10 tips for renters.
Today's rental market is a bit...complicated...to navigate. Will apartment prices go up or down? How can we find options in our budget? Henah and Katie chat through tips for renters today, from the best times of year to look to the most valuable apps and alerts to set up.
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Katie: Welcome back, Rich Girls and Boys, to the Rich Girl Roundup weekly discussion of The Money with Katie Show. I'm your host, Katie Gatti Tassin. And today, Henah and I are talking about renting and finding affordable rent, specifically in higher cost of living areas. But before we dive in, here's a quick message from our sponsors.
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Katie: Henah, tell me about your week this week.
Henah: My week was a hellhole, but it is almost done. It's a Friday. I'm very excited. It's a long weekend. So do you have plans?
Katie: We're actually going skiing tomorrow. Normally my answer to that question would be no, but we're skiing tomorrow. Shout out to Snowy Range, Wyoming, cheaper than the places you can ski in Colorado by quite a long shot. So we are going north instead of south.
Henah: I've never been skiing, so you'll have to let me know how it goes.
Katie: You've never been skiing? Wow. Yeah, we'll have to talk offline about this.
Henah: No, I think it's gonna become evident in the literal question of why I've never been skiing, 'cause I've always lived in pretty urban areas. So this week's question is from Shauna, and it's one that I intimately empathize with, 'cause I've been in the same situation. So she asked, “In a high cost of living market like New York City, where most rental options are too expensive and the affordable ones are gone within 24 hours, what advice would you give to find a place? Is spending a little more on rent justified and then I can adjust my budget, or should I wait and hope that the bubble will burst and then I can sign a lease?”
Katie: Mm. Okay. So I have some generic rental thoughts and real estate thoughts that I can share, but because, Henah, you're from the New York area, why don't we start with you kind of giving us the NYC rundown, specifically.
Henah: So I think that this specific area can obviously be a really hard place to find a good rental, and obviously we're in the middle of a boom right now, because as interest rates rise up, people are opting towards renting instead of buying, and there's already a housing shortage. So landlords pretty much feel like they could do whatever they want with such limited vacancies. So the first thing I would say is you could set an alert for spaces in New York on the big apps like Trulia, Apartments, Zillow, but StreetEasy is another big one. I wouldn't discount either Craigslist or Facebook Marketplace, especially if subletting is an option, 'cause that could help find something a little bit more affordable for the short term. But I would also say just consider your other options. So, you know, if you're not planning to live with a roommate, is that something you can explore to cut costs? Is moving slightly further out, like Jersey City or Washington Heights or the Bronx or Queens, is that an option for more affordable rents? Or could you try to extend your current lease, just to kind of buy some time while you're waiting for the bubble to burst, if it will? Katie, I mean, what is your perspective on the trajectory of rent costs right now?
Katie: Let me get out my crystal ball. No, I do think we're in a really funky, interesting real estate moment right now, because on one hand, we are being told that we're about to go into recession and that the economy is gonna slow, and typically, historically, you would think that that would mean that prices will go down and we'd see a softening. However, as you pointed out, technically there is still a bit of a housing shortage nationally. So that is kind of, what's the word? Putting upward pressure on the downward pressure. So we're kind of in this weird stalemate moment.
But I do think that New York City, there's one unique benefit that you have as a renter in Manhattan, or I could say the greater New York City area. And that is that you probably don't have a car, and the rest of us in, you know, the very car-dependent United States, it's very hard to have no vehicle if you are having to travel for work every day or really get around your area. So I think that even though the kind of best practice for renting and even buying is that you don't want the monthly payments to exceed roughly 30% of your take-home pay, give or take, I think because most people are also budgeting probably around 10% for transportation-related costs, you can get by with a little bit more because you don't have that other very large chunk of your budget. So I mean, unless you are trying to have a car in New York City, in which case, good luck to you, ma'am.
Katie: Aren't parking spaces like a thousand dollars? I mean, I wouldn’t know.
Henah: Oh yeah.
Katie: Crazy. So if you're like a regular [inaudible], you have the normal situation in New York where you do not have a vehicle, I think that that can help loosen up a little bit of extra money. So I think that would be my one New York-specific take here, but I honestly don't even wanna venture a guess on what rents are about to do. I have no idea. It's really honestly hard to say. I would think they're gonna go down is more likely than they'd continue to go up. That would be my guess.
Henah: But you bring up a good point about the cars, because my husband and I had two cars in Jersey City and our apartment included one spot, and then we had to pay for the other spot, and it's not cheap. So if that's something that you don't have to budget for and you can just get like a MetroCard and I think it's maybe $120, $130 bucks for the month, that's a huge cost savings. But the other piece that, kind of along the same lines, is like, are there other parts of your ideal renting scenario that you're willing to kind of concede a little bit? Like maybe not having in-unit laundry or a dishwasher, being in a walkup. Like are there other options that you can look into that at least keep you where you wanna be? But it may not be the ideal place, but at the same time, renting is year by year, month to month. So maybe you just do it for a little bit until you find something you're really excited about.
Katie: It's a good point, yeah. It's not forever. It's always made me feel better if I've been renting somewhere that maybe cost a little bit more than I wanted to pay at the time. Just knowing it's 12 months, you know, I'm not locking into a 30-year agreement here. If this isn't ideal right now, that's okay. I can figure something else out later if I'm really in a bind.
