leasing it. This can provide time to the prospective homebuyer to save up funds for a down payment or to build their credit. However, an option fee (usually nonrefundable) and a higher rent can be part of the arrangement, so it’s wise to consider this carefully. Having a lawyer review the agreement up front can be a good idea so you fully understand the potential risks and rewards.
If you think you’re ready for homeownership (whether after renting or right away), you may want to check out your mortgage options: what kinds of home loans are available at what interest rates from which lenders. That can help you understand your home-buying budget.
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 does it mean when someone says rent-to-own?
Rent-to-own arrangements allow a person to rent a property and then have the option (or obligation) to buy at the end of the lease. There is usually a nonrefundable option fee to be paid up front, and the rent may be higher than the norm in the area. That’s because a portion may be earmarked to go toward a down payment at the end of the rental.
Is it smarter to rent or own a home?
Deciding whether to rent or buy a home is a very personal decision. It can depend upon your financial situation, your need for flexibility vs. your desire to put down roots, and other factors.
What is the main reason to avoid renting to own?
Renting to own can have a few drawbacks. However, here’s a key one: There are often nonrefundable fees and rent surcharges, which could cause financial loss if you decide not to move ahead and buy.
*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.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
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.
This article is not intended to be legal advice. Please consult an attorney for advice.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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 $20 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.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
How much rent can I afford making $20 an hour?
If you make $20 an hour, based on a standard 40-hour work week, your gross income would come up to approximately $3,467 per month.
If you follow the 30% rule, this means you should allocate a maximum of $1,040 each month for rent.
$3467 x 30% = $1040
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 $693 each month for rent.
$3467 x 20% = $693
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.
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.
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 $20 an hour a livable wage?
Given the average rent in the United States is $1702, $20 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 $1040.
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 $20 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 November 13, 2023.
Rent. “Rent Growth in Half of Suburbs Outpacing Metro’s Core City.” https://www.rent.com/research/suburban-growth-outpacing-core-city/. Accessed November 13, 2023.
Rent Cafe. “Average Rent in the U.S.” https://www.rentcafe.com/average-rent-market-trends/us/. Accessed November 13, 2023.
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Screening tenants, especially their financial situation, is the most critical part of operating a rental property. To make sure tenants can pay their rent on time each month, you should run an employment and credit check. Then, you might have to decide whether you’re open to renting to tenants with bad credit.
As a rental property owner, you expect tenants to pay their rent on time each month. Even if a tenant doesn’t have a stellar credit score, that doesn’t necessarily mean you shouldn’t rent to them, particularly if other aspects of their application are a good fit. Here are a few things to remember when renting to tenants with bad credit.
Do I have to rent to someone with bad credit?
It’s up to property owners to pick their tenants. So, you may want to require tenants have a minimum credit score. In many ways, a good credit score signals that an individual is creditworthy and financially responsible, which likely means they can afford to pay rent. However, you might not want to completely avoid renting to a tenant with bad credit.
People have bad credit for many reasons. It doesn’t always mean they haven’t paid their bills in the past or that they’re irresponsible with money. If the renter applicant otherwise looks perfectly suited for your home, you can require a higher deposit or a co-signer to compensate for the poor credit score.
Do most landlords do credit checks?
As part of the tenant screening process, it’s essential to run a credit check. The reports offer a glimpse into the individual’s financial history, including their bill-paying past and whether there are any financial judgments against them.
If someone has a good credit history, they’ll likely consistently pay their rent on time. If someone has a history of late or missed payments, this behavior may continue. In these cases, property owners should dig a little deeper before renting to tenants with bad credit.
What is the lowest credit score to rent a house?
Credit scores range from 300 to 850, according to the credit bureau Experian. Here’s what’s considered a good and bad credit score:
Exceptional: 800-850
Very good: 740-799
Good: 670-739
Fair: 580-669
Poor: 300-579
It’s up to you to decide the minimum credit score that’s acceptable to you. But many landlords set 600 as the lowest score to rent a house.
