Written by Romana King, an award-winning expert in personal finance and real estate, and the Director of Content at Zolo.
Tenants looking to negotiate the best possible deal on a new rental need to be prepared before getting into talks with a landlord, and that includes knowing all the negotiation tips and tricks.
Overall, the most important factor influencing each of the below rental negotiation tips is considering what the landlord wants and needs.
“You want to think like the landlord,” explains Brian Davis, landlord and founder at SparkRental. “Sure, landlords want to collect the highest possible rents for their units. But that’s not the only thing they want.”
“Landlords want reliability; they want the rent to come in on time without constant hassles or needing to chase down wayward tenants. Landlords also want a clean, conscientious tenant who will take excellent care of their rental unit — which happen to be an expensive investment for the landlord.”
In most cases, landlords also prioritize long-term tenants who will stick around for many years.
“Rental suite turnovers are where most of the work and expenses lie for rental properties,” explains Davis.
To help, here are seven negotiation tips and strategies that can help you get the best possible terms on the lease in your next rental.
Do your due diligence
“If you’re trying to negotiate the most favourable lease, the first and most important step is to do your due diligence,” explains Kim Chan, a real estate investor and founder of DocPro.
“Whether you go through the agreement with your landlord or contact a specialist to negotiate for you, make sure you understand all the claims and issues in the contract, and that you and your landlord are on the same page. If there are any vague claims in the contract or if one issue you’re concerned about is not covered, ask the landlord for clarifications. Also, make sure to record everything in writing.”
Always go into any meeting — whether in-person or through video chats — with the intention of establishing a friendly relationship with the potential landlord.
You want to show that you are a kind, courteous and respectful person who is completely capable of maintaining the property’s condition. Work to create a convivial atmosphere, and your chances of renting the unit at a lower price go up dramatically.
Always offer less than market price
“Bargaining is not new in the real estate industry,” explains Marina Vaamonde, founder of PropertyCashin, an online platform for off-market commercial real estate investments.
She suggests reaching out with a counteroffer lower than the listed rent. Although lower rent isn’t always appealing to all landlords, the suggestion can be sweetened if you use a negotiation strategy such as offering to sign a longer lease.
Ask to live rent-free (for a month or two)
“As a new renter, you should definitely be asking for a month or two of free rent,” explains Rany Burstein, CEO & Founder of rental app Diggz.co.
According to Burstein, many landlords are offering rent-free options as a way to entice new, secure tenants. To get the best deal, research the neighbourhood and building.
“In order to know how aggressive your request should be, see how long the apartment has been on the market, or how many other apartments are vacant in the same building (if applicable) or community,” Burstein said.
The longer a unit has been vacant or the more rental units available in the area, the stronger your position when it comes to bargaining for what you want.
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Live rent-free but amortize the savings over the year
“The general perception of landlords is that they are affluent property owners, but the reality is that many rely on the rent collected each month just to pay the bills,” explains Ali.
Depending on your landlords’ flexibility, a month or two of no rent may not be feasible. Another option is to ask for free rent but offer to amortize this free-rent period over the term of the lease.
For example, rather than paying the full rental rate of $2,500 on a two-bedroom apartment for an entire year, ask for a month rent-free but offer to pay $2,292 each month (reduced by the month of rent-free). You can negotiate any term or amortization that fits your budget and your new landlord’s comfort level.
The key to successful negotiations is to offer the landlord something to sweeten the deal.
“When you are negotiating with a landlord and trying to convince this person to give up something they want — rental income — you need to offer them an incentive,” Davis said.
One option is to commit to paying your rent early in exchange for a discount.
“The last time I rented property as a tenant, I approached the landlord with a proposal,” he said. “I told him I wanted to negotiate lower rent and, in exchange, I’d pay the rent early, every single month, for as long as I lived in the property.”
In order to solidify this commitment, Davis agreed to add a clause into the lease. The clause stated that if he failed to pay rent before the first of the month, the rent would automatically hike back up to the original monthly lease price.
Most landlords who prioritize secure, stable tenants will like the pay-up clause strategy.
Ask to sign a longer lease agreement
If you know you won’t be moving for a few years, offer to sign a longer lease term. Signing a two-year or three-year lease (versus the standard one-year lease) offers the landlord some security and savings. This security should come with a discount on rent paid during the lease term.
“A landlord who appreciates you as a tenant and sees you pay on time and don’t ask for too much will want you to stay longer and will likely sign you into a better rate deal if you ask for a longer lease term,” explains Stacy Caprio, financial blogger at Fiscal Nerd.