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I was wondering if you could say what percent of income should be the maximum spent on rent only?
What would that number be if all utilities are included?
On average you should net 3X your rent whether utilities are included or not but this is a variable and also depends on how much other debt you have and whether it's short term or long term..
I was wondering if you could say what percent of income should be the maximum spent on rent only?
What would that number be if all utilities are included?
From the standpoint of a landlord...
the ideal tenant is able to **comfortably** afford their obligation.
After all other payroll deductions and other structured debt obligations...
the net of their net income should be no less than 1/3 of the rent and utilities.
An even lower percentage of income spent on housing is better for everyone involved.
Last edited by MrRational; 01-17-2013 at 02:55 PM..
I require applicants to take home 3 times the rent. However, 1/3 the take home income going to rent is not really comfortable for people with low incomes. The tenant must have enough left after rent to buy food, clothe their kids, and pay utilities.
Tenants with a heavy debt load can not afford to spend 1/3 their take home pay on rent, either.
I see these threads ALL the time on here and there is no correct answer. It all depends on your other debts. Without knowing your other debts I can't even give you an estimate. If someone says to spend 30% and the you have an 800$ per month car payment a 400$ child support payment and you bring home 3k per month, then spending 30% would be nuts.
1/3 of income is probably ok except in cases of low income in which the tenant must own a car or has children or debt. If tenant makes 20k gross and job needs him/her to have a car or he/she has children, 1/3 is going to be crushing and unaffordable for him/her.
Max 30% is the right figure to calculate which includes water, gas, heat, garbage collection. Remember you probably still have to pay for electricity, internet, cell phone, and other bills. Probably best if you do a budget listing your bills that you are obligated to pay, ie car repayment, car insurance, cell phone account, loans, food, etc. Take your NET salary minus the bills and try to leave another 10% for saving (this also helps when costs increase), whatever you have left over then you can put towards rent. Remember if your moving you also need rent deposit, pet deposits if you have pets, rent in advance plus costs to set up electricity accounts, moving costs, furniture costs, etc.
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