This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Let’s face it: rent is out of control.
In the past 12 months, rental prices have skyrocketed between 20 and 40% in Boston, Miami and New York alike.
Austin, Texas — long known for being a cheap-but-cool alternative to its coastal counterparts — is catching up pricewise, with the average 1-bedroom now going for more than $1,800/month.
And of the 30 most expensive cities in the country, only six experienced rent increases of less than 10% over the past 12 months, and none went down.
It goes without saying, then, that there’s never been a better time to learn how to negotiate your rent. In this post, we get into the nuts and bolts of doing just that, even in these dizzying times.
How to Negotiate Rent
Before asking your landlord for a rent reduction, you first need to identify that the time and conditions are right. This is essential to putting yourself in a strong bargaining position, giving you a much better chance of success.
Here are two methods for discovering whether it’s a good time to request a rent reduction or not.
1. Talk to Your Renter Friends
Talking about money is taboo in some friend groups, but it shouldn’t be. Chitchat is one of the best ways to stay on top of current financial trends, and lays the foundation for a support system should you need one down the road.
Housing is the perfect example here, because a lot of valuable housing information gets exchanged in casual conversations. If a friend tells you they rented a place for less than what you’re paying, that’s a good indicator that the time might be right for you to talk to your landlord about your rent.
2. Learn the Market
If chatting with your friends is the passive approach to learning the real estate market, scouring properties on sites like Zillow is the active one. But you don’t need to know everything about real estate to negotiate your lease: you only need to know about the type of house or apartment you live in your neighborhood.
For example, imagine you pay $3,850 a month for a 1-bedroom apartment in New York City. When you look at other 1-beds nearby, though, you notice that they’re renting for an average of $3,500.
You can do this research for any city be it Phoenix, Seattle, St. Louis, Orlando or San Jose.
This comparison can be a strong indication that you’re overpaying, and that your landlord may have a difficult time finding someone else to move in should you decide to leave. Having this information at hand can be incredibly powerful when it comes time for your negotiation.
Of course, you’ll want to get more specific than just home type and neighborhood: you should consider size, amenities, age, and other factors when doing your research. But if you find a few similar homes to yours available at significantly lower rents, you’re probably on to something.
5 Tips for Negotiating Your Rent
These five tips will help you prepare to ask for a reduction in your rental payments. It’s not a good idea to go into the negotiation without being armed with knowledge about the market and a willingness to compromise.
1. Offer Some Work in Return
Unless market conditions are extremely dire (and they’re certainly not right now), it’s rare that your landlord will agree to negotiate your rent without getting anything in return. Generally you’ll need to offer something to make it worth their while, so it’s important to find the levers you can pull in your specific situation.
For example, if the home you live in has outdoor space that requires maintenance, you may be able to negotiate lower rent payments in exchange for maintaining the property (landscaping, shoveling snow, etc.) yourself.
If you live in an urban apartment, you likely don’t have much outdoor space, but you may be able to give back your unused parking space, which your landlord can peddle to another tenant. There might be other duties you can take on such as keeping the lobby clean or simply keeping an eye on the property. Not all complexes have 24/7 staff.
As in all negotiations, the key is to offer something that’s low value to you (eg. your parking space) but high value to them. Many landlords will happily lower your rent if you tick one or several of these boxes:
Prepay several months in advance
Sign an extended lease
Offer to extend the termination notice from 30 days to 60 or 90 days
Promise not to smoke or have pets in the apartment
Most landlords are willing to accept lower rents in exchange for financial security, which is why renters who offer peace of mind in the form of extended leases and termination notices are so valuable.
2. Time It Right
When you negotiate is often just as important as how you negotiate, and this is especially true when it comes to housing. The best time to negotiate a lower rent is one to two months before the end of your lease.
Why one to two months out? Landlords and property managers know that even a short vacancy between two tenants can cost them thousands of dollars, so they’ll be extra willing to strike a deal as your contract is coming to a close. One to two months gives you enough time to give them notice that you’ll be moving out, but is still too short a time for the landlord to easily find new renters.
3. Sign for Longer (Or Shorter) Than 12 Months
With rents increasing as quickly as they are right now, it’s not an easy time to negotiate a rent decrease, but it is still possible. Capitalizing on the seasonality of the real estate market will give you another leg up in your negotiations.
Here’s why. In most cities across the country, it’s more expensive to enter into a new lease in the summer than it is in the winter because more people move during the summer months, driving prices up. This means that a “summer lease” can be worth substantially more to a landlord than a “winter lease,” since the price difference can persist for years.
How can you capitalize on this? Simple: if your current lease ends between September and April, offer to extend it so it ends between May and August. Doing so reduces the risk for your landlord no matter how hot the market is, giving you another strong bargaining chip.
4. Leverage Micro Events
There are many small events that impact the balance of power between a tenant and a landlord. For example, if your building is full with a waitlist, you don’t have much wiggle room to negotiate your rent. If there are a lot of vacancies in your building for some reason, though, you can likely ask for a discount.
“Landlords generally prefer to have you stay at a lower price rather than spend money on prepping the unit for a new tenant while taking on the risk of the place being empty,” explains Rany Burstein, CEO of roommate finder Diggz.
Similarly, if a nearby building starts undergoing heavy construction — an event that makes your unit less desirable — that swings the power in your favor, too.
“I used this strategy after construction of a new building started across the street,” Burstein said. “I had already been living there for seven years, but I was able to get $200 a month off my rent for that year just by citing the construction as a nuisance I would have to endure.”
5. Leverage Macro Events
Just as micro events between you, your landlord and your building influence rental payments, macro events do, too. Global pandemics, financial crises and local events like factory shutdowns all impact housing supply and demand in unique ways. Staying aware of what’s going on in your local rental market means you’ll be poised to act when the market turns in your favor. As the saying goes, never let a good crisis go to waste.
Most landlords are sensible, risk-averse investors willing to be flexible with tenants who make reasonable requests. Yet most of us don’t even make the request in the first place. The worst that can happen is your landlord says no, and your rent stays the same. In the best case, though, you might just be able to save yourself thousands of dollars a year.
Contributor Jordan Bishop writes on personal finance and hospitality topics. He is the founder of Yore Oyster, a website specializing in financial products reviews.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.