Discover Whether You Can Afford to Rent a Property

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Can You Afford to Rent a Property?

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The best way to figure out if you can afford to rent a property is to total up all your expenses and compare them to your current earnings. Don't forget to take into account an estimation of recurring monthly expenses for your rental, your current month to month bills and all necessary living expenses. If you can survive off the remainder, it's highly likely you can afford to rent the home or apartment in question.

To get you started, we have provided you with an outline of some common bills to consider when determining if you can afford to rent a property.

Recurring expenses

Rent will be your highest recurring bill, but in addition to this large lump sum you will be dropping every month, there are utilities and other bills like loans and credit card payments that should also be considered, as well as money required to get you through your day to day life. For bills you haven't incurred yet, guesstimate their cost the best as you can by researching the average in your area.

These recurring daily, weekly and monthly expenses include but are definitely not limited to:

Monthly bills associated with your rental:

Other monthly bills:
  • Loans - car, school, personal
  • Cell phone bill
  • Credit card bill(s)
  • Insurance (medical, dental, car, tenant insurance)
Other living expenses:
  • Food
  • Clothing
  • Cleaning supplies
  • Gas, car maintenance and/or other transportation
  • Other cost of living expenses - haircuts, doctor's visits, gifts
  • Emergency expenses - parking tickets, hospital visits, auto repairs
Do you earn more money than the total sum of all your current and future bills? Enough to actually survive and continue to live within your means? Congratulations: you are able to afford a rental property.

Move-in expenses

Once you've determined if you can afford to rent an apartment or home, it's important to determine whether you can afford to move at all.

Moving is an expensive endeavor and it's important not to forget to factor in the one time cost of items and expenses:
  • Security deposit/damage deposit (this can range anywhere from half a month to a full month's rent and may or may not be refundable - check with your landlord first to determine what kind of deposit you are handing over)
  • Various furniture and home furnishings
  • Moving-specific expenses - renting a truck, hiring a moving company, tipping your movers, wrapping and packing supplies

TIP: Put aside money in a savings account before your planned move so you're not coming out of pocket too much for your moving day expenses. There are also various ways to save in the midst of the actual moving process.

Make a budget

Keep living within your means after moving into your rental property by making a budget and sticking to it. Include all recurring expenses in this budget and set money aside out of each paycheck to pay for the sum of your bills.

Also consider setting aside a portion of your earnings into a savings account for any future moves--especially if you are thinking about purchasing a property of your own one day.

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on October 16, 2014 - Moving Expert
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