Budgeting for a home rental

When you’re looking for a new rental, there are a lot of considerations that will go into how much you want to spend. Not only is there the question of how housing costs fit into your budget as a whole, you have to look at what the final cost of the house might be.

There are a number of expenses that can be influenced by your house along with the rent itself. For one thing, the utilities may not all be covered. You’ll need to be clear on exactly what the rent includes, which may be limited to either water or electricity or may even be nothing at all. Remember that any phone or cable accounts you sign up for will also not be covered. Once you’ve talked with your prospective landlord about what’s covered, you can talk to the utility company in the area you’re moving to about what the average charges are. Ask about how high power bills can get at the worst part of summer, or heating in the winter. You might even be able to get a history for the specific property you’re looking at. This is also a good chance to look for a better cable deal.

The neighbourhood in which the house is located will also affect overall costs. The most obvious of these is transportation. When looking at houses farther out in the suburbs, think about how much more you might wind up spending on gas, or on parking while driving around the neighbourhood. Those costs can add up significantly, so you’ll want to add that into the equation when comparing rent costs in different areas. This is another part of considering what your new daily commute might be. You’ll also want to look at the general cost of living in the area—what kinds of prices do the nearest grocery stores have? Will it be easy to find clothes on sale? This kind of cost can have a real impact on your budget as a whole.

If you have any questions related to the neighbourhood your are looking to prospectively rent in, you can get local and expert opinions here. 

Of course, early in the process it’s important to have a clear sense of your budget to know what kind of expenses you can accommodate. First, list all of your regular income. You might want to be conservative with this. If you’re considering income sources like investments and retirement funds, only include as much money as would be readily available for you to spend directly. You probably won’t want to include money that you’re keeping in long-term savings.

Next, you’ll want to list expenses. Separate optional spending out of disposable income from necessary spending, and think about which costs are fixed and which you might be able to lower without cutting out entirely. Be honest with yourself; look at your past spending to get a real picture. Think realistically about what costs you can cut down, and also take into account that you’ll want to keep saving a bit on a regular basis. Using budgeting software can help you sort out your spending patterns in order to improve or at least recognise them. Generally, most experts recommend that you only spend about a third of your income on housing, so spend some time shopping around to find the best deal. 

Now that you’ve got these tips under your belt it’s time to search! You can start with the 5 most glamorous rentals now available on Homely here.