Renting a home or apartment is a considerable expense. Most renters spend about 30% of their income on rent, almost double what the average American homeowner pays for a mortgage.
Whether you are looking for your first apartment or trying to cut down your current rental costs, read ahead to learn how to save money on rent.
Best ways to save money on rent
According to the national average price trends for larger rentals, rent prices increase by an average of 3% to 7% per year. To secure the most affordable rent, you will want to lease an apartment or house at the right time, make some sacrifices to your needs and wants, and show the rental company that you will be a dependable tenant.
Here are the tried-and-true methods that will save you the most money on rent.
Get a roommate
Living with a roommate isn’t for everyone, but the truth is that it remains the best way to save the most money on rent.
The national average cost of rent for a one-bedroom apartment in 2020 was $1,617. In contrast, the average price for a two-bedroom apartment is $1,909. If you and a roommate split an average two-bedroom apartment, you will each pay $955 a month. That’s a savings of $662 per month or almost $8,000 per year! You’ll likely save even more when you factor in your ability to split utility, cable and internet bills.
Though you will need to give up some of the freedom that comes with renting your own apartment, the sizable amount of money you will save may be worth the sacrifice.
If putting money aside or paying down debt is your priority, living with roommates is likely the single biggest way to save. When I was in my mid-twenties, I thought I had finally arrived when I leased a one-bedroom apartment — by myself! But I quickly realized that I wasn’t able to put any money aside. As I was still paying off debt, this didn’t make any sense. After a year living alone, I moved into a house that I shared with three other roommates — and saved over $500 a month.
Look at it this way: You can go crazy cutting out a coffee here and a restaurant lunch there and save $100 or $200 a month if you’re lucky. Roommates might drive you crazy, too, but at least the savings will be significant.
Start your lease in winter
Have you noticed that the cost of rent for the same apartment can fluctuate throughout the year? Many rental companies will alter rent prices based on the demand during each season and other apartments’ rates in the area.
If you can be flexible about when you start leasing your apartment, you should look for leases that begin in the winter months. Rent may cost anywhere from 2% to 5% less when you start leasing in December through March rather than May through October.
Because the rental price gets set at the start of your lease, you could save hundreds of dollars by beginning a lease during these optimal months.
The winter months are the best times to lease an apartment because people are less likely to move when the weather is cold, in the middle of the school year, and around the holidays. They are more likely to move during nice weather, after graduating high school or college, or between school years for their children.
Try to lock in a lease between December and March, even if it means getting the apartment slightly earlier than you wanted. The savings you could incur over time will be worth the inconvenience of moving during the winter.
Satisfy your needs rather than you wants
Odds are, you aren’t going to find the perfect apartment in your price range. In most cases, there’s going to be something you’ll have to give up, which is why it’s smart to focus on your needs instead of just your wants if you want to save money.
As you search for apartments, make a shortlist of essentials that you are not willing to sacrifice in your new apartment. These may include the number of bedrooms and the general location of the unit.
To save the most money, you will need to be flexible with securing all of your wants. Though having a washer and dryer in-unit is convenient, it may not be a necessity. The same goes for updated appliances and flooring.
Lowering your expectations will allow you to place more emphasis on finding a rental that’s within your budget rather than checking a lengthy list of boxes.
Look for high vacancies
Apartments try to avoid vacancies as much as they can. The longer an apartment sits empty, the more money the landlord or rental company loses. Often, companies will list apartments as “available soon” to find new owners before the previous ones have left.
Suppose you see advertisements for several apartments available in the same complex. In that case, it may have high vacancies and will possibly be willing to lower rent to fill its openings as quickly as possible. In these situations, the landlord may offer incentives to lease empty units. Incentives might include a month or more of free rent, a reduced security deposit, or a willingness to negotiate the rent for the term of the lease.
However, proceed with caution: you may find a reason why so many apartments in a complex are opening up. Schedule a viewing to see the unit and complex for yourself before moving forward with the rental agreement.
Consider several locations
Being flexible with where you want to live is a practical way to cut down on rental costs.
Some cities have higher costs of living than others. Renters in urban areas pay around $1,848 on average for rent. Those living in the suburbs pay an average of $1,269 per month—a difference of $578 a month. Consider living 10 to 20 minutes outside the city to save thousands of dollars every year.
