How much discount if one were to pay rent upfront for a year?

Any such calculation depends on the one year riskless interest rate. At this point, because interest rates are so low, you won't "deserve" much of a discount. The 1- year UST note is currently at about 0.6%. A one year CD would get you about 2%-2.5%. So really you should get AT MOST 2.5% off of your 12 month's rent, and zero off of your first. If you really cared you would do the net present value of each of the twelve, but for simplicity's sake if I were the landlord I would not give you mroe than 1-2% off.

HOWEVER if s/he is in a cashflow dire strait, start off by suggestion 5% off and see what happens.

IMO.

you are completely wrong man. you are dealing with the credit risk of the counterparty. you are lending money to your landlord. it is an unsecured loan. discount the cashflows back at a 15%-20% interest rate. what happens if your landlord sells the apartment and you get the boot, what happens if your landlord doesn't pay her mortgage and the bank forecloses on the unit, what happens if your landlord is a fraud. there are risks involved and the discount must properly represent the risk. scoots, i think jason10006 is the landlord asking you to pay the years rent upfront. the level people will go to to deceive always amazes me!

are you talking about mgmt company like glenwood or regular schmuck land lords? I have asked this question before to some LL and they refused to give any discount. Mgmt companies don't even bother with cash upfront since they mention something about they have to pay more taxes, which doesn't make sense to me.

jason, you fail to account for the surety of payments. In this job and economic enviornment, a premium is definitely called for with regard to guaranteed payments, leaving out the risk of a bum tenant (whether or not its his direct fault)or even an attempt of renegotiation midway through the lease as some people are attemtping now with falling rents. And rents are expected to continue to drop.

trevorF- Yeah but from the landlord's perspective, why on earth would I TAKE a 15-20% discount on the rent just because the cash is up front? Jason is taking the perspective of a landlord who isn't worried about renting the unit out, which is perfectly fine to take. You're taking the perspective of a propsective tenant with $$ up front - both of you have your points. Accusing him of trying to deceive is a jerk thing to do.

Beseder - that is exactly what I was thinking ... if I was a landlord, I would be thrilled as the renter has now taken all of my risk off the table.

It appears (via this brief albeit limited thread) that there is no clear industry standrad for such a transaction.

I was in fact speaking from a LL POV. If the tenant gives me a deposit and has good credit, i would not be worried enough to give a big discount for cash up front. If they had poorer credit, I would ask for a bigger deposit.

Don't do it! You will lose any leverage you may have with the landlord (to deal with rodents, fix appliances, etc.), and who knows what will happen in 6 months?

Landlord here. I do not want $$$ up front. I want a tenant who can and will pay their rent on the 1st (ish) of the month, like everyone else.

What do you think will happen at the end of the year they prepaid?

Even tenants who are slightly below my normal standards, who I accept but take an additional month security from are always the ones who I regret ever taking...

It's always better to just have a normal tenant

0%. It may get LL to select you over another tenant, but frankly paying all up front is kinda weird and makes me nervous that something is up with the tenant--like a credit check will show issues or something he's sure I'll ding him for if I find out. There is no good reason a tenant will want to pay all up front that I've ever heard. People with issues generally offer to do this.

Yes MAV, but the point being these times are different, good tennats on the first day have the capability of turning into problem tenants through external factors.

"I want a tenant who can and will pay their rent on the 1st (ish) of the month, like everyone else."

Like saying if you're a rental car company and you rent your car out to people and say "I want a driver that will never get into an accident, ever!" Great idea, but you still protect yourself with insurance, right? And 1 month security is not enough "insurance" because it can take multiple months to really evict someone.

It's a simple idea of judging the environment and asking yourself if a 4-5% discount in a 10%+ unemployment environment (we're headed there) is worth it?

Personally, from a renters perspective, I wouldnt do it for the reasons OTNYC mentioned however. Spot on.

That is another good point. I have in fact had to legally withhold rent twice for lack of heat in my life, and you could not do that if you paid up front. Conversely, if you were a nuisance tenant the LL could not kick you out as easily.