Looking to move to NYC or finding a new apartment in the big city? We’re here to show you how to figure out which apartments are best for your budget.
If you’re considering moving to NYC in the future, the cost of living can be a large concern for you. This is especially important if you’re moving from a city with a lower cost of living compared to New York City. For instance, the cost of living in New York is 27.09% higher than Los Angeles. So what is it like financially to live in the city? First off, the cost of living in the Big Apple is 187.2. This is a lot higher than the national average of 100 and the cost of living in NYC ranks 8th out of 486 cities in the world.
The biggest factors contributing to the high cost of living are housing and rent. This is evident as in 2019, the cost of living in Manhattan was 148% higher than the average cost for other major cities in the United States and Brooklyn was 80% higher than the average.
If you’re set on moving to NYC, it’s essential you be prepared financially since you may find yourself spending money quickly once you sign your rental lease. While moving itself can be an expensive and time-consuming process, it’s best to get settled financially so you have one less thing to worry about. A few things you should consider before committing to an apartment and monthly rent, are your gross income, any current debt, prices of food, insurance, transportation, and utilities. By keeping these costs in mind, you’ll be able to better understand how much you’re able to allocate for housing.
How do you figure out how much you can afford for rent
With rental prices and cost of living being a lot higher than the U.S. average, you may be wondering “how much rent can I afford in NYC?”. This is especially important if you’re looking to move to New York City in the future since money can go fast due to expenses. Depending on your financial situation and lifestyle, there are many different ways you can calculate how much rent you’re able to afford from your income.
One is the 40 times rule, which states that your annual gross income should be at least 40 times your monthly rent. This is a standard because many landlords require this when renting out an apartment. To calculate your income to rent ratio, you can simply have to divide your gross salary by 40 to see what rental price you can afford. For instance, if you’re looking for where to live in NYC with a 80k income, you divide $80,000 by 40, which equals $2,000. That means the maximum monthly rent you’re able to afford is $2,000.
Another is the 50/30/20 budget rule that was made popular by Senator Elizabeth Warren. It’s a great way to create a budgeting plan for yourself so you know exactly how much you can spend and can also help you reach your financial goals. This guideline states that your net income should be divided up as 50% on needs, 30% on wants, and 20% to savings or paying off debt. The 50% for needs are necessities such as monthly rent and other bills.
These bills can include utilities, transportation, insurance, internet, and phone bills. To calculate this, you first need to figure out your monthly after-tax income. So for instance, if your monthly income is $7,000, you’ll have $3,500 for your rent and necessary expenses, $2,100 on wants, and $1,400 for your financial goals. In order to fully determine how much you’ll have left for rent, you will first have to budget half your monthly income and then subtract your utilities, transportation, and other fixed expenses. What’s left will be the maximum monthly rent you’re able to afford.
With these two options, you can easily calculate your rent affordability. This includes if you’re looking for an apartment in New York City alone, with a significant other, or with roommates. If you’re looking to share an apartment with others, you just need to calculate your rent to salary ratio by using all of your combined annual incomes.
Most affordable neighborhood in NYC
While New York City in general is an expensive place to live, that doesn’t mean there aren’t any cheaper apartment rentals available. In fact, there are plenty of affordable apartments in NYC that can fit your budget. A few neighborhoods in NYC that have cheaper average rent would be Washington Heights, Sunnyside, Inwood, Hudson Heights, Hamilton Heights, and Bedford-Stuyvesant. Some neighborhoods might be more expensive overall, but it is still possible to find a few apartment listings with a price cut or even those listed at a cheaper price. Here are a few affordable listings under $2,000/month and under $3,000/month:
45-35 44 Street, #5k Sunnyside, New York ($1,675) – studio, 1 bath
375 Pleasant Avenue, #2A East Harlem, New York ($1,799) – 1 bed, 1 bath
190 Columbia Street, #3F Columbia Street Waterfront District, New York ($1,900) – studio, 1 bath
303 West 137 Street, #2C Harlem, New York ($2,000) – studio, 1 bath, 500 sqft
425 East 74 Street, #1B Upper East Side, New York ($2,175) – studio, 1 bath
48 West 55 Street, #3a Midtown, New York ($2,495) – 1 bed, 1 bath
249 Broome Street, #15 Lower East Side, New York ($2,875) – 1 bed, 1 bath
Now that you know how to calculate how much rent you can afford right now and have more knowledge of how to manage your finances while living in the city, we hope you feel more at least moving to NYC. Localize is a great resource for all your apartment hunting needs. We have insights on all listings in New York City so you don’t have to do the hard research yourself. Happy apartment hunting!