So if your annual salary is $60,000, you should pay no more than $1,500 a month in rent. In New York City, landlords also follow this guideline, insisting that applicants earn 40 times the monthly rent. As an alternative, your landlord may allow someone (usually a well-off relative) to co-sign the lease as a guarantor. “You cannot be living hand-to-mouth,” said Carlos Castro, the director of lease administration for Halstead Management, adding that renters should be aware of brokers’ fees, security deposits and other housing-related expenses. And when calculating how much you can afford to spend each month, don’t forget to factor in student loan or car payments.
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You may not be able to find an apartment that would be affordable on an entry-level salary. Between 2006 and 2014, seven of the 11 largest metro areas became less affordable, as rents grew at a faster rate than salaries and more renters entered the market, according to a report by the Furman Center and Capital One. The most expensive market was Washington, D.C., where the median rent in 2014 was $1,530 a month.
SmartAsset, a financial technology company, mapped out how much income a renter would need to afford an average two-bedroom apartment in various American cities in 2016. The findings are sobering. In San Francisco, a renter must earn a stunning $216,129 a year to avoid being rent-burdened; in New York City, $158,229.
Still, you have to live somewhere. To offset costs, consider a roommate. If you pool your incomes, you might be able to find a nicer apartment than you could afford on your own. You might also be able to save a little for the future.
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