When you look to rent an apartment, you want to make sure that:
- You can afford the monthly rent (a popular rule of thumb is to allocate 30% of your gross income to rent)
- You have enough saved up for one-time expenses that are due almost immediately before move in, including, security deposit, 1st month rent, moving costs, furniture costs, and renter’s insurance.
Therefore, it’s wise to have at a minimum $8,000+ in cash saved up…just to afford the initial cash outlay.
What are the upfront costs?
Typically, before move in, you will need to pay the first month’s rent, security deposit, renter’s insurance, and any application / admin fees up front. For example, if your rent is $1,500/month, you likely need to pay $1,500 for 1st month’s rent, $1,500 for a security deposit, and perhaps a $250 admin fee. Renter’s insurance could be $300 for the year. In this example, that’s $3,500+ in cash up front. Also don’t forget that you may need to pay extra for parking so include that in your estimate as well.
You might also be required to pay last month’s rent on top of all this.
Do you have enough for furniture and décor cost?
You’ll need furniture like a bed, table, couch, lamps, TV, dressers. Of course, the cost of furnishing an apartment can vary widely based on where you purchase your furnishings, the brand, the material, etc. Furnishing a one-bedroom with stock furniture from a Wayfair or similar vendor can cost $3,000 to $4,000+. For a two bedroom, it can cost $4,500 to $6,000+. You’ll need this cash on hand unless you finance the furniture. Don’t forget essential items like cleaning supplies, toiletries, toilet paper, etc.
Do you have enough for moving expenses?
Moving your items costs money. If you plan to move on your own locally, budget at least $200 to $500 for the rental truck plus moving supplies. If you plan to hire a professional mover, this could be $1,000 to $1,700+. Get some quotes from reputable movers.
Make sure you budget for on-going expenses
You need to know what the cost of your on-going expenses will be so you have enough leftover savings for other expenses like food, entertainment, groceries, and utilities.
Find out what the rent cost is each month plus all utilities. If you don’t have an exact number for utilities, budget conservatively.
You also likely have other expenses such as debt payments, car payments, school, and more. Be sure you have enough money for these plus any savings goals.
Err on the side of caution. Seek professional financial advice if needed.
*This article is merely meant to provide general guidance for those seeking to understand the costs associated with renting their first apartment. It is not in any way meant to be financial advice or a substitute for any professional financial advice. All readers are strongly encouraged to seek professional advice.