Renting apartment or home? Here is what experts say you need to know

Looking for an apartment or house to rent can be stressful.

Rental prices have rebounded well above their pandemic lows and are now among the major inflation pain points for American consumers, along with food and gas prices. Several factors have contributed to the rising rents, including low housing inventories. It is a vicious cycle: less inventory drives up home prices and results in more potential homebuyers opting to rent, which in turn drives up rental prices.

Take New York City as an example. Data provided by StreetEasy shows a dramatic rise in its housing market. As of February, Manhattan rents are up 36% year over year, with rents up over 15% in the outer boroughs of Brooklyn and Queens. But surging rent isn’t confined to metropolitan areas. Demand for single-family rental homes is soaring as rents gained a record 12.6% year over year in January, according to a recent report from CoreLogic.

The current real estate market dynamics make it all the more important to know your budget and have all your documents ready as the first steps when beginning a housing search.

When it comes to deciding how much you want to pay for a new place, knowing what you can afford is crucial. People need to consider more than just the monthly rent when creating a budget, according to Sophia Bera, a certified financial planner and founder of Austin, Texas-based Gen Y Planning. “People need to tally up their current expenses,” Bera said. “Do they have any monthly expenses, like student loans, credit card debt or car payments?”

She recommends using a rent calculator, like the one available at rentcafe.com. People can enter the zip code they are searching for a rental within, their monthly income, preexisting debts, and the site will recommend a budget. A good rule of thumb for renters is to spend around 30% of monthly take-home income on rent, according to Bera. Paying up to 40% can begin to affect how much you can save and spend on other activities.

Many landlords or property managers charge an application fee when you are interested in renting a property. This can be as low as $20 (where New York City caps the fee) but run as high as $50 in many places.

States, cities and apartment complexes can all have various requirements. Still, most rental applications require similar information for each applicant so they can verify your identity and your ability to pay rent. Information can include your personal contact information, Social Security number, current and previous addresses, employer information, and proof of income and credit reports. Having these documents ready can help get you approved faster.

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The fee should not be a deal breaker,…