Everybody loves a great special! Especially an apartment special that can literally save you a $1000 or more! You hear your locator or leasing agent talk about the "net effective rent" or "self prorating" and it is easy to get lost in the apartment lingo. You may find yourself wondering - WHAT IS MY RENT RATE? We are hear to explain it in plain old English!
Why would an apartment give me one month free rent - or - even two?!?!
Apartments run specials when they have units they need to lease. Typically, the more vacant units they have - the better the special! It's a marketing strategy to help them lease units quickly. Once they reach a certain occupancy level the special is no longer available. This is why an apartment may be running a special on Friday and by Monday the special is over. It is likely because they leased up some units over the weekend and are no longer pressed to offer specials.
Calculating the Incentive
The most common special you see when you are apartment hunting is "one month free
rent". For example your rent is $1,200 per month and you signed a 12-month lease. If a property offers a one-month free special, you automatically save $1,200! So you are paying $1200 for 11 months = $13,200. You are living there for 12 months so you divide $13,200 by 12 = $1100 and this is your net effective monthly rent.
Some Apartments Pro-rate the Special
Some apartments will pro-rate the special over the length of the lease for you. So based on the above example each month you pay $1,100 instead of $1200. They are spreading out the incentive over the duration of the lease and are giving you a credit of $100 off your rent for 12 months.
Upfront Specials
When a property has a special that’s "one month free upfront”; this is free rent that is given at the beginning of the lease. Many times it is your first full month is free. Based on the above example, say you move in on May 1st and that counts as your free month. On June 1st you will owe $1200 for rent and each month after you owe $1200 until your lease ends.
Self Prorate
If you feel that paying the regular rate for 11 months may stretch your budget then self-prorating would be a great option and it's simple with the use of a savings account! Here's how it works. You move in on May 1st. You would put $1,100 into a savings account that month and pay NOTHING for rent to the apartment. Then, every month, you take out $100 from your savings to pay towards rent. Each month you will pay the $1,200, but $100 will come from savings! Effectively you are still only paying $13,200 for the lease term!
Conclusion
Basically, it doesn’t really matter if the apartment prorates the special or if you self-prorate the special. In the long run, getting a month or two of free rent saves you big $$$!
Curious how much you can save? We can help you find an amazing apartment special! We know where all the best deals are in the area! Get started today!