Save on Housing Costs: Renegotiate Your Rent With Landlord

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If you are are a renter in this market, you may be able to lower your monthly housing costs with a little research and courage. Mary Pilon of the WSJ Wallet Blog recently showed how she reduced her rent by 11% by writing a convincing letter to her building manager’s office. She even shares a form letter that people can use themselves. I reverse-engineered some of it to see what types of ammunition might be useful when negotiating with your landlord:

Provide local statistics. A quick Google News Search with the keyword of your city and “average rent” or “rental vacancy rate” should bring up some useful stats. For example, according to Forbes, Atlanta is the nations 3rd most empty city, with rental vacancy rate of 16.1%.

Provide concrete, real examples. Use rent-comparison tools like Rentometer or Zilpy to find out how your rent compares with local properties. (Zilpy also provides rental trends by zip code, as shown below.) Try to find places that are very similar or better than yours, but which are renting for less than you pay now. You could even provide the exact Craigslist page.

Of course, the best comparison is with another person in your complex. Ask what your neighbors what they are paying. That’s how Pilon found out her neighbors were paying $300 a month less than her. If you’re not that close to them, perhaps start up a conversation with “Hey, how’s it going. Isn’t it a bummer that our rents are going up?”. You might get a “Yours too?” or a “Really, mine’s still $XXX…” I don’t see people being overly uptight about sharing rents.

Show why you are attractive renters. Some landlords try to squeeze out every last penny of rent, and deal with the resulting turnover, but 99% of the casual landlords I know would gladly give a discount to low-maintenance tenants. I know some who literally haven’t raise rent in a decade because the renter pays rent like clockwork, takes care of the house, and never bugs them unless it’s really important. You’ll want to show why you should get a discount too.

Remind them that you have a solid rent payment history. Perhaps you have excellent credit scores, or maybe it has greatly improved since you first moved in. Point out any minor repairs or maintenance that you have done on the house, or offer to do some in exchange for a rent reduction. Provide reasons why you want to become a long-term renter, or even agree to extend your lease.

These tactics may not work in all areas of the country, but in lots of places it should at least be worth a shot. The worst thing they can say is no.

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  1. You should also consider the potential harm you could be doing to your landlord. Often times in this market, you could already be renting the property at well under what your landlord pays for the mortgage, asking them to lower the rent can put them in worse of a situation with an even more negative cash flow than before. Obviously this only holds true if you’re renting a house, or other private property and not an apartment complex… but please before you follow this blog’s advice, consider the human factor.

  2. Nice article Jon – I find the advice sound and practicle. My follow-up is along the lines of that offered by George. There is the flip side to this coin.

    Just as home owners should not ‘walk away’ just because the mortgage balance is higher than the homes worth, a renter shouldn’t simply renegotiate their rent just because the market has soured,

    Simply put – if you can pay your bills then pay your bills.

    That said, if you’re in a bind then all options are on the table.

    I don’t know if you meant this as a 2 part series, but I’d love you hear your thoughts from the landlord perspective. If you’re the ruling ‘slum lord’ should you proactively assist your tennents (assuming you can afford it) or how should you prepare and then react if this question crosses your path.

    Interesting thoughts and discussion… certainly a coin with 2 sides.


  3. I am going through this right now with my apartment. The rents have lowered by over $200 and I just renewed my lease right before they dropped the rates. It’s ridiculous! Now they’re telling me that if I want to break my lease I have to pay back my concessions, a reletting fee and give 60 days notice – all of these things are 100% fine with me except the one little detail they told me at the end of that: After I pay all of these fees, I am still going to be held liable for the remainder of the lease? WTF?! I thought all of those fees were for BREAKING the lease which would mean the contract would be over after I pay them, right? This makes no sense, why would I keep on paying rent AND pay break fees? I’d just move out and pay the remainder of the rent.

    Anyone else have these problems or heard of this? Am I crazy or is this just ridiculous?

    I am being pursued by 3 condos right now to buy and they told me they’d buy out my lease…. but could lose job at any time in this economy.

  4. Christine says

    I surf craigslist regularly and feel what I pay for rent is already more than fair. When it was time to renew my lease earlier this year, my landlord was kind enough to “suspend the annual rent increase” and I thanked them by baking cookies for the office. Two months later I was looking for ways to reduce my housing costs that didn’t involve adjusting the rent. I suggested installing a “tankless” water heater, as it would be a tax deductible capital improvement and you can receive up to $300 in tax credits. This was shot down because they don’t like the tankless water heaters (I’ve had one and I love them). Then I asked if part of my substantial deposit could be returned, as I had established myself as a good tenant. That was shot down due to “fair-housing laws, if we gave it to you we would have to give it to everyone”. My last attempt was a success though, I asked if I could take on a roommate and if they would waive the $50 extra person fee. This one they took and it was probably the best deal as I will now be getting an extra $600 a month from “Erica”! I’m not exactly excited about having a roommate, but it seems like a smart thing to do for now. ps… if none of that worked I was going to ask if I could have a pet; at least I could have been poor in good company!

