With the end of the year rapidly approaching, you might be wondering how your living situation could change next year. The start of a new year provides a great opportunity to review your expenses and establish your annual budget, and as you get to know your limits better, you might come to better understand how you can go about renting your first apartment in the new year. Whether you’re gearing up to pay rent for the first time in your life or you’re moving out from a shared home into an apartment that’s entirely your own, here’s how to prepare to rent an apartment in 2020 and beyond.
Establish your 2020 budget
Rent payments can often be your most expensive monthly cost. To prepare to rent an apartment, establish your budget for next year now and use it to decide the maximum rent you can afford to pay. If you’re considering condos among your rental options, you may also want to factor in maintenance and HOA fees, if the condo owner does not pay those.
Budgeting experts recommend that you spend no more than 30 percent of your pre-tax income on rent. If you make $36,000 a year ($3,000 per month), then by this rule, you would need to cap your rent at $3.000 * 0.3 = $900. However, if your 2020 budget includes extra costs such as student loans, car payments, insurance premiums, etc., you might want to scale that 30 percent calculation back a bit.
Alternatively, if the rent cap that the 30 percent rule suggests for you feels limiting, then you can increase your maximum affordable rent if and only if you plan out active methods for reeling in your spending and increasing your income. These changes can take the shape of spending less when you go out with friends, taking on freelance side work in addition to your main gig, and committing to buying fewer luxury goods such as clothes or tech gadgets.
Get your initial deposit ready
Affording monthly rent payments can be challenging, but pooling together enough money to cover your initial deposit can require even more effort. Your initial deposit will likely comprise three payments: your first month’s rent, your last month’s rent, and a security deposit usually equal to your rent (but sometimes more). You’ll thus need to have not just one month’s rent available to put down as you prepare to rent an apartment in 2020, but at least three months’ rent. Start saving toward this goal now – it’s no simple task to pool together several thousands of dollars!
Improve your credit score
Just because you’re searching for apartments in your budget range doesn’t mean you’ll be approved to sign the lease. Landlords often require that tenants have good credit scores to be approved for renting. Take the time now to improve your credit score – start paying all your bills well before they’re due (if not immediately when you’re presented with them), limit your credit card spending in favor of using debit cards, and get ahead on your student loan payments if possible. On the other hand, if your credit score is already excellent, reacquaint yourself with the ways in which it could potentially decline.
Gather your documents
As with any big application, you’ll need to have identification and proof of income when looking to rent an apartment. Photocopy your driver’s license or state-issued ID and your social security card. Gather your three most recent pay stubs (or, if you’re freelance, your two most recent tax returns) and print out your three most recent checking account statements to prove your income. If you think you’ll need a guarantor, be sure to gather their info now too.
If you start taking these steps the moment New Year’s strikes, you’ll be in great condition to rent an apartment in the new year. Hit the comments with any extra tips you want to share!