Have you ever been driving down the road and seen what you consider the “perfect home” for you and your family? Then you start thinking about how much it would cost. You may even go so far as to run a few numbers in your head to see if it would ever be within the realm of possibility. It doesn’t matter if it is an apartment or a house; knowing how much you can afford is a very important first step before getting into any lease agreement. You may also be shocked that after you spend time running the numbers, “perfect home” may be closer than you think.

What Landlords Look For

Normally, a landlord will ensure that an individual or group of renters can afford the monthly payments laid out in the rental agreement. Seeing a landlord expect your annual income to be 40 times the monthly rent isn’t unheard of. So, if you’re looking to afford a house for rent that is $1,250 per month in rent, the expected combined income would be $50,000 for the year. However, not all landlords charge the same amount. For example, Buckeye Northwest Realty only uses a 3 times the monthly rent calculation. If you want to afford the same $1,250 apartment through Buckeye Northwest Realty, you would be expected to make $3750, considerably less strict than many other landlords. This is a pretty simple calculation that anyone can do, but make sure to consider whether you will have roommates or if you will be handling the monthly rent all by yourself.

Affording Rent

If a landlord is looking for your annual income to be 40 times (instead of Buckeye Northwest Realty’s 3 times) the monthly rent amount, then where does this leave you in your budgeting? You should never spend more than 30 percent of your annual income on rent as this amount is believed to be the most affordable and leaves some income for other expenses. So, with some simple calculations, you can find your “sweet spot” for rent. If you make $50,000 a year, 30 percent of that would be 30 percent of $50,000, which equals $15,000. The next step is determining how much per month you will be paying. So, $15,000 / 12 months is $1,250 per month. An easier version of this is like the landlord’s math: simple $50,000 / 40 equals the same $1,250 per month.

At Buckeye Northwest Realty, we simplify home renting. Refer to our earlier “three times rent” statement to see how we make renting a snap!

Applying What We’ve Learned

We have learned what the landlord is looking for, and we have also learned what we should be looking for. Now comes the biggest part of the equation: where is the property that fits our perfect mold? Sometimes, people will pay less monthly rent to have more of that proposed 30 percent than others. This could lead to purchasing more things for the family or needs taken care of, etc. In comparison, some may opt to pay more than 30 percent of their annual income and have a much nicer house. It all boils down to what you feel is best for you and your family.

Contact us today to learn more about our houses for rent in Toledo, Ohio, or if you have questions about renting.