Very few things are more exciting than searching for that perfect place to call home.
That excitement, however, can quickly turn to dismay once one discovers the challenge of finding an affordable apartment. Although the situation may seem impossible, locating an affordable apartment is possible. Armed with a solid budget and ready to negotiate, renters can be quite successful in their search.
Figuring out How Much to Spend on Rent
Locating an affordable apartment starts with a budget. Armed with a solid budget, renters can figure out how much money they can spend on rent. Creating a budget allows renters to get a sense for how well their income can cover their dream apartment. As a rule of thumb, renters should spend no more than 30 percent of their pre-tax earnings on rent. Someone with a yearly income of $60,000 dollars, for example, should not pay more than $1,500 per month on rent.
While this is a good rule to follow, it does not provide the most accurate number. There are other factors to take into account when determining how much one can afford to spend on rent. Transportation costs, utilities, groceries, and other necessities of life are a part of monthly expenses in addition to rent. Not taking these things into account could lead one to an apartment that eats away at all of their extra income, and leave them feeling overextended and frustrated.
A better approach to budgeting for an apartment is to create a detailed list of all expenses for the month. Include things such as transportation, healthcare expenses, contributions to retirement plans, groceries, entertainment, shopping and incidentals. Renters should evaluate the total of all items in the list and subtract it from the total monthly income.
The amount remaining is the amount available for rent. Some may find, however, that they still cannot afford that ideal apartment. Many landlords are willing to negotiate on the rent. Sometimes approaching the landlord to discuss the matter can lead to surprising results.
As a first step in the rent negotiation process, renters should determine what they would like from the discussion. Although a reduction in the rent might be the primary objective, renters should keep in mind that there are alternatives that can help on costs. Ideally, the landlord agrees to a lower price.
However, if they do not they may compromise by offering you a free parking spot or a discount on some other amenity. These things might seem small, but they could make a difference in the budget.
There are a few things renters can do to increase the odds of getting a discount. Existing tenants with a solid reputation as good tenants might see some success in asking for a discount, or at least in avoiding a rent hike. In addition, renters could offer to handle small maintenance items in their apartment as doing so would save the landlord time and money.
Another to keep in mind is that property owners do not want empty units in the complex. Each day that an apartment sits empty is lost profit for them. Offering to sign a longer lease is ideal for a landlord because it keeps the unit rented longer. Renters may find, however, that none of these tactics works and that they are still unable to find affordable housing. An alternative solution is to seek housing subsidies offered by the federal government.
The Section 8 program is a federally funded program that provides rent subsidies to qualifying low-income families. The program, administered by local Public Housing Authorities (PHA), issues a voucher that renters use towards their rent. The amount of the subsidy varies but most cases, renters pay no more than thirty percent of their adjusted gross income on rent.
The program does not limit families to location and type of housing. Families have control over the process and may locate suitable housing to their liking. Although not all landlords accept the voucher, many do, so it is important to ask. Once a tenant finds a unit, the PHA inspects the apartment to ensure that it is safe and sanitary. Landlords must address all concerns found in the inspection before the tenant moves in. Renters must meet eligibility requirements to receive the subsidy. Each member of the household must present a valid social security card to prove legal citizenship. Further, the family’s total household income must not exceed fifty percent of the median income for the area. Lastly, all applicants to the program must pass a criminal background check. Renters should visit the PHA in their area to apply. Each applicant must provide picture identification, birth certificate and Social Security cards during the application process. The Section 8 program is an excellent option for renters who may need some extra assistance getting into an apartment of their own.
Renting to Own
Renters who would like a home of their own but do not meet the requirements to qualify for a loan should consider rent-to-own homes. In this case, a rent-to-own agreement could help the renter find their dream home, but with the flexibility of a lease. In a lease-to-own arrangement, renters pay a down payment to secure their right to purchase the property at the end of the lease term. Each month, a portion of the rent payment goes towards the purchase of the house. During the lease term, renters have a chance to work on improving their credit scenario. At the end of the lease term, renters should be in a better position to qualify for traditional financing. Renters should treat this type of arrangement just as significant as purchasing a home. Thus, they should request an inspection, verify free and clear title and verify that the mortgage, insurance and taxes are current. No renter wants to get into a home only to find out he or she might lose it because the owner is facing foreclosure. Lastly, renters should be fully prepared to commit to the house. Usually, the down payments on rent-to-own arrangements are significantly higher than that of an apartment and are non-refundable. Renting-to-own can be an excellent arrangement for those who would like to move on from renting to a dream home of their own.
Locating an affordable apartment is possible with the right outlook, a solid budget and a plan to negotiate. Renters who prepare in advance will see the best results in landing a place to call home at a price they can afford.