Question: For renters, is the “one month free” enticement worth it?
— Counting pennies in Kips Bay
Dear Counting:
In Manhattan, where the median rent was $3,232 in April, the rental market has cooled considerably this year, and many landlords are offering incentives. It’s a similar story in Brooklyn, where the median rent was $2,799 in April. Fourteen percent of StreetEasy apartment listings featured landlord concessions, way up from 8 percent in 2016. Fifty-eight percent of the listings in Downtown Brooklyn and 49 percent in the Financial District offered concessions.
While most enticements are made in the form of a month’s free rent, some landlords have gotten creative, offering gift cards, Netflix subscriptions, even HD TVs. Clearly it’s a renter’s market out there.
So here are some ways to play it:
Good: If an apartment rents for $3,000 a month, and you sign a two-year lease with a 3 percent bump in the second year, you will pay $73,080 over the two years. If you get one month free, your total will be $70,080, an effective monthly rate of $2,920. That’s an $80 a month or 2.6 percent discount, but you’d still be out $3,000 in months 2-24. And do you really expect you’ll save that initial $3,000?
Better: If you show the landlord the numbers, you could end up paying the same total discounted amount over the term of the two-year lease while saving $123 a month — enough to cover your Con-Ed bill, winter and summer. Here’s the arithmetic: $2,876.85 a month with a 3 percent bump comes to $70,080 over two years, the same amount you’d pay with the $3,000 free month.
Best: If you are renewing a lease, you could well be in the best position of all. If a landlord is willing to give away $3,000 for a new tenant, what’s an existing tenant worth? A move out would mean two to four months of no rent at all, plus the cost of painting and upgrading. Why shouldn’t you get that $123 a month discount? And while you’re at it: How about upgraded kitchen appliances? New carpet? Or this LG 4K Smart TV?
David Crook is a veteran journalist and author of The Complete Wall Street Journal Real-Estate Investing and Homeowner’s Guidebooks. Do you have a question about anything real estate-related in NYC? Write him at askus@streeteasy.com. For verification purposes, please include your name and a phone number; neither will be published. Note: Nothing in this column should be considered professional legal advice. If you have a legal issue, consult an attorney.
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