Things to remember when renting to tenants with bad credit
Even if an applicant has a negative credit score, that doesn’t always mean you shouldn’t rent to them. Here are some things to remember when renting to tenants with bad credit:
1. Understand the reason for the bad credit score
Credit scores come from various factors, including payment history, account balances, length of credit, types of credit accounts and recent activity on these accounts. But, many different things affect these elements.
For example, if someone is a recent graduate or just moving out on their own, they likely haven’t built up a solid credit history, which could show up on their credit report as a low score. Financial changes from getting a divorce, incurring large medical bills or being a victim of identity theft can also ding someone’s credit.
Communicating with the applicant about why their credit score is low is crucial. It will help you understand their situation and build a trusting relationship. The more information you have, the more informed decision you can make.
2. Get proof of income
The screening process should include verifying the applicant’s income. If someone has a steady job with a decent salary, it could overshadow their poor credit score and set your mind at ease about their ability to pay rent.
Ask for pay stubs and contact information for their employer to find out how long the person has worked there and to verify their salary. Make sure their income is at least three times the monthly rent to ensure they can afford it.
3. Check rental history
An applicant’s behavior with previous landlords are a telling sign of how they’ll be with you. If the individual is renting somewhere else, ask for rent receipts showing that they’ve paid on time each month.
Contact previous landlords, as well, to learn more about their rental history. Find out what type of tenant they were, whether they followed the lease, paid rent on time and if they got evicted. If past landlords don’t have good things to say, it’s a good idea to move on to another renter.
4. Charge a higher deposit
Banks often charge people with lower credit scores a higher interest rate to protect themselves against the risk. So, you might want to consider doing something similar.
Increasing the deposit amount could lower your risk of tenants defaulting on their rent payments. If your typical deposit is one month’s rent and a security deposit, increase it to two months’ rent and a security deposit. Make sure whatever you charge aligns with local landlord-tenant laws, which may set caps on security deposits or other fees.
5. Require a co-signer or guarantor
Another option for renting to tenants with bad credit is to ask them to have someone with good credit to co-sign or act as a guarantor on their lease. If you’re not sure of the difference between a co-signer and guarantor, here’s an overview:
A guarantor is usually a family member or friend who agrees to take on the responsibility of paying rent or covering property damage if the tenant can’t. Guarantors sign the lease but usually don’t live in the home.
A co-signer is often a roommate and signs the lease with the right to occupy the home. The co-signer agrees to share the responsibility for the rent, fees and damage. They may contribute to the monthly rent and are responsible for paying when the tenant can’t.
If you allow a co-signer or guarantor, you’ll need to check that person’s credit history and proof of income, as well.
6. Use a shorter lease
The term for most rental lease agreements is one year. Offering a shorter lease term, such as three or six months, is an option for renting to tenants with bad credit. A shorter lease gives the tenant the opportunity to prove they can pay rent on time and protects you in case they can’t by ending the tenancy within a short timeframe.
If everything works out after the shortened lease ends, you can ask the renter to sign a year-long lease.
Renting to tenants with bad credit
Renting to tenants with bad credit is risky. You’re not sure of their financial situation and whether they’ll pay rent. But automatically discounting these tenants because of their poor credit might be a mistake.
If the individual meets all your other requirements and seems like a good fit, consider charging a higher deposit or relying more on proof of income. The tenant will appreciate your willingness to work with them since renting a home with bad credit is challenging.
When Caleb Pepperday and his wife secured a 2.75% mortgage rate on their home in Pittsburgh in 2021, the young couple couldn’t believe their luck. Buying when interest rates were at historically low levels in the U.S., the Pepperdays received one of the most enviable loans in home ownership.
Just two years later, the couple sold to move to Montana—losing the rate and becoming renters again in the process. “We thought we were going to stay in that house for a long time,” Pepperday, 27, tells Fortune. “But things change.”
While he and wife don’t regret the move one bit—they and their entire generation are wishing there was a way to turn back the clock to the glory days of low mortgage rates. Right now the 30-year fixed rate hovers around 7.7%, which is not historically high, as many members of older generations are quick to point out. But when coupled with the outrageous price of the median home, now standing at over $412,000, many would-be homebuyers feel locked out of the market. In fact, affordability hit a 38-year low in September.