  5. Rent can go up as well as go down, but expenses does not. If your in rent control area, your restricted to a percentage each year. In order to survive in this business, you have to increase rent or expenses will kill you. I have never seen a decrease in property tax, water, garbage or pg&e bill. Landlord who fail to raise rent cause they want to keep a good tenant is just lazy.

  6. My lease is up this month. Met with our landlord last week. Currently paying $2400, asked for $2100. He came back with $2250. We’re still deciding if we want to take it or move out.

  7. Christine, the rule in California, you are allowed 2 people per room plus 1 for a 1 bedroom and for 2 bedroom, would be 4 people plus 1 for a total of 5 people, for a studio, you are allowed a total of 3 people. Landlord cannot charge you extra, you do have to inform the landlord and that person have to go through the same screening process, since the lease for you only, since you want to add an extra person, a new lease has to be formed. I made this mistake without even knowing it until a Fair Housing speaker told me I could not charge extra. It sounds like you live in a large apartment complex with employees who are educated in Fair Housing Law, a lot of small time landlords are not, which gets them in trouble. You can’t go by whats right or wrong or your what your instinct tells you, you have to go by what the law says.

  8. Everyday Finance says

    great stuff, I stumbled the article. I like it…but I’m also considering a real estate rental purchase. So, I hope it doesn’t make renters TOO creative. but, i can’t argue against free market forces, as that’s what I live by. If the going rate is lower or if the landlord is willing to lower the rate to retain you, then go for it!

  9. Hmm, only 13% of apartments are cheaper than mine according to that site. I guess I can’t expect a rent decrease (actually they are raising rates by $50 for next year, but it’s so cheap I doubt I can do better elsewhere).

  10. George – you looking for a bailout i take it?

  11. I’m a landlord. If I had a renter who is a GOOD renter and their lease is due then I’d be willing to adjust their rent if I”m above market.

    I wouldn’t be concerned about harming the landlord. Renting property is a business after all and they have to be competitive. If their mortgage is high then thats their problem, not yours. Of course the landloard has no reason to drop rents if they don’t want to or if they are already competitive.

    The best time to try to negotiate rent is if you are already month to month or if your lease is about due. And if other renters in the same comlex have different rates or if you see the complex offering discounts to new renters then that gives you obvious leverage.

    I’d take sites like Rentometer or Zilpy with a big grain of salt. Those are just broad average figures and every rental is different. For our rental it says median rents are $925-950 and our house easily rents for $995. Those sites are not comparing apples to apples. You don’t know if thats a good neighborhood, if the house is clean or if its by the railroad tracks or if the landlord is negligent in their duties, etc.

    Do NOT assume that since housing prices are going down that rental rates will drop in the same way. Rent rates do not usually move the same rate that housing prices do. In my area real estate dropped 10% in a year and rents dropped 3%. So don’t assume that if housing costs dropped 25% in your city that rents should to. Landlords have fixed costs they cant avoid and and other things influencing what rent they charge.

  12. If you’re rent doesn’t include cable, internet, or utilities, bring that into the discussion as well. Point out other landlords that offer their tenants these types of things free of charge. In my case, I wasn’t able to reduce my rent – but within a few months my landlord installed high speed internet for everyone without raising the rent a dime.

  13. Christine says

    Thanks for the response Eric. I actually live in a 2 bedroom 1 bath house in a very small, yet picturesque town. The property is managed by a knowledgeable real estate/property management company. Good to know about the occupancy limits for general purposes though. I manage a property in another town for my family and it is always helpful to understand the law.

    If our tenant were to ask for a decrease in rent I would ask what could he offer in return as his rent is definitely fair market value. Perhaps I would lower it if he took responsibility for the yard maintenance (and I could therefor cancel the gardner) for instance, but then again we have the gardner in the first place because tenants are notoriously bad gardeners! I guess what I want to see is that the tenant has put time, thought, and hard facts into their appeal for a reduction.

  14. Very useful article. Thanks a lot.

  15. Great article! Another tip is, if possible, try and get an apartment that will include heat and utilities in the rent, otherwise you’ll be paying a lot more money a month. Also, in this economy, I feel a month-to-month lease is better. Then you’re not locked into something that you can’t afford. That’s just my two cents, though.

  16. To ghost –

    Check the applicable renters laws in your state. I can’t imagine any state requiring more than 30 days notice. Also, legally leases protect renters, not landlords. The only monies you are required to pay to a landlord, if you terminate a lease early, is for lost rent for not giving enough notice (as required by State law) for the landlord to find a new renter, and the costs to clean the apartment and repair any damage you did. That’s it. Early termination fees and paying the remainder of the lease is bogus.

  17. Furthermore, I am surprised that negotiating a rent decrease would be an option for most people. There are more renters now than ever before because of all the people who have been kicked out of their homes through foreclosures.

  18. I would think you would also have to factor in the cost of MOVING.

  19. I wish more landlords would think this way – don’t they see the value of long-term, low maintenance tenants.
    Sadly, in Vancouver it is tough to find decent accommodation.
    Some companies don’t care and jack up the rents and don’t do the proper maintenance.

