Can you negotiate rent? Unless it’s your first time here, (in which case… ¡Hola!) you probably know about my love for real estate investing. I was so into it, I bought my first rental house while I was still renting.
I simultaneously was hoping rental rates would go up AND down! That’s obviously silly but I discovered a way that made landlord me AND tenant me very happy.
After years of being on both sides of the rental table, I’ve learned a few things that I wish I’d known earlier. One of my best learning experiences of all time is still the answer to the question: Can you negotiate rent?
The answer is yes you can, but not only that, there’s a way to do it where both you and your landlord get what you want.
So let me show you why it’s worth doing, why your landlord will be okay with it, (how to get what you want if you’re the landlord,) and most importantly, how to negotiate your rent. In the end, everyone wins!
How can you say no to that? You can’t so let’s find out how to make it happen.
Table of contents – Can you negotiate rent?
- Why it’s a win if you’re the landlord and how to make it work for you
- Why it’s a win if you’re the tenant
- Four steps to prepare for the negotiation
- Four tips for your pitch successful
- A secret negotiation pitch technique with a real example
I love negotiating rent! My story 🙂
Truth be told, I actually like it when a tenant wants to negotiate.
It puts a lot of things on the table that I can’t put in an ad or would be too awkward to try to word.
My very serious ad would look like this:
“$1100/mo + utilities…
UNLESS you have a pickup truck and will carry things around for me…
OR if you can teach my kids Mandarin…
OR you will do my taxes.”
Applicants would be 100% weirdos.
However, anything is on the table once you are negotiating. Be it repairs, utilities, maintenance, or something even more creative. Then once a tenant has a weird deal with me, they will NEVER get it matched at another rental, locking them in forever.
YAY! A forever tenant = Huge win!
The other amazing bit is I get to make judgment calls I wouldn’t normally make.
So if I don’t like you I don’t have to negotiate:
“Oh, you seem sketchy and you want to skip the security deposit?”
“Oh, you’re are a nun on a charitable mission and can’t wire the money?”
Sounds legit and your credit score is amazing!
But more than anything I like to have a tenant who feels in control and takes ownership of the house. There are already enough things to deal with and this opens up the possibility of a good long term relationship and shows me that they truly care about living in my place.
A few years back, I had a tenant give me a sad story about not being able to handle a rent increase. I forget why, and to be honest, I didn’t care why in the first place. I was already ok with it.
He was a good long term tenant, never late on rent and he had skills I could use.
Now, not only is he still my tenant six years later, he’s my free handyman for a few houses. His rent is abnormally low so he’ll never move and my repair fees are abnormally low at a few places. Now that’s a win-win!
Can you negotiate rent as a landlord? Yes!
I want to start with why landlords should love this because as a tenant if you understand the mind of a landlord your argument should be really easy.
Fellow landlords, let’s face it. You don’t want your tenant trying to pull on your heartstrings, asking if you could please please please reconsider the rent increase.
It will either break your heart to force the rent anyways, or you will be forced to show that you have no heart and people get to know you for the soulless monster that you are.
At the same time, if you have a good tenant, you’ll do backflips for them. So, the key is to remember that you can get something good out of rent negotiations too while just keeping your best tenants. There are 3 points to keep in mind when thinking about this negotiation.
1 – You are in charge.
These requests will take you unaware, but just remember that it’s your house and you get the final say. That said, some things can be better than money.
Know what it is you would like more than a rent increase and push that agenda. Most people will go pretty far to get the price they want, so make sure you know what you would happily replace some extra rent with.
A few ideas:
- Signing a two-year lease is pretty standard as a cost-reduction, but I’m not a fan because it doesn’t give any truely long term benefits
- Prepayments/increased late fees or direct bank/payroll deductions are good if don’t like chasing people.
- Passing on the utility bills (if you don’t already) takes one more thing off your plate and has your tenant take greater ownership over how much they pay (possibly by taking cold showers?)
- Something more creative: like my on-staff handyman or a tutor. The more creative the better the value.
2 – Know your breaking point.
Some things can be more important than money, but money is money and you don’t want to lose it. Make sure you are really getting equivalent or more value from this custom lease you’ll make.
While you are at it. Work out the cost of vacancy for a turnover (I use 3-months). Then add on the small repairs like painting, finders fees for new tenants and decide if you want to deal with the vacancy to really push a rent increase.
Once you’ve gone through this your tenant should have below-market rent, and they won’t leave even if you raise the rent the following year. They are just $100/month or so behind where you wanted them. Just because you did them a favor once doesn’t mean you are stuck.
The big win here is that once you have below-market rent you should never have to do this again. I’m all about saving hassles.
3 – Think win-win.
You’re doing your good-tenant a huge favor here, not trying to win this agreement. So, develop a long term bond and get creative! This lease had tenants agreeing to spittoon cleaning!
