What % of net income should be spent on rent?

[bryan_05]

Out on my own soon. How much % wise should I spend on rent? Please specify whether you are talking pre-tax or post tax income.

THanks, Bryan

[JohnnytheSkin]

Re: What % of net income should be spent on rent?

Out on my own soon. How much % wise should I spend on rent? Please specify whether you are talking pre-tax or post tax income.

THanks, Bryan

Most tax my wife and I are currently paying 17% on rent. It all depends on income though, but I would try and stay around a third and absolutely no more than a half of your post tax income...especially if you have student loans, car payments, etc. Being able to dedicate money every check to a savings/investment account is highly suggested as well. We dedicate a full 20% to 401(k) and savings every check as well. The rest is tied up in loan and car payments.

Our three bedroom apartment in suburban Boise runs $950 a month, which I imagine is slightly lower than normal. Good luck!

[Nivek]

Re: What % of net income should be spent on rent?

If you plan on living there for more then a couple of years, don't rent. You're pretty much throwing money in the trash. Buy a piece of property(condo/loft/studio apartment); but you might have to play for utilities. Depending on the area, I would say it's about 45% to 50% of your net income. If you make about $2000 a month; $850 would be ideal.

[MassNole]

Re: What % of net income should be spent on rent?

If you have good credit then it may be better to look at buying as compared to renting, depending on the local market and what a reasonable mortgage vs. rent would be. Obviously this isn't the ideal for everybody, but I felt it should be thrown into the mix. If you are lucky you can find steals on the Hud market. My wife and I found a 3 bedroom, 1 bath, 1000 square foot house for under $100k.

[bkrich83]

Re: What % of net income should be spent on rent?

Depends on location, especially since you are just starting out though. Buying here, would be tough, since you can't find anything for less than $500k.. That would be pretty taxing on someone right out of school. Plus you have to factor in property taxes and maintenance. Buying does have the extra advantage however, of giving you a nice tax break at the end of the year.

[MagicBucsWsoxFan]

Re: What % of net income should be spent on rent?

Hey im sorry to being a hijacker if it turns into that, but I was wondering the same thing. I was wondering if about 2000 a month income would be able to afford a condo? Me and my girlfriend are trying to look into it but neither of us know anything about it. I make 670 every 2 weeks (1340 a month) and my girlfriend makes about 500 every 2 weeks so thats 1000, so wed be at about 2340 a month. Is that enough for a condo? with utilities and gas and cell phones and such?

We dont have any student loans or car payments other than gas, insurrance and maintenence. But if possible were looking into something used and cheap for her to drive but that can wait for now.

[bkrich83]

Re: What % of net income should be spent on rent?

Hey im sorry to being a hijacker if it turns into that, but I was wondering the same thing. I was wondering if about 2000 a month income would be able to afford a condo? Me and my girlfriend are trying to look into it but neither of us know anything about it. I make 670 every 2 weeks (1340 a month) and my girlfriend makes about 500 every 2 weeks so thats 1000, so wed be at about 2340 a month. Is that enough for a condo? with utilities and gas and cell phones and such?

We dont have any student loans or car payments other than gas, insurrance and maintenence. But if possible were looking into something used and cheap for her to drive but that can wait for now.

'

Really depends on the market you live in. The first place I bought was about $300,000. I put $80,000 down so I financed about $220,000. I think with insurance and property taxes my payment was around $1,800... Of course this is going off of memory and I Am old. So I could be off.

[MagicBucsWsoxFan]

Re: What % of net income should be spent on rent?

'

Really depends on the market you live in. The first place I bought was about $300,000. I put $80,000 down so I financed about $220,000. I think with insurance and property taxes my payment was around $1,800... Of course this is going off of memory and I Am old. So I could be off.

hmm im almost positive I wouldnt be able to afford 1800. How much of a down payment did you put down?

Im also in suburban Illinois...stuff is pretty high here. 3 bedroom apartment like someone said earlier that they got for 950/m, would probably go well over 1100 here, maybe even more. Heck its between 850-1200 for 2 bedroom

[Lintyfresh85]

Re: What % of net income should be spent on rent?

so the consensus is to buy and not rent? Even if fresh out of college?

[MagicBucsWsoxFan]

Re: What % of net income should be spent on rent?

so the consensus is to buy and not rent? Even if fresh out of college?

If possible yes, but it is much more expensive, so if renting is the only thing you can do, then its what has to be done.

[JohnnytheSkin]

Re: What % of net income should be spent on rent?

so the consensus is to buy and not rent? Even if fresh out of college?

Not fresh out of college. I don't know why someone would buy, since most grads will change jobs quite a bit within the first ten years of graduation...not to mention life changes (marriage and kids).

My wife and I bought a house and had a devil of a time getting rid of it when the job I was at fell apart. It was an absolute nightmare! In some markets where housing demand is high, resale might not be a problem. But who can forecast three, four years and see the housing market...since in three years you might be passed over for a promotion and want out.

I guess if you really like an area and want to stay (close to home or whatever) then buying would be an option right off the bat...especially if you don't mind commuting. In fact we'll likely buy when we relocate in six months. However the mistake of buying with my first job will hang around our necks like a millstone for a while, despite the fact that we are so much better off now.

[ehh]

Re: What % of net income should be spent on rent?

so the consensus is to buy and not rent? Even if fresh out of college?

Well obviously, you want equity. Renting is essentially flushing $ down the toilet.

My rent is a lil less than 20% of my net income.

[Nivek]

Re: What % of net income should be spent on rent?

so the consensus is to buy and not rent? Even if fresh out of college?

I'm renting right now, but that's becasue I don't plan on living there for another year. If you know you'll be in an area for 5 or more years I'd consider buying.

[aukevin]

Re: What % of net income should be spent on rent?

I waited a year after college before my wife and I bought a house. I wanted to make sure I was going to stay at my job. I don't think you should keep spending money on rent if you are in a place that you think you'll stay at for more than 3 years.

As for percentage of income, my monthly house payment is about 27% of my monthly take home pay. I don't really have any problem making that payment each month.

[Stu]

Re: What % of net income should be spent on rent?

so the consensus is to buy and not rent? Even if fresh out of college?

Not necessarily. Like others have said, it greatly depends on the market, your future plans in terms of marriage, jobs, etc and how much you have in student loans. I know in the Boston area you're looking at 300k as a starting point for most condo's which is more than most college grads can afford.