Millennials were late to home ownership for myriad reasons, including higher student debt burdens, wedding later in life, and rapidly rising rents. When rates dropped, it felt like a once-in-a-lifetime opportunity for some to finally get into the market and buy their dream home. Now that rates have doubled, that dream is fading once again: One in five millennials now says they will never own a home, according to real estate brokerage Redfin.
But Pepperday, a certified financial planner (CFP), encourages his fellow millennials who believe they lost their last shot at home ownership to reframe their thinking.
“The mindset of, if you don’t buy now you’ll miss out forever, I don’t think that’s true,” he says. “Interest rates are simply out of your control, so fretting about them doesn’t really do you much good. It’s easy to second-guess yourself and say what could have been, but focus on what you can control.”
Here’s the advice he and other financial experts have for millennials who feel they missed out on a golden housing opportunity.
1. Take your time
There’s likely a good reason you didn’t buy when rates were low, even if you had the funds to do so, says Sean Williams, a Maryland-based CFP. You might not have known where you wanted to live, or you couldn’t find the right space, especially given the tight inventory.
Remember those reasons. It’s a mistake to compare yourself to others, rush into making one of the biggest financial decisions of your life, and potentially force something that could put you in a huge long-term financial bind, he says.
Don’t get caught up in the should-haves or would-haves and make a rash decision—do what makes sense for your household. If you need a cautionary tale, Fortune previously reported upwards of 40% of recent buyers regret their decision, but feel locked in due to their low mortgage rate. (And that low rate doesn’t preclude you from shelling out for a ton of other unexpected costs you wouldn’t have renting.)
“Patience isn’t fun, but it can yield great dividends,” Williams says. “Something greater could await you, and you’ll miss it if you keep looking back.”
2. Use this time to prepare
Those are set on buying shouldn’t be dissuaded by higher rates, Williams says. Though inventory is low, housing hopefuls can use this time to build their credit, scope out mortgage lenders, explore neighborhoods, and better understand what they want in a home and what they can afford.
“Take the time to understand the transaction,” Williams says. “It won’t be a waste of time if you’re incrementally bettering your position for when the time is right.”
And remember all that regret? While owners may not want to sell now, they won’t hold out forever if they aren’t happy in their home, no matter how low their interest rate, Williams says. That will open up more inventory, which buyers can snap up—if they’re prepared.
“Home values can move. And so can interest rates,” he says. “It’s sort of like investing in the market. You can look back and say, ‘Oh, I could have timed it.’ But it really makes sense to put yourself in the best financial position possible no matter the season.”
3. Look into alternatives
Though a 30-year mortgage is the most traditional option—and typically the headline figure—Dottie Herman, vice chair and former CEO of Douglas Elliman Real Estate, advises homebuyers to look into alternatives, such as five-year ARMs, which can offer lower introductory interest rates than conventional loans, or other forms of “creative financing.”
“I tell so many young people, it’s kind of a cliché that people use 30-year mortgages, because people don’t live in houses for 30 years anymore,” Herman says. “Go sit with your mortgage broker or banker and educate yourself on the different mortgages available.”
There are also grants and first-time homebuying programs that can make the process easier and more affordable. And Herman says to remember that you can always refinance in the future. If you find a home you like now that you can afford, it can still make sense to buy. You won’t get a sub-3% rate, but that doesn’t mean it’s not a worthwhile purchase. There will never be a perfect time.
Higher rates “would not stop me from buying a home. If you’re looking, you should not stop looking,” she says. “No one can time the market, so you just have to wait for a time that you can refinance.”
Finally, Pepperday says to consider whether home ownership is right for you at all, or if you just want to buy because it seems like the socially acceptable thing to do. Yes, it can help build wealth—but so can plenty of other financial moves, he says. Don’t put your life on hold for one financial choice.
“We are spending less on housing costs as a renter than when we owned,” Pepperday says. “Of course over time we’re not building any equity, but we have additional cash flow that we can use to put toward other investments that have more flexibility to get to the money than what a home has.”
The worst thing you can do, according to Pepperday, is stretch yourself to buy a home you can’t afford, just because you think it’s something you “should” do. “Don’t make yourself house-poor.”
