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I'm currently looking for a new apartment. I am prepared to pay a whole year's rent up front in exchange for a discount. How much of a discount should I seek?

It adds risk for me and I lose some opportunity cost; meanwhile, the landlord's risk is reduced. So, I know I should get a discount. How much?

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    I'm a little conflicted on answering this, since it seems like you're looking for an approach to come up with a number - but in real life, the only thing that will matter is what your potential landlord decides, probably regardless of whatever theory backs your math. Plus I feel like there is an obvious question, why would you want to prepay that much, vs doing something with the money in the meantime? – dwizum Dec 11 '19 at 19:36
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    There is no set of rules. If your landlord is willing to negotiate, ask for a ridiculous discount and then ask for a counter offer. See what you can get. – Bob Baerker Dec 11 '19 at 19:40
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    The problem with pre-paying a whole year is that now the landlord has all your money. If you need to move, getting it back will be difficult. – RonJohn Dec 11 '19 at 19:42
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    @RonJohn That really depends how the contract is structured. My lease requires me to pay the rent payments to the end of the lease even if I move. So in this case pre-paying wouldnt take away any rights. – Vality Dec 11 '19 at 19:51
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    Just FYI, I once bought a house before my rental lease was up, and my landlord told me I could get out of my lease early if I found a "good" renter to start a new lease after I moved out. Turned out his definition of "good" was quite particular. One of the renters I found was a foreigner with no credit who offered to pay the entire year's lease up front, and my landlord turned it down because he thought "that's weird". – TTT Dec 11 '19 at 21:34
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What discount they'd agree to (if any) will depend on a lot of factors.

From my discussions with other landlords and reading on landlord discussion boards, many don't want to deal with prepayment. The primary concerns seemed centered around potential for it to be ill-gotten cash or just feeling like anything outside the normal monthly payment was just weird/unnecessary. Some, like me, don't feel the need to discount because we have very low non-payment rates.

I've been offered a half year's rent in advance and turned it down because they had no documented income source/credit history. Even if it had been an otherwise well-qualified tenant who pitched the idea of a full year up front I'm not sure I'd give much discount for it. It does eliminate non-payment risk, but it would throw off my income for that first year and the year I switched back to monthly, not everyone would care about that, but I doubt I'm the only one.

As a tenant, paying for a year up front carries risks. There are times when a tenant is justified to withhold rent, if you've already paid it you've given up that leverage and a crappy landlord could take advantage (imagine a broken furnace/water heater for months). If they are in a bad spot financially they could take your year of rent, stop paying the mortgage, and bail on the rental altogether, which would be at minimum an annoyance to you and potentially quite costly.

In my market, I have no interest in discounting rent. I think that in general, at most, a 5% discount is reasonable for those interested in entertaining the notion at all. If it's an area where eviction rates are quite high they have already baked a high non-payment rate into their rental rate, so they will have more room to negotiate on guaranteed payment and I bet 10% would be pretty agreeable in such markets.

It doesn't hurt to ask, but I'm not convinced it's worth the risk to you.

I'm in the US, depending on country some of the considerations above might not apply. In the US landlord/tenant rights vary by state, so the withholding rent statement might not apply where you are.

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    You also have issues taxation wise if "a year" is partly covering 2 fiscal years. – Stian Yttervik Dec 12 '19 at 10:24
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    @StianYttervik In any country following traditional accounting rules (and assuming you are not using a cash basis exemption such as this one), it should have no impact on your tax. That's because income is taxable at the tax point date (i.e. the date of supply), not the date you received payment. It would only have an impact if you changed your contract so that rent is payable yearly (as opposed to the current scenario which is a year's prepayment on rent payable monthly). – JBentley Dec 12 '19 at 13:13
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    @Jbentley most developed governments have simplified tax codes for 'ordinary' people. This would mean you have to ask to be taxed after a more complicated scheme, where tax deferment and tax point dates are applicable... At least that is a european perspective – Stian Yttervik Dec 12 '19 at 14:58
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    @StianYttervik Again, I can't comment on your particular country, but in the UK (which is European) you are wrong. By default the standard accounting rules apply, and you have to ask to use the cash basis, not the other way around, and you need to be eligible to use the scheme. I provided a source for this in my comment above. – JBentley Dec 12 '19 at 14:59
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    @JBentley In the US, rents are generally recognized as income when received (larger organizations are more likely to use accrual basis, but most small businesses/individuals use cash basis). For me, personally, with mid-year lease starts it would mean that in the first year I accepted a full year up-front I'd have 18 months of rent for tax purposes, and the next year I'd have 6 (unless I did another year up front in which case I'd have a normal 12). – Hart CO Dec 12 '19 at 16:40
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Your statement

the landlord's risk is reduced.

