Whether you’re renting your first apartment or your next one, getting the best deal on rent may be a top priority.
That’s because rent may be your largest expense.
According to Apartment List, the national median rent for a two-bedroom apartment was $1,193 as of January 2020. Year over year, this represents a 1.6% increase in rent prices.
If you’re living on a tight budget, attempting to negotiate a lower price on rent is one way to stretch the money in your bank account. There are other ways to save money on rent as well.
Here are some tips to negotiate a better deal on rent and save more money.
How to Negotiate Rent
Negotiating rent is similar to negotiating a higher salary, a promotion or anything else.
You have to make a strong case as to why a landlord should consider giving you a better rate. Just like in salary negotiations, you need to bring something of value to the table. In the case of a raise, you can discuss your skills or experience.
When rent is on the table, here are some approaches for adding value.
1. Agree to a longer lease
One of the simplest ways to reduce rent and land a better deal is signing a longer-term lease, says Garrett Derderian, managing director, market analysis at CORE Real Estate in New York City.
“Oftentimes, landlords are willing to offer one to three months free if a renter signs an 18- to 24-month lease,” Derderian says.
“The added free months reduce the net-effective rent the tenant is paying.”
For example, say you’re renting an apartment for $1,000 a month. You agree to sign a 26-month lease instead of 24 months, with two months’ rent included free. Altogether, you’ll pay $24,000 in rent payments but when you average it out across the 26-month lease period, it’s like paying $923 per month.
When weighing a longer lease, make sure it’s a good fit for your short-term plans. For instance, if a job change and a move to a new city is in the cards, negotiating a longer lease might not be best as you may have to pay a penalty for breaking the lease agreement early.
2. Offer the landlord a service
Another idea for how to negotiate rent is to offer the landlord something more tangible in the form of service.
“I was renting a room in a home that was near the campus. The rent was $600 a month but I negotiated it down to $500 by offering to do yard work each week,” says Beach.
In exchange for a $100 a month savings on rent, Beach was responsible for mowing the lawn and trimming bushes regularly. She says this is something you can try if you’re renting a home or a room in a home with a yard.
If you’re not the outdoorsy type, there may be other services you can offer. For example, if your landlord is elderly, you might offer to assist with running errands. Or if they have pets, you could trade a discount on rent for a daily dog-walking gig. Just remember to keep the value of the service you’re offering in line with the amount of the rent discount.
3. Prepay or pony up a larger deposit
Most landlords expect you to offer a cash deposit as security when renting a place. According to Zillow, this deposit could be anywhere from one to three months’ rent, although the typical amount paid by renters is $600. If you have enough cash to cover the security deposit as-is, you could potentially negotiate rent by offering a larger deposit or prepaying some or all of the rent in advance.
“Landlords are just like everyone else: they feel a strong temptation in the face of a large cash payment all at once,” says Brian Davis, real estate investor, personal finance educator and co-founder of Spark Rental.
“Often they’ll accept a lower monthly rent if you offer to pay three to twelve months’ rent up front when signing the lease.”
Remember, this technique requires cash in reserves. If you don’t have a substantial amount of money tucked away yet, consider opening a savings account and scheduling regular deposits so that when you’re ready to try this move, you have the cash you need.
4. Offer to pay your rent early
Your rent payment itself isn’t necessarily the only thing a landlord values, Davis says.
“They also crave consistency and reliability in the ongoing rent payments.”
One strategy he’s used in the past for how to negotiate rent is offering to pay the rent ahead of the monthly due date in exchange for a lower rate. He negotiated a landlord down from $2,200 a month to $2,000 a month by incorporating terms into the lease contract that specified he’d pay early every month. If he missed a payment, the rent would revert back to the original $2,200 rate. The landlord agreed and Davis was able to save $200 every month while renting.
If you know you can be consistent in paying your rent early, this can be a highly useful tactic for lowering your rent and saving money. And, you can make paying rent easier by setting up direct deposit for your paychecks. With direct deposit, it’s possible to get paid up to two days early.
5. Do your research
One final option for how to negotiate rent is to play a little hardball. When the landlord quotes a rental price, you can say “thanks, but no thanks” to see how they react.
Just make sure to do your homework. Here’s why.
If you’re trying to rent in a high-demand area, you’re likely competing against other would-be renters. If there are five people trying to land the same apartment, the landlord can easily find another renter if you play hard to get.
So, when researching rentals, learn about the overall market demand, and use a tool like Rent Jungle to see how rent prices are trending. The best case scenario is to find a rental that’s been vacant for more than 30 days in an area where rent prices have flatlined or are minimally increasing. While this is a gamble, it may pay off.
Make a Plan for Your Rent Savings
If you’re successful in negotiating better rent terms, consider what you want to do with the money you’re saving. For instance, you could build your emergency fund or pay down some of your student loans. Or, you could save up for a down payment on a house.
Regardless of what you use your extra cash for, make sure you plan wisely for your financial future.
This page is for informational purposes only. Chime does not provide financial, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for financial, legal or accounting advice. You should consult your own financial, legal and accounting advisors before engaging in any transaction.