The COVID-19 pandemic changed the way that we work. In-office attendance in some U.S. markets dropped 70-90 percent in 2020, according to The McKinsey Global Institute. The same research notes that in-office hours were 30 percent below pre-pandemic levels in 2022, with U.S. workers reporting to the office an average of 3.5 days.
The 2022 Renter Preferences Survey Report supports these findings. The largest group of renters surveyed (39 percent) were hybrid employees who worked from home a few times a week. Another 31 percent worked from home on a full-time basis. Remote work and hybrid work appear to be here to stay.
This shift away from the office hasn’t just changed the way people work in the United States. It’s changed where they live, too.
What hybrid workers want
The top cities for hybrid work are located all over the country. They include major urban hubs and small cities.
To find the best cities for hybrid workers, Rent ranked cities based on the coworking spaces per thousand work-from-home employees. This survey ranks the percentage of the population that works from home and measures the cost of living index. All features were weighted equally to come up with a score.
Affordable properties
Commute length isn’t as important when workers aren’t going into the office so often (or at all), so a key benefit of apartments in the often expensive city centers disappeared almost overnight. Yet rent prices rose 4.77 percent across the country between December 2021 and December 2022, followed by another marginal uptick between the end of last year and October of 2023.
Saving money became a key concern for many renters. Many remote or hybrid workers moved away from properties in the city center and relocated to more affordable metros, cities, suburbs and neighborhoods.
A lower cost of living
Relocating to a city with a lower cost of living index can save even more money. In addition to housing prices, the cost of living index also measures the price of food, utilities, transportation, health care and miscellaneous goods and services.
The average cost of living in the U.S. is reflected with a value of 100. So a score of less than 100 means a city is more affordable than the national average. A score over 100 means that city is more expensive than average.
Coworking spaces
Coworking spaces are a plus for the hybrid workforce. They provide practical resources and technical support, as well as an opportunity to connect with other remote workers.
Many rental properties have expanded amenities designed to attract and retain remote workers. They include reliable, high-speed internet; expanded work and meeting spaces and extras like complimentary coffee and tea or social spaces to relax after hours.
The 10 best cities for hybrid work
Half of the 10 best cities for hybrid work are located in the South. Another three are found in the Midwest. The Northeast and West also claimed one community each.
Tampa, FL
Tampa is the tenth-best city for hybrid work in the United States. The cost of living in this culturally rich and diverse community on Florida’s Gulf Coast is almost exactly the same as the national average – 99.8.
The city has a robust hybrid workforce. A quarter (25.2 percent) of Tampa’s residents work from home in some capacity. That’s easy to do when there are 56 coworking spaces in the city, roughly one for every two remote workers.
Pittsburgh
Next up is Pittsburgh, the only Northeastern city on the list of the 10 best cities for hybrid work, Pittsburgh thrived as a Gilded Age industrial and cultural hub. It’s expanded to include 90 unique neighborhoods joined by hundreds of bridges.
The cost of living in Pittsburgh is comparable to the national average (100.4). But it’s much more affordable than many of the other major metropolitan areas in the Northeast, one of the most expensive regions in the country.
A substantial portion of Pittsburgh’s 300,431 citizens (30.3 percent) are hybrid workers. A respectable 42 co-working spaces rest within the city limits.
Everett, WA
Bicycle-friendly Everett is the only Western city you’ll see here. Find this creative coastal city just off Puget Sound, 25 miles north of Seattle.
A cost of living index of 111.8 makes Everett the most expensive metro listed here. But it’s still more affordable than many other West Coast communities, which regularly top lists of the most expensive metropolitan areas in the country.
Everett is a small, approachable city (population 110,812), but it still supports remote work employees, who make up 15.6 percent of the city’s population. There are 17 co-working spaces in Everett.
Minneapolis
Minneapolis is Minnesota’s artistic and cultural center. Located along the Mississippi River, it also offers acres of parks, green space and lakes for residents to enjoy.
It’s a good bet for remote workers too. There are 50 coworking spaces in Minneapolis. This support system has helped attract 147,591.6 (and counting!) hybrid workers to Minneapolis already. They comprise just over a third (34.7 percent) of the city’s population.
