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I'm going to rent an apartment in a major urban area in the next few months. When I drive around the area where I want to rent I see numerous "For Rent" signs. Also when I look online there are numerous listings. Given the abundance of properties for rent... and from a short conversation with a real estate agent... I've come to realize that negotiating the amount of monthly rent is not out of the question (and perhaps common?). How does one effectively negotiate rent?

I'm open to a variety of ideas including trading a longer lease length for a smaller monthy rent... or paying multiple months in advance in exchange for a lower monthly rent etc.

Cheers!

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If anyone is curious I did successfully negotiate a better deal: I got the lease term shortened by five months in exchange for starting the lease one month early. –  MrDatabase Sep 8 '10 at 2:56

5 Answers 5

up vote 16 down vote accepted

One of the best ways to "win" any negotiation is to make an offer in which the other guy "wins" too.

Give them something you don't care much about in exchange for something you do care about. (Assuming the "something" is of value to them.)

You've already hinted at this strategy in your question:

  • Prepay months in advance.
  • Longer lease.
  • Longer notice time built into lease termination agreement.
  • Do you have a car? Can you give up a parking space?
  • Are you a non-smoker? Can you promise not to smoke in the apartment? (This is an expense for the landlord when you move out.)
  • Do they allow cats and you don't have cats? Can you promise not to keep cats? (Another expense for the landlord.)
  • Probably unlikely to succeed in urban areas where landlords are pros, but in other areas: can you offer to do work for rent reduction? E.g. you are handy and can help with maintenance, or you can mow the lawn, shovel the walk, paint, etc.
  • If they have low occupancy, can you make a deal for referrals?
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Good point about giving them something of value which does not matter as much to you. A note about pets though, typically you pay an extra deposit for animals (this of course depends on the state/location). –  George Marian Aug 19 '10 at 1:47

I'm open to a variety of ideas including trading a longer lease length for a smaller monthy rent... or paying multiple months in advance in exchange for a lower monthly rent etc.

These two ideas that you mention are good.

Do your homework first. See a few places. Find out how much they are asking. Make a note of details such as square footage, appliances, amenities, etc. Then play them off each other. Be sure to point out that there are many places available in the area. Be courteous, but firm and be ready to walk away from a place you like if you are not happy with the deal they are willing (or not willing) to give you.

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having an idea of the price per square foot will give you an idea of both value, and a common comparison for places that are hard to compare –  MrChrister Aug 18 '10 at 4:30

Another negotiating technique is to ask for extra items to be included at the base rental rate.

Examples of "extras" in an apartment rental might include monthly rental of a washer/dryer, monthly fees for fitness center access, or higher rent for a good location apartment (top floor/pool side/etc).

Ask to get one or all of those items included in the rental price they offer you.

If they say "yes": You win the extra items at no additional cost.

If they say "no": Then challenge them that if they take away the washer/dryer you'll need to pay $50 less rent per month to meet your target price for rent.

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Me:I'll take it if you throw in the $50 washer/dryer for free. Landlord:Sorry that doesn't work for me. Me: If you don't give me the washer/dryer I'll need to pay $50 less. Landlord:What are you, some kind of idiot? I said No. –  DJClayworth Jan 11 '11 at 18:01

I just did the apartment finding dance. This doesn't make me ultra qualified, but I did spend a bit of time thinking about this. A lot of people seem to think that negotiation is about finding some set of words to scare or intimidate the other side into concessions. "Be prepared to walk away from the deal." This is essentially bluffing, and a bad idea. The bottom line is that negotiations, like wars, are won or lost before they start.

What you need to do is prepare. I spent a day just touring apartments in the area. Don't be too selective here, and don't sign any contracts yet. Your goal at this stage is to gather information. What kinds of information? Two kinds: information that you can compare your alternatives with, and information that about the landlord's alternatives.

Your comparison info:

  • Price per square foot (and square footage) is the common dollar comparison tool.
  • Furnishings
  • Laundry accommodations. If washer and dryer aren't provided on-site, find the nearest laundromat and their prices.
  • Utility costs.
  • Proximity to work, stores, and other common destinations.
  • Parking and garaging.

Landlord alternatives:

  • Credit scores / quality of tenants.
  • Number of vacancies and prospects for filling them.
  • property taxes and debt payments.

Knowing the all landlord's positions will help you determine who will be more willing to negotiate. If they only have one vacancy and a two upcoming appointment showings, they have no reason to offer concessions to you. Take their offer at face value and spend your effort on other apartment complexes. Landlords know this and thus the good ones protect this information and project lies. Find more reliable sources if you can. You can infer some things by looking at how much they advertise in Craigslist and local papers. Talk to current tenants.

With this information, you can identify where to find small wins. If you find two comparable and acceptable apartments, but one is further away from the Local Major Employer and has more vacancies as a result, you might try negotiating with them first, knowing that you've got another apartment to fall back on if things fall down. The fallback apartment is known as your BATNA (Best Alternative to a Negotiated Agreement), and the dollar value between your BATNA and the landlord's determines how much room there is, or if a deal goes through at all.

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Usually this depends on the market. I live in Albany, NY and the rental market is very tight here -- landlords rule. Short of pre-payment, you're not getting concessions. In other areas, YMMV, especially if the apartment has an unusual thing going on like poor location, if it's owned by old people who own the building outright, or if it needs work.

Figure out how much money they're making on the property by computing their property taxes and estimate a 15 year mortgage payment. That's going to be the price floor for similar quality properties.

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