In Denver, the Fair Market Rent (FMR) for a 1-bedroom apartment is $1,260.
Let’s say you make $17 per hour. If you work 40 hours per week every week of the year without missing work for sickness or vacation, you’ll earn $35,360 before taxes (gross salary). Not bad. If you are able to rent a FMR 1-bedroom apartment at $1,260 per month, you will spend $15,120 per year on just your rent.
That is 42% of your salary (before taxes) spent just on rent!
Having a place of your own allows you the freedom to do what you want and not worry about the needs of roommates. If you’re working full-time, having that space to yourself is even more attractive after serving customers and clients all day. Plus, you’re working full-time so you can afford it, right?
When you spend more than 30% of your income on housing costs (rent + utilities), you are considered cost-burdened. That means a disproportionate amount of your income goes to housing leaving less money available for other things you need.
If you were to only spend 30% of your gross income on housing and you make $35,360 per year, that means you should only spend $884 per month on housing. To spend only 30% of your income on housing would save you $376 per month or $4,512 per year versus what you would pay in FMR!
Don’t run out just yet and find an apartment for $884 per month (if you can) because we haven’t talked about utilities yet, which are included in the 30% number.
Utilities include electricity, gas, water, sewer, and trash removal. The average 1-bedroom apartment in Denver pays around $150 per month in utilities. That means you only have $734 for rent ($884 – $150). Where can you find a 1-bedroom apartment in Denver for $734 per month?!
So now that we have established that living in the Denver Metro area is expensive and you would be spending a large portion of your income renting an apartment, let’s look at homesharing.
Homesharing is when a homeowner has an unused bedroom that they rent out. The homeowner also lives in the home and common areas in the home such as the kitchen and living room are shared. People have been homesharing for centuries – what’s new is the use of technology to match with compatible housemates and streamline the lease and rent collection.
Open Up finds homeowners with empty bedrooms in the Denver area who are willing to rent out those rooms for between $600 and $925 per month, utilities included.
Let’s say you rented a bedroom for $600 per month instead of an apartment for $1,260 per month. You would spend $7,200 per year and save $660 per month, which equals $7,920 per year. That is 22% of your gross income that you would be saving by not spending it on housing! Once again: You could be saving $7,920 per year!
Open Up’s clients have paid off crushing debt, have increased their credit scores, have saved up money to buy a home, or purchased a car… In other words, when our clients have been able to save money on housing costs, they have instead spent that money on improving their lives for the long term.
Homesharing has its trade-offs. You have your own private bedroom, but it is in someone else’s house. Of course, you also have at least one housemate, so you have to learn to get along together. Living with someone else is also a tremendous benefit. You’re likely to meet someone you wouldn’t normally socialize with. Interacting with other humans helps keep away feelings of isolation.
So where do you want to be in one year? Do you want to spend 42% of your gross income on housing? Or do you want to have thousands of dollars in your bank account that would have been spent on rent?
If homesharing is the right option for you, contact our team at Open Up to get started in finding a home that is the right match for you.
Open Up is a local nonprofit organization that uses the power of the Silvernest technology platform to help our clients access affordable potential housing matches. Think of Silvernest as the best dating app, except it’s for housing. When you use Silvernest you are going to see the best match possibilities for you based on how well your profiles match. Plus, by using Silvernest’s payment platform, your rent is automatically withdrawn from your bank account on time every month.
Have questions? Check out our FAQ’s