As I was working on a different article something came to mind that I needed to explore. I asked my other half if she ever negotiated any of her apartment rentals. Her answer “No”. It never occurred to her to seek a break on the rent or to seek concessions. But when she purchased her homes she negotiated like a champ. It was then that I realized that apartment seekers have a rental mindset. It is this mindset that determines how we approach a rental. And it can work against us.
How do you use the rental mindset
In the rental process, the prospective tenant will do many things to prepare for the apartment search. Some items are:
- Research the rental prices for their chosen area. Check.
- Research the area. Check.
- Research the owner. Eh maybe
- ∗Consider negotiating the rental price. Huh… Do What?
∗Note: This is different than re-negotiating the rent when the lease is ready for renewal.
People begin the apartment search with the mindset that the price is the price. And this is an owner’s market. But when it’s a renter’s market the mindset is still the same. The rental price is still the rental price. Why?
At a time long ago
This is not to say that no one in the history of obtaining an apartment rental didn’t negotiate the price. But in all honesty, did you? I know I never did I just search for an apartment that I could afford. The next thought was to make sure that I could pay the gas and electric.
In fairness, the last time I looked for an apartment was 1976. It was a different time. There were plenty of apartments and rents were reasonable. Those conditions have changed but the rental mindset has not.
But this is now
And now we have people with more money than brains. They are willing to pay outrageous amounts for an apartment. This has created something I call the rental ripple effect. Taken together with the rental mindset we have a situation where rents are “Too Damn High”. And if nothing is done they are going to get higher.
So the question is do you want to pay lower rents? If so, then your rental mindset must change. This is not something that will happen overnight and there is a risk. But real estate is about negotiation and risk. That includes apartment rentals. So how do you position yourself in order to negotiate rent and be taken seriously?
The First Rule of Rental Negotiations
Don’t go into the negotiation with the idea that you will low ball the owner and win. No one appreciates that and you will not be taken seriously after such a move. Any questions, there shouldn’t be.
Ask First
You can ask if the owner is willing to negotiate the rent. Note: Agents usually can’t answer this question. Unless the following happens:
The owner’s instruction clearly states: It is okay to let prospects know that the rental price is negotiable. Then we can answer that question.
You can, of course, speak to the owner at the showing. If the owner is not available you can ask the agent to relay your inquiry to the owner.
Note: An owner’s willingness to negotiate rent is not the same as bait and switch. In bait and switch you are presented with a bargain then told it no longer exists. You are then offered an alternative. This is usually not a bargain or is of inferior quality to the item of interest.
When you negotiate the rent you are looking to either lower the rent or get some type of concession. In New York concessions are hard to find. If it’s not already in the lease it probably does not exist.
Are you worth the risk?
Prove that you are worth the reduced rent. Owners need to fill apartments, true enough. But they want tenants that they can work with and who will keep the apartment in good condition. Tenants without issues such as pets that could damage the apartment is a plus.
The Rental Package
The rental package you put together is your best-negotiating tool. Some tenants know how to put this together. Some supply too much info and some not enough. If the owner is working with an agent the agent usually has a list of documents the owner request.
If after viewing the apartment you decide you want to be considered for it. Ask the agent for that list and supply as much of the requested information as possible. It is also a good idea to fill out a rental application at this time.
Work with the owner
Be willing to work with the owner. In most cases, the owner will probably look to keep the stated rental amount. But the owner may be willing to lower the rent if the first year goes without a hitch. The “trial period” most owners set in New York is one-year.
Note: Some will use a month-to-month method but most use the one-year lease method.
Does this work?
By now you’re asking if any of this work? The answer is yes…sometimes. The deciding factor is usually the financial condition of the owner.
Developers
In the case of a developer that needs to fill units they sometimes work rents out on a case-by-case basis. Make sure to read your lease carefully. It usually contains language allowing the developer to raise the rent at certain intervals.
Negotiate for the longest time frame without large jumps in the rental amount. Oh, and they usually ask that you keep all negotiations to yourself. You should do that.
Private Homeowners
As for private homeowners, they also are tied to their financial situation. Homeowners, however, don’t have much flexibility when it comes to adjusting rents. Most set their rents to an amount that provides a profit without hurting the tenant. These owners usually keep the stated rent. But may lower or keep the rent the same when the lease expires.
Amenities over rent reduction
I have an owner so happy with her tenants that she made unneeded improvements to the apartment. She made these improvements without increasing cost to the tenant. This is because the owner deemed them to be great tenants and wants to keep them.
In this instance increased amenities without increased rent is immeasurable.
Why it was all worth it
Suppose the Rent Guidelines Board okays rental increases. Your owner may choose not to institute those increases. This is because you are a desired tenant and your owner wants to keep you.
You’re overjoyed. You not only pay a lower rent than others. But you have more amenities now than when you rented the apartment. All courtesy of the owner. Way to negotiate.
Note: Owners not bound by rent guidelines sometimes follow the rent increases approved by the Rent Guideline Board. This happens because private homeowners use the guidelines to set their rents.
What I propose is not easy. Most owners will not do it but it doesn’t hurt to ask. It’s best to ask after you have viewed the apartment not when you walk in the door.
In my article: The other side of the affordable housing problem we see why a change in the rental mindset is important.
You have just read: What is the rental mindset and how to overcome it
Next: East New York Neighborhood Plan Section 3 Made Better
Disclaimer: I am not a lawyer and nothing stated here is legal advice. This article applies to the five boroughs of New York. All information deemed accurate but not guaranteed. Always check the real estate laws in your part of the country.
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