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Calculate the maximum rent budget based on income

How much do you have to pay for rent based on your monthly income? How do you set the maximum rent budget?

The RentGuard.Ro team provides you with a short guide to your financial education as well as a price calculator.

pretul maxim pentru chirie in functie de venit

How much can you afford to pay on rent?

First of all, we are of course talking about a percentage, not an amount. Secondly, in order to make the theory coherent and explicit, we need to detail a little the “whole picture” of the rent and the landlord-tenant relationship.

Landlord’s Story

Before establishing the right amount for renting his property, a landlord has to consider and line up several important aspects.

On one hand, the return on investment. Although in the simplest way of seeing things, the landlord receives a lot of money from his tenants, there are other aspects to be considered:

  • He might also have to pay bank rates and interests for the property he bought
  • Except for the property, furnishing and equipping the house/apartment was also an important investment
  • In time, several equipment repairs or replacements are necessary, as well as property maintenance (painting, plumbing etc.)

On the other hand, the competition. Despite his investments, costs, and liabilities he will be forced to set the rent amount on the same level as his direct competition.

Last but not least, he has to pay taxes for the income he receives.

Certainly, a landlord is supposed to “do the math” before investing but it is important for the tenant to understand that not 100% of the paid rent goes into the landlord’s pocket. And that he also has obligations and responsibilities, towards the tenant and third parties, therefore the rent amount is generallynot the subject of large negotiation.

The tenant’s story

On the other side, comparing to the landlord, the tenant has other problems and responsibilities, first of all towards himself:

As a tenant, you rent a property for two basic reasons:

  • You either do not have the financial power of buying your one house / apartment
  • Or you prefer to stay mobile, able to move as frequently as your life style requires

Is it better to rent or is it better to buy your own house / apartment? This is an important issue that we will develop in a future article. Until then, let’s tell the story of the tenant.

As mentioned before, the tenant has a primordial responsibility towards himself when choosing an apartment to rent: to choose wisely how he spend his own money!

First of all, it is a question of amount (percentage) – how much to spend for the rent; second, an issue of conditions (in terms of distances, utilities, colocators etc.)

buton Check your maximum rent amount

It is important to make conscient and logical choices!

Regarding the rent amount, real estate specialists recommend that rent budget should represent maximum a third of your income. While establishing the amount for the rent, you should take into consideration factors like:

  • Your monthly expenses
  • Your monthly income

But you should have a more thoughtful approach on the issue. It is important to analyze and decide:

  • Do you have a long hour working program? Then choose a property next to your working place, prioritize your time
  • Do you have a fix, acceptable working program? Then you can spend some 20, 30 minutes more on the way to work and back. Prioritize your money
  • Do you spend o lot of time at home? Do you need a nice, full equipped property (that generally comes with higher costs)? Or you just spend time for resting and sleeping?

Why should you ask yourself those questions? Because specialists say you should spend maximum 30% of your income for paying the rent. Nevertheless, nobody says you need to pay all 30%, so you might find useful to ask yourself those questions and maybe save some (of your) money.

Explanatory example:

Assuming you have a monthly net income of 750 euro – in this case you should look for properties with a monthly rent of 280 – 320 euro.

If you wish for an upgraded comfort (bigger space, better area), you have the option of sharing the property with one ore more friends / colleagues. According to your relation, you can also split expenses like cleaning products etc.

While choosing the right property according to your budget, please consider the following:

  • Thermic isolation (interior / exterior) offers you better comfort and a downgrade of winter costs with heating
  • Your apartment should be located between other apartments, not on the corner of the building. Also, if on top or below you nobody is living, your heating costs will increase
  • Having your own heating system is both cheaper and easier to use (you turn it on and off as you wish)

Before renting a property, check last months maintenance costs. Consider that they might be higher in the future if nobody lived there before you.

Check all these factors before deciding how to split your monthly income.

RentGuard rent budget calculator

Try for free our calculator to find out the maximum rent amount that you should pay according to your income.

Important! We only take into consideration the rent amount (no other expenses like heating, cleaning etc.).

Start filling the form with the tenants number and follow the process step by step to find out the right rent amount that you should pay.

At the end, you will provide you a form to fill in, in order to help you find the right property for your needs.