You want both sides to come out happy. If you don’t have any good ideas ask your tenant what they think might be a fair exchange. The win-win possibilities are truly endless.
Can you negotiate rent as a tenant? Heck YES!
So I probably don’t need to work too hard to convince you that as a tenant paying less in rent is worth your while. For a lot of people, rent amounts to half of their income so reducing what you pay is an obvious tip for saving money.
Sure, you could move or get a roommate but that takes time and we hate wasting time here on the Fire Escape. So what’s easier than moving? Not moving AND paying less!
Need more motivation?
If you need a little extra oomph. Think about what would happen if you invest that money. You will end up with a HUGE wad of cash!
If you can negotiate $100 less per month in rent and invest it monthly, that turns into $17,270 after ten years! (If you do a simple investment it at an easy 7%)
What can you do with an extra seventeen grand? Maybe pay off debt or save for a house if that’s your thing. Or maybe save for a Eurotrip. That’s pretty motivating! Whatever financial goals motivate you, think about it and let’s get started!
How to negotiate rent
First of all, this works best if you already have a relationship with the landlord and there’s a scheduled rent increase (which typically happens every year.)
Can you negotiate rent if you are just apartment hunting?
You can do the same things we’ll talk about but your relationship is really just your credit score and your first conversation, so make them count!
That said, you should try to negotiate your rent EVERY TIME you can. Just for practice.
Four steps to prepare:
1 – Don’t be scared. Even though negotiating can be scary, you are still in charge of where you live and if you do this right, everyone wins.
Besides, what’s the worst-case scenario? Not getting what you want, and having to pay market value for your place. That’s what would happen if you did nothing!
2 – Be a good tenant. That means don’t make the landlord chase you for payments or worry about the state of their house. The landlord wants to keep you and avoid the hassle of looking for a new tenant… But not if you’re a pain in the butt.
3 – Know your numbers. (Use zillow.com or https://www.rentometer.com/). Look prepared. Know the rental rates in the area, and the planned increase. If you have a good argument for why it’s not worth it, it will go smoothly for you. If you say you already visited a prospect, your argument is even more convincing.
4 – Offer them something that makes this win-win. Maybe just offering to stay is legitimately a good offer from you (if your office moved away) but if you are trying to dodge a lot of rent it will go better if you have a special skill to offer up instead, like being an accountant.
Otherwise, offer what you can: prepay if you are typically late, walk their dog, sign a lease, mow the lawn, fix things, take on utilities (and then keep the house really really cold).
Four tricks to actually do the negotiation:
1 – Do it in person or at least over the phone. It’s too hard to convey the right tone in email or text, and emojis won’t cut it here.
2 – Build on a good relationship. Really, the owner only wants to keep you if you are good so you have to play that up.
3 – Get the timing right. Make your pitch as soon as they ask for a rent increase. It’s natural to do it as soon as they ask. Mainly, if you do it too late, they might get combative by feeling held hostage.
Bonus: you have a leg up in the winter, because no one likes apartment hunting then, and they’ll have a longer vacancy if you move out.
4 – Don’t apologize. You are offering a win-win scenario and you’re not moving out so you are helping them. You’re being the nice guy with this technique. They should thank YOU!
The secret negotiation pitch technique.
If you are in control and to the point everything will go better. Here is a secret negotiating technique I have always found to maximize my success:
Sentence 1: Why this is important to you
Sentence 2: How it affects your landlord and remind them you are awesome
Sentence 3: The ask to reduce the rent with your win-win built in.
Sentence 4: “Can we make this work?” It reminds them it is a team effort.
1- Hi owner, I’ve started to pursue a job as a beard stylist which is what I always wanted to do my whole life.
2- Beard school tuition is enormous so it means I really don’t have the money to handle a rent increase right now but I think I’ve been really good and I would really like to stay.
3 – I’ll have to move out if you increase the rent so instead of a rent increase I can offer quarterly beard trims on Beardo-Campus.
4- Can we make that work?
Rent negotiations – It’s crazy enough to work
If you’re not accustomed to negotiating, your landlord may be the last person you want to start with.
Do it anyway!
- There’s never a downside to asking, besides they need you as much as you need them.
- You are helping them by presenting this win-win scenario
- You are a great tenant. Landlords love great tenants
I actually like these moments, because it shows me that the tenant cares about the home and is willing to do what it takes to stay. To me, that’s priceless.
(And besides, I could use a spittoon cleaner one of these days.)
TL;DR – Can you negotiate rent?
- Negotiating rent can be a win for the landlord – as long as you ask for the right thing
- Negotiating rent is a win for the tenant – as long as you use that money to further your life’s goals
- The key to good negotiation is to prepare, to build on a good relationship, and to offer a win-win
- (And use my three-part negotiation pitch to put it all together.)
So now it’s your turn. What was your takeaway after reading this, whether you’re a landlord or a tenant? And are you
crazy creative enough to make it work?