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How to move out of your parents’ house

Gina PogolThe Mortgage Reports Contributor

In this article:

There are three key steps to moving out of your parents’ house and into your own place:

  1. Make a budget. Generally, no more than one-third of your gross (before tax) income should go to rent. So, if you earn $3,000 a month, you can spend up to $1,000 on rent.
  2. Save for emergencies. It’s important to have an emergency fund in savings before moving out. Aim to have at least one to three months worth of living expenses in savings.
  3. Pay rent on time. Once you move out, it’s important to know when your rent is due and pay it on time each month. Landlords can report late rent payments to credit bureaus, which could impact your credit score.

Get out! And stay out!

If you have never lived on your own, the prospect can be exciting, and a little scary. You may not realize how much your first experience living on your own can set you up for housing success — or failure — in the future. And you don’t want to return home in a few months with no money, bad credit, and your tail between your legs.

Here’s how to make it work the first time.

Verify your new rate (Sep 21st, 2018)

Move out of your parents’ house: money stuff

Moving into an apartment or rental home often means paying a lot of money upfront: a damage deposit plus first and last month’s rent, plus deposits to utility companies to get your power, gas, water, etc. turned on.

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Miscalculate, and you’ll spend your first month without light, heat, or even internet. You can make this a little easier if you find a place that includes utilities in the rent. But expect to pay about $3,000 upfront to rent a $1,000 a month space.

How much rent can you afford?

How much can you afford for rent? The normal rule of thumb is about one third of your monthly gross (before tax) income. Earn $3,000 a month, and you should be able to spend $1,000 for rent.

But that’s just a rule of thumb. If utilities are included, you may be able to stretch it a bit. And if your other expenses are high — student loans, perhaps, or an expensive car payment — you’ll need to scale back your housing costs to stay financially healthy.

How much house can you comfortably afford?

If you were buying a home, most lenders would not want to see your total payments — housing and other monthly obligations like credit card payments, auto financing and student loans — exceed 43 percent of your gross monthly income. With earnings of $3,000 a month, that means you should be able to comfortably spend up to $1,290 for everything.

If your car payment is $400 and you owe $100 a month on student loans, that leaves you $790 a month for rent.

Finally, mortgage lenders like applicants to have at least a month or two of reserves — savings available to pay the monthly mortgage if you experience an interruption in income or an unexpected expense. You should have at least a month’s rent in emergency funds before moving out.

Should you get (or be) a roommate?

One of the easiest ways to move out is to move in with someone else who is already established. Your upfront costs will be much lower, and someone who knows you personally may overlook less-than-perfect credit.

However, this obviously involves trade-offs. You won’t have total privacy, and you will have to compromise your lifestyle to live companionably with someone else. That’s not a bad lesson to learn. Finally, if it doesn’t work out, you could find yourself scrambling to find another situation quickly, and the “breakup” might get nasty.

Advice to renters: What happens when my roommate moves out and I’m not on the lease?

You can tell a lot about a potential situation by the way the advertiser describes the room offered. Are they thorough and organized? Friendly? Do they communicate well? Good communication between roommates is essential.

Make sure you avoid scams, too-good-to-be-true offers, and people who don’t seem that interested in your qualities as a roommate. Because they plan to take your money and may not even own the place they’re advertising, so it doesn’t matter to them if you have bad credit or pet rattlesnakes.

Craigslist rental scams and how to avoid them

Make a list of your concerns as a roommate.

  • Are you looking for a friendly or more business-like arrangement?
  • Will pets be involved?
  • Address personal habits: smoking / recreational drugs / overnight guests / musical instruments / cleanliness
  • Ask to see the lease to make sure roommates are allowed and to see the rules for tenants
  • Find out about previous roommates, if any, and why the vacancy exists
  • Listen to your gut. If someone makes you uneasy, pass on the situation. Even if it looks good on paper

Alternatively, if you can swing the upfront costs but want to save monthly, you can get your place and choose your own roommate. That affords you more control. You’ll want to do a full application and check references and credit before allowing someone you don’t know to live with you. Even if it’s a friend, you should take this step.

Move out of your parents’ house: stuff you didn’t know you’d need

Before moving out, make a list of what you’ll need and how you’ll get it. Your parents may help you with some of these items. Others can safely be purchased second-hand or in discount stores. Get them together in advance, so you don’t find yourself dripping wet before a date and discover that you don’t have a hairdryer…

Consider what you do every day at your parent’s house. Then imagine doing it in your new digs. Do you watch your parents’ big screen for two hours a day? Better learn to do without, substitute hulu and netflix, or pony up for an expensive satellite subscription.

Rent-to-own homes: Move in now, buy later

How about small appliances? This writer moved out with a suitcase of clothes and $400 in cash, and got an unpleasant surprise after the first week when it was time to clean the new apartment. No vacuum, not even a broom. Oops. And you can’t make avocado toast without a toaster.

And don’t forget dishes, silverware, cookware, sheets, towels, paper products, cleaning supplies, hobby materials. If the new place is drafty, you may need more blankets than you did in Mom and Dad’s comfy home. Two sets of sheets give you some leeway when you want to change them up but laundry day isn’t until Friday.

You may have to get creative to hang your prized artwork or posters. Most apartments don’t just allow you to drive nails willy-nilly. But there are many ways to personalize a place safely — sticky hangers for frames and mirrors, and even temporary wallpaper to create dramatic and fun backdrops.

Choosing the right neighborhood and arrangement

The easiest way to derail your first independent living arrangement is to choose an unsafe or unworkable neighborhood.

How to check out your next neighborhood

  • Check the crime rate of any neighborhood you consider with sites like neighborhoodscout.com. If safe neighborhoods are too expensive for you, choose a smaller cheaper place or move in with someone else in a better area. This should be your top criterion.
  • Second, make sure that you can get to places you need to be — work, school, etc. — easily from your location. if you don’t have a car, verify public transportation options and schedules. If you do, make sure there’s a safe place to keep it. This is a key to long-term satisfaction with your arrangement.
  • Look into local amenities — if you like clubbing and art galleries, and you’re surrounded by kiddie pools and family parks, you may be more comfortable in a less suburban setting.

Consider buying your own place

If you’re established in your career, perhaps a little older than many young adults living with their parents, and comfortable financially, it might make more sense to buy rather than rent.

In many locations, it can be harder or more expensive to rent than to buy, and in markets with high rents, becoming a homeowner and perhaps a landlord can generate wealth.

It’s worth considering.

Verify your new rate (Sep 21st, 2018)