Considering moving to NYC? Here is the first thing you need to do: know how much rent you can afford. Committing to a lease that is too expensive is one of the fastest ways to fall into debt. Follow these simple tips to help you stick to a reasonable budget.

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<strong>Let’s do some numbers here</strong>

Most landlords in New York City require your gross annual income (before taxes) be 40 times your monthly rent. So, for instance, if you want to rent a 1-bedroom apartment for $2,000 a month, you must prove that you make at least $80,000 a year.

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An easy way to determine how much rent you can afford is to divide your income by 40. Let’s say you make $45,000 a year:

$45,000/40 = 1,125

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Using this equation, you can afford to pay $1,125 in rent every month. You can also this simple, little math trick to calculate 30 percent of your income. Most financial advisers and real estate professionals cite 30 percent of your annual income as an appropriate amount to spend on rent. But, do you really want to spend 30 percent of your income on rent? Before you commit to a lease, consider a few things:

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<strong>Account for the taxes</strong>

As mentioned above, landlords generally will want to see that you make 40 times the monthly rent – <em>before </em>taxes. In New York, state and federal taxes deduct 35% of your annual income. So, let’s say you make $50,000 a year:

35% of $50,000 = 17,500

$50,000 - $17,500 = $32,500

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Yes! When taxes are deducted, you are actually taking home only $32,500 a year. It’s important to be aware of exactly how much money you are going to have in your pocket every month, so you can plan accordingly.

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<strong>Don’t forget utilities and other expenses</strong>

Consider all other expenses that come with life: perhaps you want to put aside money every month for retirement, or you have a health insurance plan that requires monthly payments. Everything is important, so add those up. There are also other apartment costs that come int play, besides rent: utilities and cable bills are usually not included in standard leases. Then there are miscellaneous costs that come from living in a big city: laundry, a MetroCard, a cab ride, a night out in town, movie night maybe? Don’t forget to budget for a little fun!

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<strong>The broker’s fee</strong>

If you choose to look for an apartment using a broker/agent, remember that will come at a price: agents generally charge 12-15% of the annual rent or one month’s rent. Landlords often ask that renters pay first and last month’s rent up front, and they may ask for a security deposit on top of that – which is generally the equivalent of one month’s rent. You will get the deposit back in the end, and it’ll be a relief not to have to pay your last month’s rent when you decide to move out, but renters must be prepared to pay a lot of money up front when they first sign a lease.

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Alright, enough with the scary numbers. If you have found your dream apartment and cannot prove that you make 40x the monthly rent, but know that you are good with money and can hold yourself to a strict budget, there are few options to consider:

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<ul>
 	<li><strong>Guarantor</strong> – Guarantors are legally and financially obligated to pay your rent if you, for some reason, cannot. Guarantors need to have an annual income of 80-100x the monthly rent. Guarantors can be useful for renters with bad credit or no rental history.</li>
 	<li><strong>Roommates</strong> – Sharing your apartment with others will allow you to afford a much bigger place on your budget, or perhaps a more desirable neighborhood. They help cut the cost of rent, not to mention other monthly expenses, like utilities and cable. If you decide to sublet, you may even avoid having to buy furniture!</li>
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Finally, just remember: the New York real estate market can be intimidating, and most first-time renters will experience some sort of fear, but worry not, here at Chase Real Properties we are committed to finding your dream home in this amazing city.

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