Is actually not correct, from the landlords perspective. Unless you have a clear intent to move out at the end of that year, and maybe not even then.

  • If you intend to move out at the end of the first year, the landlord is going to be less interested in renting to you then someone who plans to stay for several years. Loss of incoming and additional overhead, make short term tenants less desirable.

  • Landlords are in the game of long term profits. A lump sum payment does not offer any real incentive, they either fully own the property or they have a long term bank loan. If they wanted quick profit they would sell the unit and not be a landlord.

  • If you plan to stay beyond the one year, you will have lived there without paying rent monthly for 12 months, most likely you will have developed spending habits that are going to be difficult to adjust when you suddenly need to part with a significant part of your income that you are used to having available.

Which leaves your final statement, incorrect.

So, I know I should get a discount. How much?

You can ask, but you should not expect it. And you may actually lower your chances of being granted a lease. Just because you want to live in the apartment does not mean you are the most qualified candidate.

Edit Final note; If you have a years rent in hand and you have the ability to pay the monthly rent. Put the extra money in the bank and save it for emergencies and/or a down payment on a home.

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    You have some reasonable points, but the answer overall is unjustifiably one-sided. The reality is that there are arguable pros and cons of accepting a year's prepayment. An obvious pro is present value; money today is worth more than money tomorrow. Secondly, for the prepayment period your risk of non-payment is zero. Thirdly, it says something about a person's financial security that they have 12 months rent saved up in the first place. Now you may well decide that on balance the cons outweigh the pros, but you can't claim there are no pros. – JBentley Dec 13 '19 at 16:22
  • @JBentley The OP does not say they saved 12 months rent. It says "prepared to pay a whole year's rent up front" – James Jenkins Dec 14 '19 at 13:57
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Hart CO's answer gives a good reason for a landlord not accepting such a discount negotiation, and why you probably would not receive much of one even if successful.

From the other side, you should ask yourself what the minimum discount you would be willing to accept in order to prepay is. There are plenty of things you could be doing with that money in the meantime (such as investing it), and prepaying your rent means giving up those opportunities. If the potential landlord is not willing to at least match your minimum discount, just pay month-to-month.

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Step one

You're not entitled to a discount so clear that mindset right out of your head.

Step two

Humbly ask the landlord:

Do you accept a full year's worth of rent up front?

If the landlord says no then there is nothing else to discuss.

If they say yes then you can inquire:

Oh great, is there any sort of discount for doing so?

If they say no then choose whether you still wish to offer a year's worth of rent.

If they say yes then ask how much it is and decide if it's worth it to you. I doubt that haggling for a better discount will be met with positivity. It can even cause you issues because if something breaks the landlord will remember that you haggled them so they might drag their feet a little when getting it fixed.


One thing to note is that if you plan to stay there beyond 1 year then you need to either save up for a whole year's worth of rent or avoid living paycheck to paycheck so that when the time comes to pay monthly you won't have trouble handing over hundreds of dollars which you may have already budgeted for your car, food, hobby, or whatever.

Paying monthly has a psychological budgeting benefit which keeps you on track with your spending. A huge yearly bill is not something most people can swing. This is the same reason why a mortgage company offers an escrow to pay your property taxes.

Keep in mind that this psychology could be why the landlord doesn't wish to risk allowing you to pay for a whole year. They wouldn't want to deal with the headache of you having trouble paying once the new lease starts.

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As others have said, the risk reduction is probably not significant. If the landlord has already performed a credit check, he's presumably concluded that you're not much of a risk for non-payment.

