It doesn't matter how much you love your rental: The day your renewal notice comes in with a rent hike you never imagined, all those fuzzy feelings might just fly out the window. That said, how do you know if it's worth it to move?
From an economic standpoint, know that your next landlord will need the first and last month's rent plus a security deposit, and for some apartments, a real estate broker's fee. "I always tell people to have at least four to five months of their new rent on hand before looking for a new apartment," says Charlie Panoff, an agent at Triplemint real estate in New York City. "Rent and security is a wash because it's money that's spent either way, but moving costs and brokerage fees aren't." His handy tip? Take the monthly rent increase and multiply it by the length of the lease. If it's less than the cost of three months' rent, you're saving by staying.
Though this is a good starting point, the situation is sometimes more nuanced than that (as they usually are). We went to the experts to find out some more scenarios where it might be better to move and when you should stay put:
You should move if:
It's a large increase and you live in the suburbs or a rural area.
If you live in a less-expensive area, including the suburbs—you probably won't have the added cost of a broker's fee. Hiring movers, too, are usually less expensive than in the city—and you probably have a car or two you can use. However, a monthly increase that's relatively small can still cost you less over the course of the year than it would cost to relocate, Chyla says.
You can get a better deal in another area (that still fits your needs).
Even if you can afford the rent increase, it may better fit your lifestyle to find a new place. Whether it's more space, amenities, or a great deal on rent, a hike from your landlord can signal that it's a good time for you to leave your current space for greener pastures.
You can't afford the monthly increase (but you can find ways to cut down on spending.
If you're not ready to move, be honest about your finances and assess if your budget can absorb the increase. "For example, if your rent increase is $50 or $500, think about how this will impact you," says Elysia Stobbe, a mortgage and money expert and the author of How to Get Approved For The Best Mortgage Without Sticking A Fork In Your Eye. "Ask yourself how this will impact your ability to save, go out for dinner and generally affect your daily spending habits." Unfortunately, in competitive real estate markets, being priced out is a real thing. If you can't negotiate with your landlord against the increase, you will need to pay the costs of moving upfront for a more affordable rent. In these situations, it might be easier on your finances to take a lump sum hit to your savings (and do a lot of the moving yourself) than to diminish your quality of life for a year or two.
You should stay if:
It's a small increase and you live in a major city.
"If you live somewhere like New York City or San Francisco, where the cost of moving is high, and relatively minimal annual increases are common practice, it's most likely not worth it," says Joe Chyla, a real estate agent in New York City.
The rent increase still has you paying less than the median price for your area.
"If your rent is going up, it's usually a sign that the market price of rentals in your area are going up, too," says J.R. Duren, a personal finance expert at HighYa.com, a consumer-focused website. If you find out that your landlord is raising the rent beyond the market norm, this is an issue you'll want to talk to your landlord about. But if you find that your apartment is still less expensive than other options in the area—even with the increase—you should probably stay.
You can negotiate more benefits.
Before you book a moving company, there's still more that you can fight for. For example, see if you can score a new amenity or two to make up for the rent hike—something that every good renter who always pays on time should consider, says Brentnie Daggett, a rental expert at Rentec Direct, a property management industry website. "A free parking space, new upgrades to the apartment, free storage or waived fees at the gym are all cost-saving benefits that landlords or property managers may be more willing to negotiate than the rent itself."