|
Page 4 of 12
Mr. Thrifty Principle #3: Be willing to negotiate and have your information ready
When it comes time to discuss the rent, negotiate. You need to determine the “true rent value” of the unit so you can decide what to offer. “What’s the true rent value?” you ask? The true value of the apartment is the average price per square foot of comparable rentals multiplied by the square footage of the unit you’re considering.
The best way to discover the true rent value is to determine the average price per square foot of comparable properties or “comps.” And the best way to do that is to collect information about similar properties. Look for listings within 0-3 miles of the unit you’re considering that offer the same number of beds and baths and are of the same type (i.e. condos can’t be compared to duplexes). Call on every similar unit you can find. Ask for the price, lease term, and square footage.
After you get information about 5-10 good comps, you can calculate the average rental price per square foot. With this information, you can calculate the true rent value of the apartment that you want. Don’t hesitate to throw out “outliers” (i.e. the ones that artificially inflate the price).
If the comp analysis shows that the apartment you want is underpriced, you can try another way to show it’s overpriced. For example, instead of calculating the price per square foot, calculate an average price for units of the same number of beds and baths. If the second method shows a lower average price, negotiate using this. Mr. Thrifty recommends that you use the rent infromation that helps you negotiate best!
You are now ready to negotiate your rent! Take the true rent value, then give yourself a discount for being such a good tenant. Realistically, the landlord knows it will cost him $500-$1000 in lost rent, time, and marketing expenses to fill an empty unit, so having a highly stable tenant (like you) is probably worth around $750 to him (more with houses) over the term of the lease.
Let’s say the landlord is asking $1,000 per month. You’ve determined by looking at the comps that the true rent value is $980 per month. Then, factoring in your “good tenant discount” of $62.50 per month ($750/12), you should offer $915/month.
Once you have a number in mind, the conversation should go something like this, “I like this place a lot, and I’ve looked at a number of rentals in this area. It seems like this unit is priced sort of high compared to the comps. I’m considering another property, but I think this one would work if the price were right. Would you be willing to consider an offer?”
At this point most landlords will think, “Hmmm… maybe I did overprice it; maybe the market has weakened from when I did my research; these people seem to have their act together, maybe I should just see what they’ll offer; I don’t want them to go with the other property, they seem good.”
Be prepared for him to say, “no, sorry this is the price.” If this happens, then you’ve probably encountered a landlord who either has a very hot property and knows it, or has just put his unit on the market and has high expectations. If you still want the unit and can justify the price to yourself, call him back and take the unit. But if he agrees to consider an offer, tell him what you have in mind: “I’m thinking $915/month and we’d like to sign a 6 or 12-month lease.”
If the landlord refuses your offer on the spot, say “Ok, thanks for showing me the place. Here’s my contact info – give me a call if you change your mind.” Then write your offer and cell number on the back of your letter of reference, and leave it with him. Then leave.
This does two things. First, it focuses the landlord’s attention on your reference letter and more importantly, your qualities as a renter (instead of the price you’ve offered). 2) It subtly reminds the landlord that you, the consumer, have many choices and his unit doesn’t exist in a vacuum—he’s competing against all those other properties. As a stable tenant with a good record, you can name your price. Don't be afraid to negotiate your rent!
|
|
|
|
Housing 
