It's important to know what type of apartment you can afford before you embark on an apartment search. But it's also a good idea to learn whether you're paying too much rent for an apartment you like or already live in. Paying overly high rent means you have less money available for other expenses or savings. It also means you can probably get more for your money at the same rent level.
Rent-Controlled vs. Market Rate
While most rental rates are based on the local real estate market (and the discretion of the landlord), some properties are subject to rent controls. If you're renting an apartment in a building that participates in an affordable housing program, such as the low-income housing tax credit program, the amount you pay may be capped and determined based on local income levels. Market-rate rent is simply the rate a landlord can reasonably expect, given the supply and demand of similar rental properties in your area.
If you know or suspect, that your apartment is rent-controlled and you think your rent is too high, contact your city's rent control board (if it has one), a local apartment owners association, or even a lawyer who specializes in housing issues.
If your rent is based on the market rate and you determine that you're paying too much rent, you may be able to negotiate a lower rent (or a reduced rent increase) at your next lease renewal.
How to Find out If Your Rent Is Too High
Use any or all of these sources to determine how much similar apartments are going for in your area:
- Talk to your neighbors. See what other people in your building are paying in rent. Also, if you have friends or work with people who live in your neighborhood, ask what they pay. Take note of any differences between their apartments and yours, especially the number of bedrooms and bathrooms, and any amenities and size differences.
- Check your local listings. Browsing apartment listings for your area is also a great way to check what comparable apartments are going for.
- Use a free, online tool. A free, online tool known as Rentometer can help you determine if you're paying too much for rent. Just enter your address, monthly rent, and the number of bedrooms in your apartment, then click the "Analyze My Rental" button. A quick glance at the meter will show you if you're in the green ("a good deal!"), red ("[way] too high"), or in between ("reasonable").
Rentometer points out, however, that green results could still be reasonable if your apartment is in poor condition or has fewer amenities than most. Similarly, red results could be reasonable if your rental is in prime condition or has more amenities than most. To the right of the meter, you'll see a map centered around the address you provided, with nearby rentals listed for comparison (and color-coded green, yellow, and red to indicate the relative price).
You can also use this tool to assess the rent for an apartment that you're considering. Also, if you want to check for a particular neighborhood, just enter an address in that neighborhood.