How to navigate the “free rent” scheme
“Renters should think carefully about the potential implications of such an arrangement rather than getting too enthralled in the immediate deal,” Mena says. “What looks like a great deal now may not be the case when you write the first rent check for the gross amount or go to renew your lease.”
“You need to be aware of the concessions you're receiving and be ready to renegotiate them when it comes time to renew,” says James McGrath, Licensed Real Estate Salesperson and co-founder of the NYC real estate brokerage, Yoreevo. “It's often easier for landlords to reduce concessions than raise the rent, which is why they use this approach. If your landlord offers to renew with one month free that's effectively at 10% rent increase!” he says. “A regular 10% rent increase would shock most tenants, but when it's pitched as still getting one month free, it's much more tolerable and likely to be accepted.”
Just like charm pricing, the phenomenon when an item is priced at X.99 instead of the number that costs just one cent more, this illusion of a deal can make you feel like you’re paying less in rent, when in fact, you are not. McGrath recommends never thinking of the free month as a “gift” but rather calculating your annual expenses based on the gross rent, or net effective rent, multiplied by twelve.
Unusual rental rates are often your first red flags. An apartment listed at $2,448 or $2,307 has clearly been calculated down from a more sensical number. Even if the red flag is waving you into the glossy lobby and through the studio walk-in closet, remember that the supposed concession could be setting you up for financial woes down the road. “If you do decide to see apartments advertised with the NER, make sure to ask which month(s) are being offered free so you can plan your finances accordingly,” Mena says. “And while not as common, ask if you can pay the net rent every month, though this isn’t something most landlords will accommodate.”