Another sweaty Shanghai evening, I wait for the elevator, step in, and press in succession my floor and the "close-door" button. The oldish man who has followed me in turns to me and inquires in halting English, "How much do you earn?"

"Excuse me?" comes my response in Chinese. He repeats the question.

"Do I... know you?" Twenty-four floors, five apartments per floor, who knows how many people per apartment. It's impossible to keep track of all the faces. "Oh," my inquisitive neighbor explains, "I was just curious how much foreigners are making these days in Shanghai?

The greatest inconvenience of living as a foreigner in local housing is not the occasional hour spent stuck in the elevator or the seemingly endless construction on the upper floors which results in the water being cut off. Instead, it is the fact that everyone in the building, literally everyone, knows who you are, and thus feels justified in asking your income, occupation, age, origin, blood type and/or weight, regardless of whether or not you have the faintest idea who they are. You become the Waiguo Pengyou, the foreign friend -- yep, the neighborhood mascot. The greatest inconvenience, yes, but also the greatest pleasure, in little things like the toddler next door who calls me aiyi, the elevator operator's boasting to the neighbors about my supposed prowess in the Shanghai dialect, and the crestfallen look on the door guard's face when he discovered he couldn't practice his high school level Russian with me.

About five years ago, living in local housing would have been less possible and much less legal. Most Chinese cities have strict rules governing where and how foreigners can reside. In Beijing, segregation of foreigners combines with an expensive real estate market to drive prices in the upscale expat ghetto to ridiculously high levels. Over the past few years, however, loosening laws and a flood of construction have allowed Shanghai's foreigners to reside cheaply and with a good degree of freedom. Last year, the laws were altered to allow foreign residents to rent and purchase property anywhere in Shanghai.

Except for service apartments and pricey suburban villas, pretty much all housing in Shanghai can be considered local. Our humble, unfurnished Zhabei district flat cost 800 RMB a month for two bedrooms, a living room, bathroom, and kitchen. This was a bargain based on guanxi, but even without connections one can find very comfortable housing in the range of 1000 to 3000 RMB, depending on your luck and where you want to live. If you're paying anything much more than 3000 for a place anything but gorgeous and/or palatial, than you're probably being overcharged. Surprisingly, quaint historic houses and modern highrises tend to cost about the same, depending primarily on size. A reasonable measure is to start at 1000 RMB for living room, bathroom and kitchen, and add 500 RMB per bedroom. The general price per room equation will vary up or down a couple hundred RMB according to the following factors: proximity to downtown, extent of furnishings, number of air-conditioning units, presence and size of balcony or garden, and overall condition of the unit.

Difficulty of finding a place depends on how particular you are and how much you're willing to spend. How long you're willing to spend looking can also determine what you'll find. Connections may work, as there are always people leaving town who would rather hand over the lease than default on their contract and forfeit their deposit. The advantage of this method is that you avoid the cost and hassle of agents, but it leaves your options limited to only a few places. Rental agents abound in Shanghai, and generally charge a fee of half a month's rent from both the renter and the owner.

There are a couple different categories of rental agencies. A few that feature English-speaking staff and target expatriate customers advertise heavily in the Housing Classifieds of ChinaNow and similar English publications. These agencies tend to offer more attentive service and more extensive listings than smaller, locally-oriented firms. In exchange for the convenience, and on the assumption that their clientele isn't aware of the going rates, prices at places listed by expat-oriented firms tend to be significantly above market prices. A place that would cost 2500 RMB a month with a local agency might list for 4000 with an expatriate agency.

Of the local agencies, there are big ones and medium to small ones. Local agencies are the only way to go if you're looking for a nice place that doesn't cost a pretty penny. Most don't speak English, so if your Chinese isn't up to it, find a Chinese-speaking friend to accompany you. The big agencies have dozens of offices around town and many are associated with huge conglomerates. Although these companies have the largest databases of apartment listings, most focus on the property sales that bring in the most income. Some refuse to even handle smaller accounts. Other agencies have quotas for their agents, who will make you to see places above your stipulated budget and below your standards before taking you to the ones you want.

The smaller companies are the best bet, as they rely upon such relatively paltry rental surcharges for their survival and thus will spend a lot of time and effort searching on your behalf. These agencies usually know places in the general vicinity of their office, so your best bet is to wander around your desired neighborhood and veer into the handful of rental companies you will inevitably find there. Rental offices are easily spotted by the rows of white slips cluttering their door and windows (beware, though, as travel agencies sometimes look very similar).

Whatever type of agent you use, start off the transaction by being very clear about what you're looking for: what district or neighborhood, what kind of place, and what price range. The more explicit, the better you can avoid wasting their time and yours. For example, if you want to pay around 2500 RMB a month but are willing to go higher, it's a very different situation than if you're willing to pay as much as 2500, but no more. In our recent housing hunt, we wanted to find an atmospheric old place. It took a couple of visits to "old buildings" from the 1980s and early '90s before we learned to explain that we specifically wanted a 1920s to 1940s longtang lao yangfang.

Both foreign and local house hunters alike often ditch the rental agency once they find the place, either by quietly slipping the landlord a phone number during the first viewing or by returning later on their own. While this allows you to avoid the fees, it leaves you vulnerable. Beyond helping you find the place, the agent will help you negotiate down the price, ensure the contract is fair, and help you out in case the landlord springs any surprises on you. Finally, the landlords generally list their places at anywhere from a few hundred to a thousand RMB a month above what they're willing to rent it for. Bargaining is expected, in terms of both rent and other concessions, so as long as you're less desperate than the landlord, the price should go down by at least a couple hundred. Shanghai is considered China's most livable city, and the housing options here are among the major reasons why.

Click here for listings of Shanghai rental agencies.