How Much Rent Can You Afford?

The majority of property managers and landlords in San Diego require the net monthly income to be 2.5 times the monthly rent. So if the property you are interested for is listed at $3,000 a month, you must show at least $7,500 in net monthly income.

Now depending on if you are moving in with a roommate or your spouse, their income is added to the total required income. Example: You make $3,000 a month and your spouse makes $4,500, the total household income is a minimum of 2.5 times the rent ($7,500), which qualifies you.

Another item looked at when calculating your total net is the debt to income ratio. Meaning, if you are close to maximizing your credit cards while having a car payment and student loans, you debt will take away the total amount of funds left over. Landlords will factor this in their overall calculations. An easy way to determine this calculation and to know what you truly can afford is by making sure your monthly expenses is a maximum 30-35% of the minimum income requirement.

Example:

Total net income – $7,500
Credit Card Bill – $300
Car payment – $350
Student loan – $300
Total income after debt = $6,550

The example shows that you make than the minimum requirement of $7,500. In this case, the landlord may only require you to bring in an extra $500 – $1,000 on top of the deposit.

Most rentals in San Diego will require the tenant to pall for all utilities, which can have a major impact on their overall budget. With water averaging $100 per month, gas/electric at $90, renters insurance around $20 and cable around $160, utilities can easily chip away at your budget. Then, there are life expenses: Health insurance, cell phone, retirement, food…etc . The point is to budget yourself to allow you to save a little money each month for those rainy days.