by: Mark Goldberg

As more and more of us opt to rent rather than own a home, the monthly cost has been climbing. My wife and I are experiencing it as we start looking for a place for our daughter when she moves out of the dorm next year. There’s nothing worse than thinking you have found the perfect place and then realizing you really can’t afford it. Here are some things to take into consideration for your calculations.

First, how much rent can you really afford? Let’s face it; it’s really expensive these days to rent a place. A new Harvard study found many of us are now paying 50 percent of our income on rent. However, The U.S. Census Bureau and many financial experts say we should only pay 20 to 30 percent of our monthly take home pay. So, if you bring home $4,000 a month, you should consider monthly rents around $1,200. Every dollar more means less you will have for going out to dinners, concerts or saving for a home.

Second, calculate the expense of finding that place. Many first time renters fail to consider application fees many landlords now charge, the security deposit (often a month’s rent) and having to come up with first and last month’s rent. This can add up to a many thousands of dollars before you even get the chance to move into your new apartment or house.

Third, don’t forget to use your “scam radar.” As apartment and home rentals become scarce and more expensive, scammers are working to lure desperate people. The Federal Trade Commission is warning about a growing proliferation of criminals running fake rental ads or hijacking landlord advertising accounts trying to steal money from vulnerable consumers. Many people fail to confirm what they are renting and who they might be renting from, as evidenced by a New York bar owner who ran a fake ad about a one bedroom for rent that turned out to be his public restroom. He was shocked at the number of people who responded. With that in mind, here are the top signs that apartment or home rental ad could be fake:

  • It seems too good to be true
  • There is no address
  • The contact is only by email or mail
  • The landlord seems too eager to rent and doesn’t ask for your employment verification or any other tenant screening
  • You are asked to wire money to apply or hold the apartment (especially if you never met anyone in person)
  • You’re told you don’t need a lease or rental agreement
  • The “landlord” says she is out of town and will only come back to meet you if you send money first

Finally, think about your other expenses. After you pay rent, will you have enough for utilities, cell phone, cable, internet, food, fuel, car payment and fun? Don’t forget about any student loans you have to repay. If you overdo what you pay for rent you may not have enough money for your other financial obligations, not to mention not being able to afford going out to see a movie or joining friends for dinner. Use this rent affordability calculator to gage what your budget allows.

Here are ways to reduce your monthly costs:

  • Look outside the urban area like a nearby town or suburb for rentals
  • Get a roommate or roommates
  • Apply for rental subsidies offered by some cities and the federal government
  • Scale down your expectations and find a smaller apartment
  • Negotiate with the landlord
  • Do without cable or satellite TV
  • Have more meals at home with friends rather than going to restaurants

One expense you should never skimp on is renters insurance. Your landlord’s insurance doesn’t cover your things, and many landlords now require you to have our own policy. For as little as $15 a month you can protect your possessions from fire, theft or damage from a broken water pipe. Renters insurance also covers you in case someone gets hurt at your place and sues. Make sure you have the coverage you need, contact a California Casualty advisor for a quote today at 1.800.800.9410 or visit

Sources for this article:

California Casualty

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