A cost of living score of 98.99 means it’s slightly cheaper to live in Minneapolis than the national average. Some of these savings came in the form of rent reduction; the Minneapolis–St. Paul–Bloomington metro saw the largest year-over-year rent decrease in the country between December 2021 and December 2022.
Savannah, GA
The genteel southern city of Savannah takes the No. 6 spot on this list. The coastal Georgia city oozes charm and historic ambiance, from its cobblestone squares to the shady parks and stately oak trees draped with Spanish moss.
The cost of living index in this community is lower than the national average at 90.1. A total of 13,237.92 Savannah residents currently work from home in some capacity.
Savannah supports 13 co-working spaces. That’s a relatively high number (nearly one co-working space for every thousand workers), considering that hybrid workers currently make up 9 percent of the city’s workforce.
Greenville, SC
Remote workers move to Greenville for a quaint Main Street, a robust art scene and easy access to lakes, hills and trails in Paris Mountain State Park and beyond. A low cost of living (90.6) is another benefit for residents.
With a population of just 72,095, Greenville is the smallest city in the top 10. But despite its modest size, it’s still attracted and supported 13,337 hybrid workers.
These hybrid work employees make up 18.5 percent of the city’s population. You can find them working from home and at 10 coworking spaces throughout the community.
Rapid City, SD
With a population of 76,184, Rapid City is the second smallest city here. But it’s the largest community in the Black Hills, a region of jagged peaks, lush forests and almost impossibly scenic byways and hiking trails in western South Dakota.
A cost of living index of 93 means it’s more affordable to live in Rapid City than the national average. South Dakota stayed affordable throughout the pandemic as well. It was one of only two states where rent prices didn’t increase in the early months of the pandemic.
Rapid City is well-equipped to handle remote work, as the city currently houses eight coworking spaces. That means you’ll find 1.1 coworking spots for every remote worker, one of the strongest showings on our list. These hybrid employees make up 9.3 percent of the city’s population.
Atlanta
Atlanta is a commercial and cultural hub and a historical powerhouse that was central to both Civil War and Civil Rights history. With a population of 496,461, Atlanta is both the largest city in Georgia and the most populous city on our list of hybrid work hot spots.
It’s also home to the largest hybrid workforce in the top 10 — 38.7 percent of Atlanta residents work from home at least part of the time, beating the famous Atlanta traffic a couple of days per week. They’re supported by 92 coworking spaces.
The cost of living index is 101.6. That means it’s slightly more expensive to live in Atlanta than the national average.
Orlando, FL
Orlando is famous for Walt Disney World and Universal Orlando. But the sunshine and comfortable climate that draw tourists to central Florida also attract remote workers ready for a change of scenery.
Hybrid workers currently make up 19.1 percent of Orlando’s population of 309,154. Find them at one of the city’s plentiful coworking spaces. You’ll find 68 coworking spaces in Orlando, just over 1.2 for every thousand remote workers. That’s tied for the most on this list.
The cost of living in Orlando is 104.8. That’s more than the national average.
Green Bay, WI
The best city for hybrid work is Green Bay, Wisconsin. This laid-back, bayside city is perhaps best known for its professional football team, The Green Bay Packers. But Green Bay’s outdoor recreation opportunities and home-grown shops, restaurants and breweries appeal to all ages.
A household budget goes further here. With a cost of living index of 89.9, Green Bay is the most affordable city in our top 10 spots for hybrid working.
Green Bay is one of the smaller metros on this list, with 107,015 residents. But it does a good job of supporting the 12 percent of the population that works remotely. Currently, Green Bay houses 15 coworking centers. That’s 1.2 coworking spaces for every thousand workers – the highest on this list.
The takeaway for hybrid workers
The pandemic changed how — and where — people work in the U.S. The best cities for hybrid work support the remote workforce with coworking spaces, affordability and a sense of community outside of a traditional office.
Looking for the best of both worlds, where you can work in your apartment one day and collaborate in person the next? Find your next rental home or apartment here. Type in one of the cities mentioned above and browse through all your options.
