Are you trying to figure out how much you’ll need to spend on rent near Denver so you can set your budget? You can easily look up the average rents, but this doesn’t tell the whole story since rents (and your personal situation) vary widely. Here’s what you need to know to make a well-informed decision.
What to Think About Before Renting
Location, Location, Location
Nothing is more important in real estate than the location. That’s because everyone wants to be close to work as well as fun things to do. Of course, supply and demand mean more popular locations will have higher rents.
If you have flexibility in your budget, you’ll need to decide if it’s worth it to you. When you do, go back to your total costs and add in things like commuting costs and average grocery prices in each location.
Quality and Size
As a general rule, newer units cost more, and more space costs more. This becomes a personal decision of what’s a need versus what’s a want.
When making comparisons, keep in mind that advertisements are often exaggerated. Search online to find out when a property was built, and try to get a tour of your actual unit whenever possible. Model units are often renovated and dressed up more than the actual units.
For size, try to get detailed floor plans with room dimensions if you can’t get a tour. Overall square footage may not tell the whole story about how your furniture will fit.
How to Set Your Budget
When setting your budget, remember the 50/30/20 rule. This rule divides your budget as a percentage of your monthly income: 50% goes to things you need, 30% goes towards things you want, and 20% goes into savings.
Needs include all necessities: housing, car payments, food, utility bills, insurance, and other things you (really) can’t live without. Wants include vacations, entertainment, gadgets, and other things you think you can’t live without. Savings includes a combination of your retirement accounts, other investments, and cash savings.
Out of that 50% for needs, keep in mind that it can’t all go to rent. The average Denver renter spends 32.9% of their income on rent. Some landlords may even require that your rent be as low as 25–30% of your income.
What Are the Average Rents in Colorado?
- Studio: $1,133
- One-bedroom: $1,220
- Two-bedroom: $1,592
Is it Better to Rent or Buy in Colorado?
There are two things you need to think about when deciding whether to rent or buy. One is can you afford it, and the second is, is it a smart move.
For affordability, most financial experts recommend that your mortgage be two to 2.5 times your salary. For a median-priced home in Denver, that’s equivalent to a salary of $87,000. Of course, there are a wide range of homes with different prices, so you may want to check out surrounding communities. In addition, you can put down a higher down payment to decrease your mortgage amount. If you don’t have the cash, there are down payment assistance programs you may be able to take advantage of.
For whether buying is a smart move, there are a few things to consider.
- You’ll rarely be comparing identical units to rent or buy. There will almost always be differences in size, location, and other factors that won’t make it a straight-up comparison on the numbers.
- Rents keep increasing at a rate faster than incomes increase. If your rent versus buy calculation is close, you might want to avoid future rent increases by locking in a fixed mortgage payment.
In the end, renting versus buying is a personal choice that will depend on your living preferences, where you are in life, and your financial risk tolerance.
Start Crunching the Numbers
To make your decision, it’s time to start crunching the numbers. We’ve provided a handy rent calculator so you can figure out if your budget for rent matches the apartments you’re looking at.
Before you decide to rent, check out our real estate listings or speak to someone on our team. You might be surprised to learn that buying is the smarter choice. We’re experts on the real estate market from Northern Colorado to Colorado Springs and can help you find the perfect home based on your budget and preferences. Contact us now to see if there’s a way you can avoid paying another $15,000+ per year in rent.