Every week, we ask a real estate professional for their Short List, a collection of tips and recommendations on an essential topic in real estate. This week, we talked with Aaron Galvin, the managing broker and owner of Luxury Living Chicago Realty, who shared with us his tips for helping clients set a rental budget.
5. Set Rental Market Price Expectations – Help your clients understand that each neighborhood or community features different price points based on inventory, season and availability. Review comps and market rates with your clients to help them set realistic price expectations.
4. Income Qualifications – Most landlords or property management companies require a tenant to earn at least three times the monthly rent in gross income. For example, if your client is looking to rent a $2,000 condo, they must earn at least $6,000 a month. If they can’t show this in verifiable income, most likely they will not be able to qualify for the apartment. As brokers, it’s our job to inform our clients of this criteria.
3. The 33 Percent Rule – I always tell my clients they should not spend more than 33 percent of their monthly income on rental housing. It’s hard to accomplish this in Chicago, but it’s a good guideline.
2. What’s Important to Them? – Clients typically have a specific set of criteria of what is important to them when renting. Understanding what your client is seeking in amenities, features and lifestyle will dictate their budget. For example, if your client wants a doorman or washer/dryer in unit, there will likely be premiums for those types of amenities and conveniences.
1. The Whole Picture – It is important clients understand all of the monthly fees they will be responsible for in addition to the base monthly rent. This includes utilities, parking, pet deposits and any other miscellaneous fees. All of these expenses add to the bottom line housing budget. I recommend my clients use a free online budgeting tool, such as Mint.com, to help keep track of monthly expenses
While your clients may not be purchasing a home, renting an apartment or condo is likely the most important financial decision they are making. Be respectful and provide the level of customer service you would offer to a sale client. You never know when they will be ready to buy again.
Aaron Galvin is the managing broker and owner of Luxury Living Chicago Realty, a rental focused brokerage. He is a top 1 percent producing residential rental broker as recognized by the Chicago Association of Realtors. For more insight on the downtown Chicago luxury apartment market, you can read his blog, “The Luxury Chicago Apartment Update,” at www.luxurchicagoapartments.com/blog.