Rent prices are based on an average from Rent.’s available rental property inventory as of November 2023. The rent information included in this article is used for illustrative purposes only. The data contained herein do not constitute financial advice or a pricing guarantee for any apartment.
As a landlord or property manager, securing the best possible tenants for your apartment is crucial. You want someone who’s not only going to pay rent in full and on time but will also be a model tenant. No noise complaints, no property damage beyond normal wear and tear, perfect. The screening process to find this ideal tenant all begins with the rental application form. Not only should this document be comprehensive, but also effective in helping you weed out applicants who just won’t fill those perfect tenant shoes.
While there are a lot of templates out there to help you draft a rental application form, you may want to create your own. If you do, make sure these essential elements come together to paint a complete picture of every person interested in renting your property.
Things to include in an apartment rental application form:
Start with the basics
It’s best to get the basic, essential information out of the way first. It’s an easy section to knock out when crafting a rental application form.
Begin this section with the day’s date. This is important because it lets you manage the first-come-first-serve style that most rental applications get reviewed. You can easily keep everyone in order if you have multiple viewings and multiple applications. You may even consider adding a timestamp once an application comes in for further organization.
The rest of the basics are all about the applicant themselves. Each person interested in renting a single apartment should fill out a separate application, so this area should focus on one person only. Include sections for:
Applicant’s full name
Current address
Home phone number, cell phone number and/or work phone number
Date of birth
Social security number
Driver’s license number (or any government-issued ID)
These last three pieces of information are necessary to run a background check on the applicant. You can explain that to them as they’re filling the form out if there’s concern about sharing this type of information upfront.
Include apartment information
Also within this section, or immediately above or below it, you’ll want to include a few bits of key information about the rental property. You want to add not just the address and unit number, but also details on fees and rent. Provide a space to write in monthly rent, security deposit fee, upfront costs and pet fees (if applicable.)
You can also insert the date the unit will become available or even allow the prospective tenant to fill in their estimated move-in date.
Putting this information here means no surprises for whichever applicant you decide to rent the apartment to. The information on the lease will match what they have here.
Dive into their employment history
The next section should focus on employment. Hopefully, your applicant is currently working somewhere, or at least can confirm a steady stream of income from some source. How else will they afford rent, right? You’ll collect information on their finances in more detail later on, but for now, establishing a work history and monthly income gives you a good snapshot.
In this section, you’ll want to ask for:
Name and address of current employer
Supervisor’s name and phone number
Applicant’s job title
Start date
Monthly income (after taxes)
Get all this information for their current position and ask for it all for their previous employer, as well. Just go one job back to establish a history of employment. It’s also OK if the applicant doesn’t have a previous employer. A first-time renter hasn’t had time to establish a job history, or they worked for the same company for a long period of time. You can look at each individual application to decide whether only having a single, current employer is OK with you.
Other sources of income
It’s also best to leave a space where the applicant can note other sources of income. You don’t need totals at this point, but it’s good to know what to research when doing a credit check. Other sources of income can include:
Inheritance
Annuity
Severance payment
Unemployment
Disability
Social security
A complete list of what types of additional income the applicant has coming in is helpful for you to total up whether they make enough to afford rent.
Gather rental history
Equally important to their finances is the applicant’s rental history. You want to know about their current and past landlord or property manager. You also want to know if they have any evictions on their record.
Collect the name and contact information from the current and previous landlord or property manager in addition to the monthly rent they paid/are paying, the date they moved in and the date they moved/are moving out.
Sometimes, the best resource to learn about a prospective tenant is to talk with other landlords or property managers who they’ve rented from before. You’ll get the inside scoop.
Ask for references
While it’s not a necessary section on your rental application, it’s a good idea to put in one asking for personal references. Your applicant can share names of friends, family or professional contacts that can vouch for their character.
This section should ask for reference names and contact information, although you can also allow your applicant to attach signed letters of reference directly to the application. You can also allow prospective renters to attach a rental cover letter or renter resume to add a little more depth to their application. If you decide to do this, add a note to the reference section that you’ll accept supplementary material.
