10 Ways to Save Money on Monthly Rent Payments
If you’ve been in the market for a one-or two-bedroom apartment recently, you know how deep you have to dig into your wallet to find a place you can afford.
Rent affordability – the percentage of income spent on monthly leases – has risen steadily since 2010. Before then, Americans spent 25% of their income on rent. Now, the average is around 30%, but the lower your income, the higher the percentage you pay.
COVID-19 made that worse — low-wage-earners were hit harder financially by the pandemic, but rents continued to rise in 2021.
If you were impacted financially by COVID-19, the federal government has a solution ready, but only if you qualify. The last two stimulus bills included $46.5 billion – yes, BILLION! – in grant money to pay past due rent for those who qualify.
The money was sent to state, county and city governments, each of whom set up programs to disburse it. Go online to your local government website or call them to find out the qualifying standards. The grant money can be used to pay up to 12 months of past due rent. It requires cooperation from your landlord, who must file paperwork alongside your paperwork to receive the money.
Why Is Rent So Expensive?
On the other hand, mortgage affordability, the percentage of income spent on a mortgage, has only been about 15% since 2010, and didn’t change much even with COVID-19. This means Americans spend a higher percentage of their incomes to rent homes than to buy them.
The disparity is because the cost of renting has exploded, while wages have stagnated.
Much of that has to do with demand, which shot up dramatically when the housing market crashed at the end of 2008. The rental market wasn’t ready. The economy was reeling, and construction of new apartments couldn’t keep up with the demand.
The COVID-19 pandemic threw a monkey wrench into the situation, and experts say it could take years for it to sort out, just like it did after the 2008 crash. But there are also regional differences, so pay attention to rental rates in your area. Know what the market value of your apartment is before you renew the lease and use these tips to save on rent in the meantime.
How to Save on Rent
1. Get a Roommate
This one is obvious, and it will save by far the most money. The average cost of a one-bedroom apartment in the U.S. in 2021 is $1,663. The average cost of a two-bedroom apartment in 2021 is $1,934. Divide that second number by two and it’s $696 cheaper a month. Multiply that by 12 and that’s a huge savings. And that doesn’t include shared expenses like utilities, kitchen supplies, toiletries and groceries.
2. Negotiate When You Renew a Lease
Landlords want to keep good tenants. It costs them money to move you out and bring someone else in. That means you have some leverage.
Research similar apartments in your area and come in with a number in mind. If the landlord won’t budge, tell them you’re going to look elsewhere. If you’ve been a good tenant, they’ll want to keep you.
Word of caution: Know who you are dealing with. Independent landlords have a lot more wiggle room than property management companies. Maybe they have multiple renters in the complex and aren’t willing to make concessions, so try to sweeten the deal by offering something in return.
3. Pay Upfront
Offer to pay the entire lease or at least a few months upfront for a discount if you can afford it. The landlord may cut a deal to have cash in hand, but it’s only an option if you have enough savings to cover and then some. You don’t want to rack up credit card debt because you emptied your bank account to save a few dollars on rent. The savings would be lost to credit card interest. And if you do pay upfront, make sure you pay the money back into your savings each month.
4. Sign an Extended Lease
What a landlord wants is stability. You can give it to them by signing for a year-and-a-half or two years instead of six months or a year. The longer the lease, the lower the landlord should be willing to go.
5. Give Up Your Parking Space
If you don’t have a car, you don’t need a parking space. Offer to give it up in exchange for discounted rent. The landlord would be able to sell the space to another tenant, who might need extra parking.
6. Look for Apartments in the Winter
Landlords have a tough time finding renters in winter. It’s cold outside in most of the country and people don’t like to leave their cozy homes. Vacancies can go on for months, and landlords lose money with each month they’re not collecting rent.
Rents increase in the summer. Some of that has to do with the weather, and a lot of it has to do with the school schedule. College graduates flood the market during this time of year, and high school graduates enter the market in college towns. Families with children in elementary school will wait until the school year is over to make a move to ease their children’s transition to a new school.
All that makes for an increase in demand, which equals higher prices. Look for apartments in the winter and offer to sign an extended lease that ends in the summer. That ensures the apartment hits the market at a good time for the landlord when you move out, and the landlord gets some stability in the meantime. They’ll be willing to work with you for those tradeoffs.
7. Private Rentals
A private rental is a property owned by an individual or family as opposed to a corporation, as is the case with most large apartment complexes. A private rental could be a house, apartment, or even a guest house separate from the main property.
Private landlords may be laxer when it comes to application fees or deposits. They don’t have strict corporate guidelines to adhere to. This means they may be more willing to negotiate rent amounts or overlook past evictions that could bar you from renting elsewhere.