But there's another factor that might work in your favor: "float". When you prepay for something, the recipient has more time to invest it. So instead of you getting a year's worth of interest payments, the landlord gets them (this is why getting a large income tax refund is not a net win -- you've been giving the government an interest-free loan all that time, when you could have pocketed the cash and earned interest on it).

This suggests that the most you should expect as a discount is the amount of interest the rent payments could earn in a savings account. Don't consider investments in other securities, because even though the stock market has much higher historical returns, it's too volatile in the short period of a year to use as a benchmark.

Also remember that the number of interest payments the landlord gains is higher for the later months in the year -- the landlord could already get a full year of interest from the first month's rent check, he's only gaining 11 months for the prepayment of the last month. So you can average this out to about 6 months of interest (the actual amount is a little different, because of compounding, but this is close enough for estimation purposes).

Back when savings interest rates were high, this might allow you to get a discount of several percent. These days, the top savings account interest rates are around 1.7%, but the landlord may not have one of these, so figure on something between 1% and 1.5%. This suggests that the biggest discount you could reasonably ask for is about 0.75%. And if interest rates drop, you should expect the landlord to renegotiate (but don't expect any largesse if they go up).

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I would say any landlord would be willing to make a discount: I am guessing somewhere around half a month's rent to a month's rent in total. If a tenant leaves the apartment in the middle of the year, it will be troublesome to collect payment for most of the tenant situations (you can't go to small claims if you have an apartment complex for example, you would have to pay for a lawyer, then for collection etc.), and if you would try to re-rent the apartment there might be a gap (2 weeks? a month?). Plus the landlord can make investments which might be more profitable.

I was curious myself, and came across this website: https://www.dnainfo.com/new-york/20160510/greenpoint/when-paying-years-rent-upfront-helps-get-you-deal-when-it-wont

..decided it was worth dipping into his savings to secure a light-filled two-bedroom in a three-unit building with a 1,000-square-foot shared garden. The unit originally asked $3,400 a month and then was about to be dropped to $3,200 a month. After offering the whole year’s rent, Meng got the unit, which he is sharing with his boyfriend Andrew, for $3,040 a month.

“They said 'the only way we’d go for that (no increase next year) was to pay more upfront,'” Andrew, 33, said. “Then I didn’t have to pay an increase.”

The couple offered to allay any concerns (puppy ownership) by paying everything upfront and got the apartment.

dropping the monthly rent for an “oversized one-bedroom” from about $5,300 a month to $5,000, she noted.

When won’t landlords accept a year’s rent upfront?

many landlords are barred from accepting advance rent under the stipulation of their mortgage agreements.

Banks worry if a landlord collects all of the rent by January, he’s most likely going to spend it by June and then by July and for the rest of the year, he won’t have any money, Zumin said.

Also, landlords of rent-stabilized apartments can’t take upfront rent since they’re only legally allowed to ask for one month’s security and one month’s rent when signing a lease.

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After some Googling, I found that this is a surprisingly common scenario and that people are usually able to pay only 11 months' rent, so approximately an 8% discount.

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    If you could provide one or two linked reference, it would definitely be a good question and answer. – jf328 Dec 12 '19 at 5:16
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    I feel I have to -1 this answer, as it provides no basis at all for "usually able to pay only 11 months rent", or for the discount being 8%. – JBentley Dec 12 '19 at 13:15
  • The only 8% number I know about in real estate investing is the upper limit of vacancy that real estate investors take into account. It's unlikely that a landlord would accept the upper limit of vacancy loss if one doesn't have to. Only exception I can see is if the cash would enable the landlord to make the loss back in other investments, using the payment. – Jonast92 Dec 12 '19 at 17:17
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    I googled it, too -- "discount rent prepay" -- and the very first hit was "Why landlords frown upon prepaid rent". The exact opposite of your conclusion. In my country and state, (a) any money collected up-front is deemed a security deposit and (b) the amount of security deposit I can collect is limited to one month's rent. – bishop Dec 12 '19 at 17:39
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    @dcacat - good answers should stand alone and be self contained (i.e. they should include their own backup, references, or justification). Just saying "I did some googling and found X" isn't very conclusive. If you did find something that explains or justifies this answer, you should exit your answer to quote or explain whatever you found in more detail. – dwizum Dec 12 '19 at 21:20

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