Get a few extra details
Not all rental situations will need these extra bits of information, so you don’t have to include these sections in your rental application form if they’re not relevant, but it’s good to consider them.
Emergency contact
Having an emergency contact on file for your tenants is never a bad thing. While you don’t really need it this early in the process, it’s easy to work the question in here so it goes into the applicant’s file.
Ask for an emergency contact’s name, phone number and relationship to the tenant.
Other occupants
To make it easier to batch review applications, you should have people list any other occupants who will live in the apartment. This includes roommates and partners. This way, you can double-check you have applications for everyone.
Pets
If you have a property that allows pets, you’ll want to collect this information early. If you have any breed restrictions or limits on the number of pets, you can weed out applicants who don’t fit the bill.
Ask for pet type, breed, weight and age. Leave enough blanks for the total number of pets you allow, as well.
Vehicles
If your apartment has on-site parking available with the unit, you’ll want to know what vehicles will get parked on the premises. Ask for the make, model, color and year of each car, in addition to the license plate numbers.
Request permission for a credit and background check
This part of the application gets you to the next step in the screening process. Here, you’ll need to ask the applicant to give you permission to look up their personal information to run both a credit check and a background check.
Within this section, you can also collect relevant information such as:
Bank name
Bank address and phone
Checking account number
Credit obligations (loans) with a monthly payment
To get ahead of running these checks, also ask whether the tenant has 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 you’ll run is helpful. It also shows you this applicant is being honest about their past.
Sign on the dotted line
Rounding out any rental application form is the signature section. Start the section with a list of fees associated with completing the form and then both you and the applicant should sign and date it. The signatures will validate the document, but also serve as proof you’ve received the accompanying fee.
The application fee should cover specific costs — those of running both the credit and background check, as well as any administrative costs you’ll incur processing the application. This is not a way for you to make a profit on someone’s interest in the apartment for rent.
This section wraps up the application and confirms the applicant’s interest in the apartment. Now you can dig deeper to find out if they’re the right tenant for you.
A rental application form template
Just in case you want a ready-made rental application template, we’ve got you covered. Simply download our PDF or download our word document template and make edits as you need. Anything in italics is an optional section that might not apply to your property.
Are enough rental applications coming?
Now that you’ve got the right rental application form ready to go, the next thing to do is draw in prospective tenants. Make sure you’re finding the best potentials by listing your property in the right location. Go where the renters are looking!
By listing your property on Rent. you get access to in-market renters along with helpful reports to expedite your screening process.
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.
It can be more than a little nerve-wracking to submit an application for an apartment, then have to wait around to find out if the powers-that-be deem you worthy enough to live there. This tense period is known as the apartment approval process.
Fortunately, most people have nothing to worry about. If you’ve lived a clean, relatively scandal-free life, you’re probably going to get the unit (provided there isn’t a ton of competition). Still, it helps relieve some of the waiting-related tension to know what’s going down during the all-important apartment approval process.
What’s the point of the apartment approval process?
The whole point of the apartment approval process is for the landlord or property manager to determine if the applicant is reliable, able to pay bills on time and otherwise just a good neighbor. You know, someone Mr. Rogers would like to live near.
How to start the apartment approval process
The first step in renting the unit of your dreams (or the next best thing) is to fill out a renters application. There’s usually a non-refundable application fee per person associated with this (an average of $30), so make sure you and any roommates love the place and stand a chance at getting it before you fork over any cash. This is how they cover the cost of using staff time to check references, credit and so on.
The application submission process varies depending on the property. Many modern communities do the whole thing online, from application completion to the upload of necessary files. However, some places do still prefer the whole in-person, pen and paper thing, so be prepared to follow whatever steps are necessary.
Come armed with all necessary documentation, or else the process could get delayed. The requirements vary depending on the property, but here’s a pretty standard list:
Photo identification
Vehicle information
Pet information (if applicable – they’re looking for type, age, breed, weight and vaccine records/health information)
Letter of current employment
Two most recent pay stubs
Three most recent bank statements
Two most recent tax returns
Two most recent W-2 forms
Any other documents that state asset information
Reference contact information for any previous landlords, as well as personal/professional acquaintances (this may be optional)
You can also choose to include a cover letter to explain any extenuating circumstances that might result in a rejection. This can include details about a criminal past and how you’ve made reparations, information on your projected career path if you’re still relatively new to the professional game and don’t have much credit history or info about credit issues stemming from special circumstances, like medical bills, divorce, etc.
