Let’s face it, if you’re under 30 and earn anywhere under $80k a year chances are you won’t be able to afford to buy a property, pay the mortgage and therefore live in it, for a good while. And if we do the math that leaves either taking advantage of good old mum and dad’s hospitality or, renting as your only options. And whether you’re able to live alone or need to enter in a share house arrangement, the rules of renting almost always remain the same.
Know how much to pay
The traditional rule of thumb is don’t spend more than 30% of your net pay on rent. An easy way to work that out is:
Income ÷ 40 = your recommended monthly rent (This is equal to: (Income ÷ 30%) ÷ 12 months)
Some modern finance advisors say the 30% figure is out dated and ill-informed but in my experience I have found it to be quite true. While it doesn’t allow for the costs of bills and living expenses, extra costs can be reduced or increased depending on your lifestyle and the amount of trimmings you pay for, such as pay TV, subscriptions and gym memberships. This Affordability Calculator may give you a nudge or two in the right direction if you need it.
Choose wisely
I say this both in terms of property, location and company. While share houses are sometimes simpler, legally you should always be on the lease and getting out of a lease is can prove difficult as you’re usually locked in for at least 12 months. That’s 5 times longer than Kim Kardashian’s second marriage. So make sure you like the look and feel of the property, you’re happy with where it is and get along with whoever you live with. There are few things worse than being unsatisfied with where your home, the place that’s supposed to be your refuge and place to relax.
Do your research
This is more about the location of the property than the site itself. While you should ask the previous tenants (or agent) about the appliances, plumbing and neighbours, spread that net a little wider. Are there amenities close by like supermarkets, cafes and petrol stations? You’ll be forking out to live there so you don’t want to have to continually leave your neighbourhood to access these facilities. Better yet if these places are in walking distance that’s less money you’ll be paying for your car, cabs and other travel costs.
Make sure to also look at public transport options, cab frequencies and the safety of the area. Can you get public transport late at night without resorting to taxis? Will you feel comfortable walking home after dark?
Don’t be a prince/ss
Coming from mum and dad’s place to a hovel you can call your own is a big reality check. While your parents have worked decades to have a comfortable house they can provide for their family, you’re on step one kid. So that means that you don’t actually need a dishwasher, car space, internal laundry or ensuite bathroom. Think of this stage as a rite of passage, sharing with a group of people in less than ideal circumstances – it usually ends up being really fun. And you’ll only go up from here, both in salary and housing quality so you can tough it out for now.
Work out your priorities
While the most cost effective solution is generally the option I recommend, it’s good to work out your priorities and what you want out of a rental property before you start looking. You may prioritise lifestyle benefits or a favourite neighbourhood and be willing to sacrifice a few extra dollars a week. I know some that choose to live in the dodgiest of places to ensure they are saving on top of living costs. Others on the flip side of the coin who use this time to YOLO through life and spend a bit more to enjoy a nicer place or ideal location.
At the end of the day there are a multitude of factors that will determine how you choose a rental property. But if you’re any kind of sensible you’ll know what you can afford, and what crosses the line. And remember, the rental market is a jungle out there, so read the rules, and prepared to fight a horde of other hopefuls to literally get your way in the door.