TO SAVE MONEY ON RENT
If you’ve been in the market for almost any kind of living space recently, you know you’re continually thinking about how to save money on rent.
The percentage of income spent on monthly rent has increased to close to 30% since 2010.
By comparison, Americans spent 25% of their income on rent before 2000.
Why Is Rent so Expensive?
On the other hand, mortgage affordability, the percentage of income spent on a mortgage, has only been about 15% since 2010. This means Americans are spending more of their incomes to rent homes than to buy them.
The cost of renting has exploded, while wages have not increased.
Much of that has to do with demand, which shot up dramatically when the housing market crashed at the end of 2008.
Unfortunately, the rental market wasn’t ready. The economy was reeling, and construction of new apartments couldn’t keep up with the demand.
According to the Department of Housing and Urban Development (HUD), rental affordability is currently down 22% from its peak at the beginning of 2001. But it’s up 7% from its low point in the third quarter of 2018.
Pay attention to rental rates in your area. Know what the market value of your apartment is before you re-sign that lease, and use these tips to save on rent in the meantime.
How to Save Money on Rent
Get a Roommate
If you can stand living with another person, this is a no-brainer. Getting a roommate will save the most money.
The average cost of a one-bedroom apartment in the US in 2020 is $964. The average cost of a two-bedroom apartment in 2020 is $1,192.
Divide that second number by two and it’s $396 cheaper per month and $4,416 cheaper per year to share costs with a roommate than to live alone. And that doesn’t include shared expenses like utilities, kitchen supplies, toiletries and groceries.
Negotiate your lease renewal
Landlords want to keep good tenants, partly because it costs them money to move you out and bring someone else in.
That gives you some leverage.
Look at the prices of similar apartments in your area and come in with a number in mind. If the landlord won’t budge, tell them you’re going to look elsewhere. If you’ve been a good tenant, they’ll want to keep you.
But be careful. Know who you are dealing with.
Independent landlords have a lot more leeway than property management companies. They might have multiple renters in the building and aren’t willing to make concessions, so try to sweeten the deal by offering something in return.
Pay up front:
Offer to pay the entire lease or at least a few months upfront for a discount if you can afford it. The landlord may cut a deal to have up front cash in hand. You don’t want to take on credit card debt because you drained your bank account to save a few dollars on rent.
And if you do pay upfront, make sure you pay the money back into your savings each month.
Sign a long term lease to save money on rent
Your landlord wants stability. And you can give it to him by signing for a longer than your average lease term (one year). The longer the lease, the lower the landlord should be willing to go.
Give up, or rent out your parking space
I live in a fairly pricey apartment that comes with a parking space. But I don’t own a car. So I rent out that space for $200 a month 🙂 That’s $2400 a year that I get for doing absolutely nothing. So I put it towards my rent.
Likewise, if you don’t have a car, you won’t need a parking space. Offer to give it up in exchange for discounted rent. The landlord would be able to sell the space to another tenant, who might need extra parking.
Or you could do like I do, and rent it out yourself.
Look for apartments during the winter months
Nobody wants to move in the winter, so landlords have a tough time finding renters in winter. It’s cold outside and people aren’t willing to leave their cozy homes. Vacancies can go on for months, and with each month landlords are losing money and getting more desperate.
Prices can increase dramatically in the summer months. Some of that has to do with the weather, but a lot of it has to do with the school schedule.
College graduates flood the market during this time of year, and high school graduates enter the market in college towns. Families with children in elementary school will wait until the school year is over to make a move to ease their children’s transition to a new school.
All that movement increases demand, which equals higher prices in the summer. Look for apartments in the winter and offer to sign an extended lease that ends in the summer. This ensures the apartment hits the market at a good time for the landlord when you move out, and the landlord gets some stability in the meantime. They’ll be willing to work with you for those tradeoffs.
This can be one of the biggest ways to save money on rent.
Big cities like New York and Los Angeles are the most coveted to live in and by far the most expensive.
However, you don’t have to sacrifice city life to save money. Think about up and coming cities like Oklahoma City and El Paso where rents average $783 and $789 a month, respectively.
How to Save Money While Renting
If you’re having trouble reducing your actual rent, or your obligations are keeping you tied to an expensive city, come up with some cost-effective strategies to trim down on your monthly expenses and save money.
Save on utilities
According to the Department of Energy (DOE), Americans spend an average of $2,200 a year on utilities. That’s $183 a month, and half of that goes to heating and cooling our homes.
A lot of this energy is wasted by aging appliances and drafty windows and doors that make it harder for your home to maintain a comfortable temperature.
Wasted energy equals wasted money.
You can save money on utilities by upgrading old appliances or making some repairs around the house.
You should talk to your landlord before making any drastic changes to make sure he or she is on the same page.
Downgrade your cable services
If you have cable, consider downgrading your package, or unplugging altogether.
Sometimes, cable options are limited based on your location.
The most affordable option may not service where you live. It’s still worth negotiating with your current provider for a lower rate.
If you threaten to switch providers or ditch the service completely, they may be more open to negotiations.
Cutting the cable cord completely
More and more Americans are cutting the cable cord entirely.
According to statistics, 19.9% of households are going without cable or satellite in 2020. It also predicts the number will reach 27% by 2023.
Instead of cable, consider switching to one of the major streaming services. Most of these cost between $10-$20 a month for a basic package. You can even split the cost among friends or family.
Cooking at home
You don’t have to cook three meals a day, but eating out will quickly drain your funds, forcing you to tighten your budget in other places.
Most people won’t go broke from eating out once a week, but if you try to eat out every meal you will end up spending more on food than rent.
Apps like Pinterest are great ways to find a few easy recipes that you can knock out after work. When you’re tired and most tempted to call it in and order take out, refer to that.
NEVER Use Credit Cards for Rent
Watch out for advice to pay rent with a credit card so you can cash in on mileage rewards or cashback from credit card companies. Property managers typically hit you with a service charge that will eat up any cash-back perks, and you’re risking overloading your credit card.
It will hurt your credit score, and the last thing you want to do while trying to save money, is to add credit card debt.