I also like that you're noting concessions about amenities. I just wanna double down on the roommate piece that you mentioned, because personally I've never lived alone. I've always had a roommate…
Katie: …no matter where I've lived, and it has been financially game-changing from the standpoint of just being able to split everything. But I also understand why people like to live alone. I completely get that. But even as someone that does require a lot of alone time, I really liked having a roommate 99% of the time, just to have another person around. So even if that's not something that you've done in the past or it feels like, “Oh my gosh…” 'Cause I've heard people say this before, like “I'm 29 years old, I'm 30 years old; I shouldn't still have a roommate.” There is nothing wrong with having a roommate. Communal living can be wonderful both financially and just like from a mental health perspective. So even if that's something you haven't done in the past.
Henah: I would challenge that, because technically, being married, it does count as having a roommate.
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Katie: Well, the other thing that I think you mentioned, okay, you mentioned Zillow, you mentioned StreetEasy. I've never heard of StreetEasy. Is that a New Yorker one?
Henah: It's a New Yorker one, yeah.
Katie: Okay. StreetEasy is New York-specific. My strategy was similar kind of to what you outlined. So when we were moving to Colorado, I didn't know the town that we were moving to. So one thing that I like to do, similar to our situation now, we're gonna be moving to Northern California soon. I like to go on Zillow and kind of get the sense of the area that I'm looking at, and then I like to toggle between the rent and buy options for the specifications that I'm looking at to get a sense for, is this a hotter market for owning, or a hotter market for renting? And where we live now, the rents are a lot cheaper than like the property values. Where we're moving, it's kind of the opposite, where the rents are actually decently high but the property values are, you know, bizarrely not. So I like to take that step first just to be like, hey, is it potentially something to consider? Probably not if we're talking about Manhattan, but you never know. So I'll throw that out there.
But then after I have my specifications, I do the push notification thing, where you can set it up so that it'll alert you anytime something new comes on the market the minute it happens. That's how we got this house, which we really lucked out 'cause the second it went available, it was on my phone, and I was like, I had the application preloaded in Zillow and I was like, “Go!”
Henah: The same thing happened to us. This house that we're renting was up for eight minutes before I reached out. So I do think that that's a huge game-changer, is having the alerts, being really aware…
Katie: The push notifications.
Henah: I like that your other piece of advice is “Consider buying in Manhattan.”
Katie: Okay, I will say that advice is more so like broad renter advice, of like, if you are moving somewhere where…not so much specific to New York City, which I know is what this question was about. But I do think that if you were in a position where it's like, could go either way for you or you're at that age or have that, you know…it's worth it when you're going somewhere new to just kind of get a sense for property values versus rents. 'Cause it has continuously surprised me.
Henah: Yeah, when we first moved to Jersey City, there's different neighborhoods and the rents changed so differently within the neighborhoods. So it's not just looking at one city and saying, okay, but like obviously if you're trying to live in the West Village, it's gonna feel very different than if you're trying to live in Queens. So to your point, do look at the neighborhoods and figure out what makes the most financial sense, and then if you're willing to be flexible and can live a little outside of that, then you have room to work with.
The other thing I would just add, if this is an option for Shauna, is if you are working in the high cost of living areas and you're not working remotely, is there any way that your employer can match the inflation and cost of living average increases? So that's something to consider too.
Katie: That's an interesting one.
Henah: I mean, Katie, you've pretty much worked remotely the last couple years, right? So it's been a little bit more flexible for you.
Katie: Yeah, the only time I've ever worked in an office was in Dallas, which isn't a cheap place to live, but it's not a high cost of living city; it's more medium. But I will say that Dallas was the only place I lived where I lived in that city when I was trying to find a rental. My other situations have all been, I was trying to find a place somewhere that I did not yet live. So it was all online, and in Dallas I kind of figured this out. I'm not sure if it was just specific to this area, but I'll throw it out there in case it's helpful. I would use apartments.com and Zillow to find available either apartment complexes that looked good to me…when I would go apartment hunting, I would kind of go to the general area and I would have a sense for how much I wanted to pay and I would just walk into the leasing offices and be like, “Hey, do you have any specials right now on two bedroom, two baths? I'll sign today. Like I will pay the application fee and sign today.”
Henah: Oh yeah.
Katie: And I don't know if it was maybe just that time in…it was, I don't know, 2018, 2019. So maybe things have changed, but anytime I'd try to call or email or do that whole thing, they would string me along, they'd tell me really high prices. But the good deals that I got in Dallas were going into leasing offices, being willing to act quickly, asking about specials, and then being like, “I’ll sign today if you'll knock a hundred bucks a month off. Or I'll sign today if the first month's free.” And usually they'd be like, “All right, cool.”
Henah: Yeah, actually that's a really great point, 'cause that happened to us the last two moves, where when we were looking at apartment complex buildings, when we reached out that we were interested, it was like, “If you sign in the next 48 hours, we'll give you three months off.” So I do think that that's, that can be really valuable. But I like the idea of being ready to sign that day, if that's something that Shauna, or you know, any person who's looking can prepare for, 'cause they'll probably do it even more.
Katie: I think the time of year really matters too. So if you're always renewing a lease in like May, you're probably always gonna be overpaying. Whereas if you can get a lease that's renewing in the fall or the winter, it generally seems like rental rates, for whatever reason, are lower at that time. Maybe not in college towns, but I feel like summer, spring/summer is usually a little bit pricier. So if you can kind of shift around, maybe you're switching from a 12-month lease to an 18, that way it's ending at a more favorable time of year. There tend to be periods of the year where things are a little bit cheaper. So even if that means moving home for a summer, that way you're looking in September or something, I think that that's also potentially something to consider.
But thank you for listening to this week's Rich Girl Roundup. Hopefully I didn't sound like a boomer with my, “Just go into the leasing office and ask them for a special” advice. Like out of touch, doesn't know anything. I don't know. It might work, it might not, but it worked for me. But we'll be back next Friday, talking about balancing a rewarding career with low pay and asking, “When is it worth it?”