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Rent vs Income

post #1 of 37
8/30/10 at 11:02pm
Thread Starter 
As another of my posts indicated, I'm currently living in the country and looking to move to a city. I'll end up saving 4x months rent for a hole of an apartment, and work part-time/minimum wage jobs until something real comes along.


However, once I have a real job, I'd like to be able live in a real place. (No rats, maybe 1 roommate rather than however many I can cram into an apartment to save rent....)

So what's a good ratio of rent to income for someone in an entry level position, with some student loan on the side. I know this is dependent on city as well (Toronto is a possibility for work, as is Montreal with extremely low rent in comparison, and so is NYC if I get lucky).


So any words of advice, or thoughts from a young professional are more than welcome.

Thanks.
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post #2 of 37
8/30/10 at 11:06pm
cost of living in NYC is RIDICULOUS

my advice is save your money
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post #3 of 37
8/30/10 at 11:06pm
15-20% of your take home.
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post #4 of 37
8/30/10 at 11:06pm
everyone will likely have a different opinion on this. I would say, no more than half of your net monthly income. montreal is definitely better bang for your buck, though the job search may prove difficult unless youre bi
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post #5 of 37
8/30/10 at 11:06pm
I've generally seen the "30% of net" calculation.
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post #6 of 37
8/30/10 at 11:06pm
NYC: Forget rent to income. If you are getting an entry level position just try to get something as cheap as possible. Gonna be hard to live in a decent place for under $1000/month (assumes at least 2 roommates).
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post #7 of 37
8/30/10 at 11:07pm
lingual
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post #8 of 37
8/30/10 at 11:23pm
Thread Starter 
I'm working on being bilingual, however Montreal is surprisingly English these days. Outside the city it's pure french, but inside you can get by. (Or so I've been told, and when I've visited it seemed true)


As for New York, is it just the rent that makes it unaffordable? Or the cost of living in general as well? I'd be up for going overboard on the rent there, if simply for the life experience of living in such a city.


Or should I be more established before trying out NYC? A few years into a career so I can receive a greater salary and actually enjoy it more?
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post #9 of 37
8/30/10 at 11:31pm
Generally people try to keep their rent (or mortgage+taxes) to less than 1/3 of their gross income.
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post #10 of 37
8/30/10 at 11:37pm
Quote:
Originally Posted by L.R. View Post
As for New York, is it just the rent that makes it unaffordable? Or the cost of living in general as well? I'd be up for going overboard on the rent there, if simply for the life experience of living in such a city.


Or should I be more established before trying out NYC? A few years into a career so I can receive a greater salary and actually enjoy it more?

Others can weigh in, since I've only visited NYC a couple of times, but from general observations, the cost of living in all respects in higher in NYC. Rent is the big kicker, but everything from food to booze to gum costs more there.
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post #11 of 37
8/30/10 at 11:50pm
I don't think there's a consistent ratio between income and rent. Rent costs what it costs, and you decide how much of a priority it is. With roommates, you can live in Toronto for 6 or 700 a month. 500 for grubby student places. 1200 for an OK place on your own, midtown. None of these will be luxurious, of course, but it won't be living Hell.
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post #12 of 37
8/30/10 at 11:59pm
I'm 22, 3 months out of school, 3 months into a paid internship in the city as a hedge fund business/IT consultant, living at home on Long Island. Did some quick research to cut down on my 1.5 hour commute/$5-6k a year transportation cost and realized that 2BR and 3BR in Manhattan are $1k per person, not including utilities or food etc. $12-14k a year is a hell of a lot, even if you end up making $55k starting. Tack on paying back loans? Pft. I'm just going to wait 12-24 months and knock some of that out while getting raises etc. I figure 23/24 is still a great age to be living in NYC. Side note: Williamsburg/Astoria/Jersey City etc are all 15-30 minutes public transportation out of the city, but saving $200 a month doesn't seem worth the convenience of living somewhere central like SoHo. PS: Find a friend to look for singles with, but add 2BRs to your search. Makes looking for places so much easier. A single is kind of unrealistic.
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post #13 of 37
8/31/10 at 12:06am
Quote:
Originally Posted by Working Stiff View Post
I don't think there's a consistent ratio between income and rent.

This.

Plus, there's so many factor's to take into account. The 1/3 is probably (I'm assuming) based on someone living in the suburbs that has the very large additional expense of a car and all the related costs that go with it, while if you live in the city your commuting expenses might only be $80-100/mo for a public transit card. Also, depends on how much the individual is planning to take out of each paycheck to put in the bank.
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post #14 of 37
8/31/10 at 12:13am
Quote:
Originally Posted by MasterplayerC View Post
Side note: Williamsburg/Astoria/Jersey City etc are all 15-30 minutes public transportation out of the city, but saving $200 a month doesn't seem worth the convenience of living somewhere central like SoHo.

Soho isn't $200/month more than Astoria or Jersey city. Unless it's renting a house in Astoria and a shit hole in Soho. Then I can see a $200 difference.


In NYC, landlords want you to make 35-40 x's the monthly rent in income. So a small studio for $1500 would call for $60K in income plus the $3K to $4,500 down (one month security, first month down, sometimes the last month down ... tack on another $1500 if you use a broker).
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post #15 of 37
8/31/10 at 12:24am
Quote:
Originally Posted by Meis View Post
This.

Plus, there's so many factor's to take into account. The 1/3 is probably (I'm assuming) based on someone living in the suburbs that has the very large additional expense of a car and all the related costs that go with it, while if you live in the city your commuting expenses might only be $80-100/mo for a public transit card. Also, depends on how much the individual is planning to take out of each paycheck to put in the bank.

It's a general guideline. Keep in mind we're talking about gross income here. 1/3 of your gross income is a pretty hefty chunk of your net income. I live in downtown Chicago, and it works pretty well for me. When you live in a city, the cost of everything, including rent, is higher. Therefore, the ratios should stay pretty similar. Also, 1/3 is pretty much a maximum. You can certainly go cheaper (most people I know do), but it's unwise to go more expensive.
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