It's time to rent a new place and you want to negotiate a great rental deal! Well, the ability to bargain on a landlord's "asking price" is governed by the laws of supply and demand in the rental market where you would like to live. In tight markets with little inventory and many people competing for the same unit, trying to significantly lower the price or terms will probably get you nowhere. Conversely, in markets where there is vacancy of over 7.5%, or when the property you want is currently vacant and you can move in quickly, you may have more power to haggle.
Additional factors that can help you are good credit scores, strong income, and an excellent rental history. You can use these to help your case when negotiating a better deal. Also, if you plan to stay multiple years and want to sign a longer term lease, that should work in your favor. Wendy Mihm from FinancialRx.com said, "Landlords love long leases!" – and this saves you money and hassle too because it means you don't have to put up with the expense of moving every year.
Where to begin?
You should start by researching the local rental market so that you can assess what you believe should be the rental price for the unit you are considering. That includes factoring in the typical rental price for a unit in that size, with the same or similar amenities, the same number of bedrooms, and the same type of bathrooms that you would like. Knowing the vacancy rate in the area is important, too. These details should give you a good indication of the negotiability available in the marketplace.
Now common sense comes into play.
Factors that would be in your favor for negotiating a lower rent would be:
- You have a strong financial history – solid income, great credit scores, and a good record of past rentals
- You show up on time, are well-dressed, and act professionally when talking to the landlord
- The property is already vacant and clean, and you are ready to move within a week
- It is late in the month and the property is available early in the following month, so you can move in and the landlord does not lose any rental days
- You are willing to sign a two-year lease, or at least mention that you plan to stay multiple years
- You have no debt or very low debt as a percentage of your gross income
- You are willing to take the property pretty much as-is, without requiring the landlord to do a lot of extra work
- It is a weak rental market with many vacancies and dropping rent rates
Factors that would not be in your favor for negotiating a lower rent would be:
- You are having a hard time getting the landlord to show it to you, which probably means there are plenty of interested renters
- The market average rents have been rising as the vacancy levels in the area have been dropping – that's called a "tight market"
- The rent being asked is already low or below market
- You have bad credit, high credit card balances, or otherwise negative marks on your credit report, like late payments or evictions
- The rental amount and your debt payments add to be more than 50% of your gross monthly income
- Your rental history is not good – either evictions, past litigation with a landlord, no savings, or you do not have any good references to support your application
- You would like a lot of expensive work done to the unit, such as painting, new carpets, or other pricey and time-consuming work
With those items above, you can see what will inspire or deter a property owner from negotiating a potential lease deal with you. The more positive factors you have, the more likely a landlord will want you as a tenant and be willing to work with you and negotiate. On the other hand, if you have a lot of negative factors, you may consider yourself lucky if an owner is even willing to accept you as a tenant. But even if you possess some of the less desirable characteristics of a potential tenant, follow the list below and hopefully the landlord will understand and accept your less-than-ideal history.
Regardless of your situation, a few items will help your cause:
- Act in a professional manner on the phone and when viewing the unit
- Bring everyone who will be living there to meet the landlord when viewing the unit
- Be on time and well-dressed when meeting with the landlord
- Give the landlord sufficient notice and apologize if you are running late
- Discuss your financial situation truthfully and openly, as well as any mitigating factors, if you have credit/job/rental history issues
- Have all the information needed for the rental application with you so that you can fill it out right there – job information, credit information, references, past landlord contact information, and, of course, your checkbook for the application and credit check fee
- Fill out your credit application cleanly, clearly, and thoroughly
Chances are that if you show up on time, act professionally, and are prepared to apply for the rental unit, the landlord will see that you are someone whom they would like living in their property. Now is a good time to consider beginning the bargaining process, especially if you display many of the aforementioned characteristics in your favor for negotiating rent.
Now is the time to gently negotiate for a better deal!
- Ask if they are negotiable on the rent for someone who will be a great tenant, as you have always been in the past for other landlords
- Explain to them why you will be a great tenant – credit, income, rental history
- Reference other comparable units you know are renting for a lower amount in the area to let the landlord know that you happen to be interested in a few other places
- State a specific rental amount you would like to pay and be reasonable
- If you want to do a two-year lease, ask for the lower amount in conjunction with that longer term offer – mention how the landlord will not have to re-rent the property, look at applications, show the property the following year, or do any maintenance due to a unit turnover to a new renter
- Ask about rent abatement, like getting half a month free if you stay a second year and a full month free if you stay a third year
- Consider having the landlord commit in writing to not raising the rent in the second year and further years, or fixing the rent in the original lease with minimal rental increases
- Ask for some non-monetary items that are not expensive for the landlord, like getting the carpets professionally cleaned
If the owner will not go for any of those, don't be frustrated. Remember that getting a great place you love that fits what you need is much more important than saving a little bit of money on your monthly rent. The most important thing is to find a place that makes sense for you, and where you can enjoy your time at home.
Here's an interesting article from Forbes worth looking at with some additional tips on negotiating rent rates – How to Negotiate Your Rent: http://www.forbes.com/2009/04/21/pay-less-rent-personal-finance-young-money-landlord-tenant.html
Finally, it is always a great time to prepare for future negotiations! As with everything in life, those with the best credit history and steady incomes usually are able to secure the lowest rates and best terms when making purchases, renting apartments, or taking out loans. For this reason, it's a great idea to start building your credit, income, and rental history profile with this next lease you sign so that you'll be assured of successful negotiations the next time you rent.