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Hint: It’s not a small number.
Image source: Getty Images
Tom Brady apparently isn’t just quitting pro football — he’s also taking the leap into becoming a landlord. Recently, the star quarterback put his Tampa, Florida home up for rent, and he’s asking for $60,000 a month for the privilege of living there, according to Realtor.com.
Now to be fair, Brady’s home is enormous. It boasts 6,500 square feet of living space, along with six bedrooms and seven bathrooms. And you can bet that it’s loaded with upgrades.
Of course, the typical U.S. consumer is clearly not going to be in a position to rent out Brady’s home. But if you’re in the market for a rental, you may be wondering how much you can afford to spend on housing. And there’s a simple formula you can use to land on that number.
How much rent does your income allow for?
As a general rule, it’s a good idea to keep your monthly housing costs to 30% or less of your take-home pay. Now if you’re buying a home, that 30% should include your mortgage payment, property taxes, homeowners insurance, and HOA fees, if they apply.
As a renter, that 30% really only needs to account for one factor — your rent itself. That’s because renters don’t pay expenses like property taxes. And while renters insurance is a good idea, its annual cost tends to be fairly modest.
So with that in mind, let’s say you bring home $6,000 a month after taxes and deductions from your paycheck. That means you should have the leeway to spend up to $1,800 on rent, provided you’re not sitting on a massive pile of debt you need to chip away at.
Of course, this doesn’t mean you should spend that $1,800. If you keep your rent to $1,500, you’ll have an extra $300 a month you can use to add to your savings account or spend on other things that are important to you, like leisure or travel. But it’s good to stick to that 30% rule, since doing so could help you avoid a scenario where you fall behind on either your rent or other essential bills.
What if you can’t afford the type of rental you want?
Maybe you can swing a monthly rent payment of $1,800. In some cities, that gives you a lot of leeway. In others, it could mean having to share a studio apartment with three roommates.
If your spending power is such that it won’t buy you a decent rental, consider expanding your search to an area that’s less expensive. If you want to live in Boston, for example, but the rents there are too high for your budget, look at renting in a nearby suburb where you still get access to the city without having to pay a premium to live there.
You could also consider getting a roommate to split the cost of a rental. Some landlords are flexible when it comes to converting a studio or one-bedroom apartment to a two-bedroom, so it’s worth having that conversation.
Finally, if you want the ability to spend more on rent, you could look at boosting your income with a side hustle. You’ll just need to make sure that income is consistent if you’ll be reliant on it to cover your rent payments.
If you can’t afford to rent out Tom Brady’s massive Tampa home, well, you’re in good company. But that doesn’t mean you can’t find a great rental to call home. Just give yourself time to look around and make sure you’re not taking on more rent than your paycheck can comfortably cover.
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