If you’ve never lived in an apartment of your own, there’s actually a lot to prepare for – it’s not simply a question of moving in. In this three-part series, we’ll give you the tips and insight you need from start to finish. First, we’ll tell you how to get ready for your search. Second, we’ll give you pointers on the best way to conduct the search. And, third, we’ll let you know what you need to do once you’ve found your dream place.
Today’s topic is how to get ready to find a place of your own. You want a nice place that’s comfortable – but you should steer clear of renting anything above your means.
1.) Figure out how much rent you can afford. How do you determine the top of your price range? As our guest blogger Joe Youngblood points out, there are two common ways to determine your apartment budget. The first is simply to divide your monthly take-home income by three. (For example, if you take home $2,100 a month after taxes, you could afford a place that cost up to $700/month in rent.) Or, divide your gross annual income by 40. (For example, if you made $36,000 a year, you could afford a place that cost up to $900/month in rent.) Either way gives you a rough ceiling above which you should not venture – overspending on an apartment is extremely problematic, since you’ll be stretched every single month. So, don’t do it – stay below your budget.
2.) Start saving. Next, you need to start saving money … even if you have a steady income. The reason for this is two-fold. First, when you do find the apartment of your dreams, you’ll need a large amount of cash at your disposal to secure it. Why? As our blogger Dedreanna explains, the day you sign the lease, you’ll need to put down a security deposit (usually the price of one month’s rent), plus the first month’s rent. That’s twice what you’d normally have to pay, and that doesn’t even include any application fees or credit check fees you may be charged. All told, you should plan on spending double your first month’s rent plus about $100 or so just to secure the place. Part of that will go towards your rent, of course, and you’ll eventually get your security deposit back, provided you keep the apartment in good condition. But you’ll need all that cash up front.
And don’t stop saving just yet: moving is expensive. How expensive can vary. If you’re just moving across town, barely have any possessions, and have some friends with a pickup who are willing to help, you may scrape by without spending hardly any money on the move itself. But, if you’re moving to a place on your own for the first time, you’ll still need to spend money on things like cleaning supplies, kitchen equipment, furniture, soap, toilet paper, etc – in short, at the very least you’ll need to make a couple of runs to Target.
If you’re doing a bit of a bigger move across town and need to hire movers, expect to pay around $500. It’s a good ballpark figure for the cost of competent movers in a big city – you’ll be paying them by the hour (most likely) but don’t be fooled into thinking you can economize by having them rush: even simple moves take three or four hours. Now, if you’re moving to a new city, the expenses of moving ratchet way up. I wrote an article on moving from New York City to Chicago, and found that Alissa and I spent $1,600 to do so – and we were quite frugal and drove the moving truck ourselves! If you do a full-service move for a one-bedroom from New York to Chicago (or an equivalent distance), it’ll run between $2,500-3,000. So, yes, start saving some money! Try to put away at least one full paycheck per month towards moving out on your own. (If you can’t save that much and you’re living at home, you probably can’t afford the burden of paying rent every month.)
3.) Check your credit score. Finally, while you’re saving money, take some time to check your credit. As we’ve discussed before, your credit does matter. Ideally, you’ll want a score above 700. Last year, I wrote a basic primer on checking your credit and what it means. You can check if there are any blemishes on your report at the Annual Credit Report website, which is sponsored by the federal government and free. If you have bad credit, it’s often a slow fix, but there are some things you can do right away to incrementally increase your credit score. The important thing, whether it’s good or bad, is to know your credit score and be prepared. If you have a great score, you have nothing to worry about. If your score is lower, ask a parent or other relative if they would be willing to serve as your co-signer on a lease, and be ready to talk about your low score with potential landlords.
Once you’ve figured out your budget, saved money, and got an understanding of your credit, you’re ready to move onto the next step: actually looking for a place! We’ll tackle that issue in our next installment in the series.