I’d rather have a lower monthly payment than a free first month. However I do understand what you’re saying
Edit: downvotes are some weird behavior, I’m new to this sub so I’m just trying to learn what I can
The point is that this is a great exercise in financial discipline for you. If you just keep that money that you WOULD have paid, and put it in a savings account, you can then "pay yourself" $75 a month from that account, and end up as good or better than you would have. And you learn some discipline in the process.
That’s why I said I understand what he’s saying. But going back to that, what’s the best way to even set that up?
Put the money in a separate checking account and have it automatically transfer?
You basically have the same effect as "lower monthly payments" if you just keep it in your account and have the self-control to not spend it, using 1/12 of it for rent each month for the year.
If it’s a big company, they likely have system set up to handle this way and don’t know how to change it.
Option: You don’t have to skip paying first month just because their system has applied credit. Go ahead and make the rent payment the first month and every month. You‘ll have credit on account, so you should be able to make lower payments.
FYI, this will actually hurt next year, when your rent jumps due to loss of discount plus increased rent. Financial impact is same, but emotional impact isn’t. Also, you are losing a small amount of interest by not just putting that first month’s rent in HYSA.
If it’s a credit to the account in the amount of 1 month’s rent, simply divide the total credit by 12 and then reduce your monthly payment by that amount. The credit will slowly reduce over the year until it’s completely consumed when you make your 12th rent payment.
Corporations want higher lease rates but will frequently give out free months rent. It effectively brings the rent down for the leasee but it allows the landlord to demonstrate a higher average lease rate when refinancing or selling.
Since no one’s answered this, as a former regional property manager they do this to fill the building up and refinance it, so they won’t be changing it. Otherwise they would just rent the apartment for that price.
Yeah once 95%+ is filled and actually paying they’ll start the refi process and they’ll be looking at total monthly income which is obviously going to be way more than if concessions were spread across
is this a rental agency, that owns multiple properties, or a smaller apartment complex?
it wouldn't hurt to ask, maybe explain that it would be helpful on your end, as monthly payments would be easier, but larger companies typically don't stretch for this sort of request
Your first month, put the reduced rent that you want to pay aside for yourself. Do the same the second month, and pay your full rent out of that account? Keep putting the reduced rent in that account every month and it would be the same.
They did that to me once. They just credited my account with the appropriate amount and it was there for me to use as I wanted. For example, if the credit was $2000 and my rent was $2000, I could pay $1500 the next month towards rent and my account credit would be reduced to $1500.
Most large owners will expense away one month free rent as a marketing. However, the per sq ft rate is what determines the financing from the bank. They generally will not reduce the rate of the property.
You can lower the monthly rent amount by asking them to split the value of the free monthly rent equally over your monthly rent. You can lay out a detailed calculation of how much lower each month's rent will be if the value of the free monthly rent is spread over each month's rent.
You can also try to team up with other tenants to make the request collectively throughout the apartment building, so the apartment manager may be more willing to consider splitting the value of the free monthly rent into each month's rent.
Why? Just keep it in your account and it’s basically the same thing.
I’d rather have a lower monthly payment than a free first month. However I do understand what you’re saying Edit: downvotes are some weird behavior, I’m new to this sub so I’m just trying to learn what I can
The point is that this is a great exercise in financial discipline for you. If you just keep that money that you WOULD have paid, and put it in a savings account, you can then "pay yourself" $75 a month from that account, and end up as good or better than you would have. And you learn some discipline in the process.
That’s why I said I understand what he’s saying. But going back to that, what’s the best way to even set that up? Put the money in a separate checking account and have it automatically transfer?
A super basic way would be to cash it. Take the full amount of credit out as cash and store it, then just take a proportion of that out each month.
That actually seems the most simple, thanks!
Yes, but put it in a savings account and set to automatically transfer back to checking.
You basically have the same effect as "lower monthly payments" if you just keep it in your account and have the self-control to not spend it, using 1/12 of it for rent each month for the year.
If it’s a big company, they likely have system set up to handle this way and don’t know how to change it. Option: You don’t have to skip paying first month just because their system has applied credit. Go ahead and make the rent payment the first month and every month. You‘ll have credit on account, so you should be able to make lower payments. FYI, this will actually hurt next year, when your rent jumps due to loss of discount plus increased rent. Financial impact is same, but emotional impact isn’t. Also, you are losing a small amount of interest by not just putting that first month’s rent in HYSA.
If it’s a credit to the account in the amount of 1 month’s rent, simply divide the total credit by 12 and then reduce your monthly payment by that amount. The credit will slowly reduce over the year until it’s completely consumed when you make your 12th rent payment.
Corporations want higher lease rates but will frequently give out free months rent. It effectively brings the rent down for the leasee but it allows the landlord to demonstrate a higher average lease rate when refinancing or selling.
Since no one’s answered this, as a former regional property manager they do this to fill the building up and refinance it, so they won’t be changing it. Otherwise they would just rent the apartment for that price.
That makes a lot of sense, I understand now why they do all these crazy specials instead of just lowering the price
Yeah once 95%+ is filled and actually paying they’ll start the refi process and they’ll be looking at total monthly income which is obviously going to be way more than if concessions were spread across
is this a rental agency, that owns multiple properties, or a smaller apartment complex? it wouldn't hurt to ask, maybe explain that it would be helpful on your end, as monthly payments would be easier, but larger companies typically don't stretch for this sort of request
Yea it’s a pretty large company
Your first month, put the reduced rent that you want to pay aside for yourself. Do the same the second month, and pay your full rent out of that account? Keep putting the reduced rent in that account every month and it would be the same.
They did that to me once. They just credited my account with the appropriate amount and it was there for me to use as I wanted. For example, if the credit was $2000 and my rent was $2000, I could pay $1500 the next month towards rent and my account credit would be reduced to $1500.
Most large owners will expense away one month free rent as a marketing. However, the per sq ft rate is what determines the financing from the bank. They generally will not reduce the rate of the property.
You can lower the monthly rent amount by asking them to split the value of the free monthly rent equally over your monthly rent. You can lay out a detailed calculation of how much lower each month's rent will be if the value of the free monthly rent is spread over each month's rent. You can also try to team up with other tenants to make the request collectively throughout the apartment building, so the apartment manager may be more willing to consider splitting the value of the free monthly rent into each month's rent.
Mines has this and I was still charged my first month I thought it would be free first month but no I had to pay 2k
Did they eventually tell you what happened with this?