However, every landlord will be different. Some may go as far as to complete background checks out of pocket. Be upfront about your situation and expectations to avoid any inconvenient surprises down the line.
8. Consider a New Location
This can be one of the most cost-effective ways to save money on rent. Big cities like New York and Los Angeles are attractive and expensive, with one-bedroom apartments in 2021 going for an average $3,684 and $2,689, respectively. If you need an urban vibe, but can’t afford those prices, consider emerging cities like Oklahoma City ($711) or El Paso ($915).
9. Offer to Work for the Landlord
If you know your way around appliances or plumbing, you can offer repairs to your landlord in exchange for a discount on rent. Each time something breaks down, your landlord has to pay someone to fix it, so he or she may be willing to work with you instead if it saves them time or money. Don’t be discouraged if you’re not particularly handy, you don’t need any special skills to mow a lawn or trim hedges.
10. Referral Fees
Ask your landlord if they offer tenant referral fees. Some landlords will offer you money in exchange for referring a new tenet. This is more likely to work with the larger apartment companies since they would need to have an excess of vacancies before offering you money to help fill them. A private lender with one or two properties probably won’t offer you much or anything for a referral, but it never hurts to ask.
How to Save Money While Renting
If you’re having trouble securing a low rent, or obligations keep you living in an expensive city, consider some of these cost-effective strategies to trim down on your monthly expenses and save money.
Saving on utilities: According to the Department of Energy (DOE), Americans spend an average of $2,200 a year on utilities. That’s $183 a month, and half of that goes to heating and cooling. A lot of that is wasted by inefficient appliances, along with drafty windows and doors that make it harder to maintain a comfortable temperature. Wasted energy equals wasted money. You can save money on utilities by upgrading old appliances or making some repairs around the house. However, you should talk to your landlord before making any major changes.
Switching cable providers: If you have cable, consider switching providers or downgrading your package. Cable options may be limited where you live, and the most affordable option may not be available there. It’s still worth negotiating with your provider for a lower rate. If you threaten to switch providers or ditch the service, they may be more open to negotiations.
Cutting cable completely: More and more Americans are cutting the cord. According to The Trade Desk, an independent media buying platform, only 49% of Americans still subscribe to cable, and 27% of that group said they plan to cut the cord soon. They’re doing it because it’s cheaper to stream the content you want. Consider switching to one of the major streaming services. Most of these cost between $10-$20 a month for a basic package.
Cooking at home: You don’t have to cook three meals a day every day, but eating out constantly will drain your funds, forcing you to tighten your budget elsewhere. Most people won’t go broke from eating out once a week, but if you try to eat out every meal you will end up spending more on food than rent. Consider learning a few easy recipes that you can knock out after work when you’re tired and most tempted to call it in and order take out.
Don’t Use Credit Cards for Rent
You may hear it’s a good idea to pay rent with a credit card so you can cash in on mileage rewards or cash back from credit card companies. It’s not. Property managers typically hit you with a service charge that will exceed any benefit, and you’re also risking overloading your credit card.
If you don’t pay your balance monthly, it will hurt your credit score. And the last thing you want to do, while trying to save money, is to add credit card debt.
You don’t have to follow every one of these tips to save a good chunk on rent. Analyze your situation and decide what makes the most sense for you. Some of the tips are big changes, like moving halfway across the country to save on housing costs. Something like that may not be possible. But others involve a lot less effort. Assess your options and find what works for you, and you may find it a lot easier to scrape up the rent money every month.
About The Author
Joey Johnston has more than 30 years of experience as a journalist with the Tampa Tribune and St. Petersburg Times. He has won a dozen national writing awards and his work has appeared in the New York Times, Washington Post, Sports Illustrated and People Magazine. He started writing for InCharge Debt Solutions in 2016.
- N.A. (2021, April) HUD PD&R National Housing Market Summary. Retrieved from https://www.huduser.gov/portal/sites/default/files/pdf/Housing-Market-Indicators-Report-April-2021.pdf
- N.A. (2021, May 28) Rent Report, May 2021: The Average State of the Rental Market. Retrieved from https://www.apartmentguide.com/blog/apartment-guide-annual-rent-report/
- N.A. (ND) How much is the average household utility bill? Retrieved from https://www.nationwide.com/lc/resources/personal-finance/articles/average-cost-of-utilities
- N.A. (2021, January 5) Cord-Cutting in 2021. Retrieved from https://www.thetradedesk.com/us/knowledge-center/cord-cutting-in-2021