Similarly, if a city lacks apartment complexes, companies will often raise rent costs to meet the demand. Apartments in cities where complexes are common, such as college towns, may be more affordable than ones in surrounding areas.
Reviewing costs in several cities surrounding your desired location will help you understand which areas are the cheapest.
Sign a longer-term lease
Landlords lose money when renters move out, even if they can get a new renter quickly. Signing a long-term lease shows your landlord that you are reliable and assures them they will not need to be filling your vacancy anytime soon.
Even if they do not advertise it, many rental companies are willing to negotiate costs depending on their lease length. You can try to get the price down by agreeing to a lease that is a year and a half or two years long rather than the typical six months to a year.
Similarly, when it comes time to renew your lease, you can attempt to strike a deal with your landlord to lower your rent costs. It will be cheaper for them to keep you on than to replace you with another tenant, so they may be willing to reduce your rent to avoid losing you.
Look for smaller spaces
The square footage of an apartment almost always correlates to cost. Rental companies will list their available apartments in order from the least number of bedrooms to the most, and you can see how the price rises for each. As a result, smaller apartments are the most affordable.
Consider what rooms you use the most and how much space you feel you need. If you plan to spend most of your time in the living area, you may decide you can sacrifice some square footage from the bedroom. If you plan to have a roommate, maybe the bedroom space is more important than the living areas.
Similarly, some apartments feel more spacious because of their layouts. Do not discount small square footage until you walk through the apartment— you may find that a small space can meet your needs just as well as a bigger one.
Cut down on utilities
Many people factor utilities into their monthly rent costs. If you cannot save money on rent itself, you can take steps to decrease your utility bill each month. According to the Natural Resources Defense Council, you can do the following to reduce costs:
- Replacing appliances and fixtures with energy-efficient versions can save the average household more than $500 per year.
- Installing Energy Star-rated heating and cooling appliances can reduce your energy bill by up to $160.
- Switching to LED lightbulbs can save the average household up to $100 per year.
Some rental companies include internet and cable in their tenants’ monthly rent. Others allow you to use community washers and dryers, saving you money on your water bill. Factor all of the included utilities and benefits into your rent cost to more accurately compare your options.
Read more: How to save money on your utility bills
What makes rent so expensive?
Rent affordability is the percentage of income that people spend on rent. For most renters since 2010, this number is about 30% of the wages they take home each month.
In contrast, mortgage affordability, or the percentage of their income people spend on a mortgage, is about 15% on average. In other words, renters spend twice the amount of money on rent as homeowners do on home mortgages.
At first glance, these statistics do not make much sense. Why would renting a small apartment surrounded by other units on all sides cost more than owning a standalone home? The main reason rentals are pricier than homes is that the demand for rental property is at an all-time high.
During the nationwide foreclosure crisis, which started in 2007, around 10 million mortgage borrowers lost their homes. However, the apartment market was ill-prepared for this influx of renters, and because demand outweighed supply, rental costs increased.
The Department of Housing and Urban Development created a rental affordability index (RAI) to track the data regarding what percentage of their incomes renters pay for rent. It shows the changing ratios as the economy fluctuates. When the RAI is greater than 100.0, it shows that renter households with median income have more than enough income to qualify for median-priced rental homes.
Recent years have seen many RAI fluctuations since it reflects both median rental unit leasing costs and median salaries/income. As of September 2020, according to HUD, the rental affordability index was 109.8, reflecting a median income of renters that was slightly higher than their minimum rental affordability.
Though taking out a mortgage to purchase a house may seem more affordable every month, remember that other factors are involved in buying a home, such as taxes and insurance as well as ongoing maintenance. Many people have no choice but to rent instead. This option provides renters who may be unwilling or unable to secure a mortgage with the accessibility and convenience of a rental.
Finding an apartment or rental house that meets all of your needs and falls into an affordable price range may feel like an impossible task. However, following these tips can help you narrow down your options and even negotiate costs to suit your budget.
Though you may not lease your dream apartment, spending less of your income on rent allows you to save for the future and keep more money for the present. You may find that a smaller rental in a less-than-ideal location can meet your needs just as well as an expensive one, without putting a dent in your wallet.