How long does the apartment approval process take?
It’s a multi-step process, so it can take a few days to complete. Try not to cry into your latte or craft beer or whatever if you don’t hear anything by the time you get back home. Take steps to facilitate the process upfront and quickly provide detailed, accurate information and all requested documentation. The longer you take to supply the deets, the longer it’ll take to get that lease in your name. The time frame varies by property, so go ahead and ask upfront when you can hopefully expect an answer.
What the application approval process looks like
A few phone calls need to be made and internet searches must be run. Fortunately, it’s usually a pretty cut-and-dried process.
They check your income
The ability to make rent is a pretty important tenant quality. Clearly, the landlord or property wants to know that you’ll be able to do this, so it’s customary for a prospective renter to provide recent pay stubs, bank statements and other financial documents. Ideally, the property wants to see that your monthly take-home pay is three times as much as the monthly rent.
If you’re relatively new to the workforce or recently accepted a new position, the employer can provide a proof of employment letter to satisfy the property’s needs. Just request one from human resources. It’s also not unusual for properties to call your place of business, just to make sure everything’s on the up and up. People try to pull some pretty crazy stuff.
They check your credit
Once they know that you make enough money to afford the place, the landlord needs to know that you’ll actually pay rent when it’s due. This is accomplished by checking your credit history. When you fill out the apartment application, you give them permission to do so.
In a nutshell, a person’s credit score is figured out by various credit bureaus. This is based on a number of factors, like whether you pay your bills on time, how many credit cards are in your name and so on. The credit score range is a dismal 300 all the way up to a picture-perfect 850. A good credit score for renters is 670 or above, which is higher than the national average. However, a score that falls between 600 and 650 usually does the trick, as well.
Most people, even young professionals, have some sort of credit history. If you’re new to the workforce and don’t yet have much to show for it, many rentals will look the other way on this as long as you have proof of employment and income. However, if you have bad or low credit you might want to head it off at the pass by offering to co-sign on the lease with a person who has good credit, like a parent. That way, if you default on payments, the property can get the payment from the co-signer. They don’t care where the rent comes from, as long as they get it.
They check your background
The potential landlord will also conduct a background check to make sure you don’t have any prior convictions. They also want to know if there are any pending issues to be concerned about. So, if that’s the case, it’s best to disclose the information upfront because it will end up coming out anyway. If you’re 45 and you had a DUI in college, but nothing dicey since then, your app is probably not going to be denied.
They check your references
Not all properties do this, but in case they decide to, it’s good to have the information pulled together. If you’ve rented before, provide the name and contact information of all previous landlords. If not, consider providing a reference who can speak to your character. Someone like a previous employer, teacher or professor fits the bill there. Give each person a heads up that someone might be getting in touch so that they make sure to return the call or email in a timely fashion.
When they speak to a previous landlord they’re trying to find out if you’ve ever committed any violations of your lease agreement, garnered noise complaints or done damage to property. They also want to know if any previous neighbors filed complaints against you, or if there are any reports of illegal activities on the property.
Probably more than anything, they want to know if you have ever been evicted. Those proceedings cost a lot of money for a property to pull off — and can take ages — so landlords want to avoid evictions at all costs.
If approved, get ready to move!
Be ready to sign quickly on the dotted line once your approval comes in. No sense in letting someone else swoop in and steal that perfect unit from you! Remember to keep up your stellar reputation, so that the process is every bit as smooth the next time.
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.
A freelance writer based out of the Atlanta area, Alia has penned articles during her decade+ career for such sites as HowStuffWorks, TLC, Animal Planet, Zillow and many more. Her favorite things to write about include fitness, nutrition, travel, healthcare and general lifestyle topics. A graduate of the University of Georgia, Alia’s an avid Dawg, but she also loves reading, sewing, eating all things chocolate and playing sports with her husband, three boys and beloved border collie, Flash.