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Do I make enough money to rent an apartment?

Do I make enough money to rent an apartment?

There have been a growing number of news reports and social media articles regarding the rental crisis across America. Monthly rental rates continue to rise as more and more Americans choose to rent long term.

A recent report by the National Low Income Housing Association did a study on how much a person who is employed full time would need to make in order to be able to afford a basic 2 bedroom apartment. This number varied state by state and Illinois was among the highest. Across the nation the number of households that rent has gone up 27% from 2006 to a little over $43 Million households renting in 2016. The National Low Income Housing Coalition characterized the lack of affordable rental housing as a national crisis for poor and middle class Americans of all ethnic groups, in cities as well as rural communities.

The 2 most common misunderstandings we run into with our clients are what they can afford and the calculation they are using to figure out their gross income.

First things first. We recommend that everyone have a budget to help keep them on track with their expenses. However, that is not what is going to get you qualified for an apartment. Managed rental communities have set standards that they look for and most commonly we find that they require a minimum of 3 times the monthly rent in household income. There is a cheat sheet below in the form of a basic chart below showing minimum wage for Illinois all the way up to $35/hour that will show you how much you would qualify for in rent with landlords under this guideline.

The second issue is that many clients short themselves when it comes to their monthly gross income.

Example Customer: Josh Jones

Josh gets paid bi weekly. He looks at his paystub for the last 2 weeks and sees that under Gross Income it shows $2,000 for that pay period. $2,000 x 2 = $4,000/mo. $4,000/mo x 12 months = $48,000/annual gross income

In this example Josh actually shorted himself $4,000 per year and here’s why.

Here is the correct calculation:  Josh is paid bi weekly and makes $2,000 every 2 weeks. $2,000 x 26 (number of pay periods in a calendar year) = $52,000/ annual gross income. $52,000 divided by 12 (months in a year) = $4,333.33 monthly gross income

To figure out your correct annual gross income and monthly gross income please use the equations below

Step 1

Hourly Rate x Number of Hours per week x 52 (number of weeks in a year)  = Annual Gross Income 

OR

Gross income from your most recent bi weekly pay stub x 26 (number of pay periods in a year) = Annual Gross Income

Step 2:

Annual Gross Income (total from Step 1) divided by 12 (number of months in a year) = Monthly Gross Income

Step 3:

Monthly Gross Income (total from Step 2) divided by 3 = Maximum Monthly Rent 

If you have multiple incomes in your household follow the steps above and add the final figures from Step 3 (Maximum Monthly Rent) together and that will tell you what the maximum monthly rental amount is for the total household income.

As with most rules there are almost always exceptions. There are a few properties that will consider an income equal to 2 times the monthly rent and others that are looking for up to 4 times the monthly rent to qualify. Additionally, there are government funded properties that have lower minimum income levels that also carry a maximum annual gross income to qualify for.

Please call our office and we can match you with a property that best fits your specific situation. We have listings for everything from affordable basic apartments to brand new construction luxury living.

 

 

 

 

 

 

Hourly Rate Weekly Gross  Annual Gross Monthly Gross Maximum Monthly Rent Based on the 3x Rule 

*not all apartments require 3x the monthly rent in income.

$8.25 $330.00 $17,160.00 $1,430.00 $476.00
$9.00 $360.00 $18,720.00 $1,560.00  $520.00
$10.00 $400.00 $20,800.00 $1,733.00 $577.00
$11.00 $440.00 $22,880.00 $1,906.00 $635.00
$12.00 $480.00 $24,960.00 $2,080.00 $693.00
$13.00 $520.00 $27,040.00 $2,253.00 $751.00
$14.00 $560.00 $29,120.00 $2,426.00 $808.00
$15.00 $600.00 $31,200.00 $2,600.00 $866.00
$16.00 $640.00 $33,280.00 $2,773.00 $924.00
$17.00 $680.00 $35,360.00 $2,946.00 $982.00
$18.00 $720.00 $37,440.00 $3,120.00 $1,040.00
$19.00 $760.00 $39,520.00 $3,293.00 $1,097.00
$20.00 $800.00 $41,600.00 $3,466.00 $1,155.00
$21.00 $840.00 $43,680.00 $3,640.00  $1,213.00
$22.00 $880.00 $45,760.00 $3,813.00 $1,271.00
$23.00 $920.00 $47,840.00 $3,986.00 $1,328.00
$24.00 $960.00 $49,920.00 $4,160.00 $1,386.00
$25.00 $1,000.00 $52,000.00 $4,333.00 $1,444.00
$26.00 $1,040.00 $54,080.00 $4,506.00 $1,502.00
$27.00 $1,080.00 $56,160.00 $4,680.00 $1,560.00
$28.00 $1,120.00 $58,240.00 $4,853.00 $1,617.00
$29.00 $1,160.00 $60,320.00 $5,026.00 $1,675.00
$30.00 $1,200.00 $62,400.00 $5,200.00 $1,733.00
$31.00 $1,240.00 $64,480.00 $5,373.00 $1,791.00
$32.00 $1,280.00 $66,560.00 $5,546.00  $1,848.00
$33.00 $1,320.00 $68,640.00 $5,720.00 $1,906.00
$34.00 $1,360.00 $70,720.00 $5,893.00 $1,964.00
$35.00 $1,400.00 $72,800.00 $6,066.00 $2,022.00

 

 

 

 

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Caryn Outlaw

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