  20. According to Zilpy, my rent is right about where it should be. But, for those who are being overcharged, it seems like now is the time to take control of the situation. Even if you’re only able the lower your rent by $25 or $50 per month, those savings can quickly add up. A true example of The Power of Small at work, and a great way to put money toward bigger life goals, like homeownership.

  21. You don’t get what you deserve in life, you get what you negotiate…

  22. To Kevin –

    Thanks for the tips. I will have to google the renter’s laws. I appreciate it!

  23. One shoe doesn’t fit all feet. I love the renter who made the landlord and offer and he came down on the rent just to have them now considering moving. That’s tells it all.

    I provide quarterly pest spray for free and have to check the new HVAC filters because no tenant changes them, even in a house.

    I pay yard service twice a month, even in house rentals because I can’t remember a tenant cutting the lawn or watering anything. It’s just the current mindset.

    Property taxes and insurance go up every 5 years in our town (just got them) and a $750 rental house went up 18%. Already paying 6% tax base.

    Bottom line, if you are maintaining your property, beating pests back, keeping the lawn, cutting rotten trees down, etc. etc. you are breaking even and lets not forget there ain’t no appreciation these days so………..I ask you …….what’s to negotiate? The next step investors will make is to exit the market and sell these losers to people who are getting $8000 from us the American people to buy a house.

    Keep it up.

  24. I am a landlord. From my perspective, I don’t see any harm in a tenant attempting to renegotiate the rent amount. The worst the landlord can say is, “no.”

    Personally, I would not really be inclined to lower anyone’s rent unless the tenant was way above market. If the tenant is only a little above-market, I’d offer to put in a ceiling fan in or some other upgrade instead (why do tenants love ceiling fans so much? Never ceases to amaze me how I can keep a tenant with a $35 ceiling fan.)

    If the tenant is at-market, then no dice. I know you can’t do better elsewhere, plus you have moving expenses, plus I can rerent your unit at the same price or better. Why should I lower your rent?

    Oh, and spare me the “average rents have declined by xx%” and the “zippy the pinhead says my rent should be reduced by $xx.xx” silliness. I am renting identical units to yours day in and day out, so I know what market rent is to the penny. No website can tell you what market rent is for a particular unit in a particular building.

  25. Kevin said: “Also, legally leases protect renters, not landlords.”

    No. A lease is a legal contract between 2 parties. Any contract has 2 sides and doesn’t only protect one party.

    Leases are geared mostly towards protecting the landlord. Leases are written and required by the landlord. Since the landlord is the one creating and requiring the lease, thats an obvious indication its written with the interest of the landlord in mind.

  26. Great article and advice. Thanks for sharing these tips!

  27. HELP! I am going through a crazy situation now. My lease is coming up at the end of April. I got a letter last week from our landlord stating that I can renew my lease at the same rate I am paying ($1,130 for one bedroom -no utilities included-) for another year. They claim the rate new renters in our complex are paying is $1,180/mo. My husband and I are thinking of buying a little house or a condo in the next few months. Although we have not started looking, we do not want to commit to another year because we hope we can find a good house in less than that time. The biggest problem we have is that in their letter, they are telling us we can stay on a month to month, but we have to pay a $300 month to month fee. I checked my lease and it says that if not renewed, the lease will continue on a mtm basis, but it says nothing about a fee related to that. Don’t you guys think that is crazy?! Has anybody gone through that? Do you think I could challenge it? Any suggestions would be really appreciated. Thanks!!!

  28. The best way to negotiate your rent renewal is to use the only real leverage you have – the threat of leaving. I just did it at my complex and got an 8% reduction (saves me about $140/month). If you go in to the leasing manager with the list of properties you have already scoped out, the rents they are charging, and how much lower that is than your current rent you have already won 50% of the battle. The remaining 50% is convincing them you are ready to move if you don’t get a lower rent. Make it all about the money (e.g., well at that price it is much better for me to move, even accounting for the cost of hiring movers…) and make it clear that you are ready to move (e.g., I need to know what you can do today, I have three scheduled appointments to see units in XX area…) Then use traditional negotiating tactics, reject their first offer as though it were absurd.

    The thing is, you have to actually be willing to move. If you aren’t willing to follow through on the threat, then they have already won the negotiation.

  29. I and wife have lived in this apt 7 years now. Pay on time
    and good tenants (both over 65). Overtime, rent went from
    700.00 per month to 917.00 month. The large corp than owns these apartments currently have a high vacancy rate.
    Managed to get rent down to 867.00 month from 917.00 month. I just found out however they are giving new people
    rent of only 775.00 per month, same apartment size etc.
    No fee for credit check (we did pay however) and no deposit
    based on credit report. Can landlords give different terms
    for new renters as opposed to older tenants based on time
    in units?

  30. I used to negotiate a cheaper rent with my landlord. It has a tool that can show the average rent in a specific area. I showed him that I was paying considerably more than others in my neighborhood and he agreed to lower it!

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