When moving into a new apartment, everybody is looking to get some sort of deal to offset the cost of the monthly rent, but do these incentives really make a difference when it comes to your bottom line?
Concessions were offered on 29 percent of transactions involving luxury rentals in Manhattan in April 2017. Most of the concessions are centered around the amount of the monthly rent and the length of the lease. Does it really matter that you sign a 14 month lease, and pay for 12 months? When you are paying almost $5000 per month in rent, I think it does.
The second most popular concession involves the broker fee. If the landlord picks up the broker fee, the potential tenant saves an additional 10% of the annual rent. On that same amount of rent, the broker fee comes out to $6,000. That is an expense you won’t have to pay if you decide to stay put and renew your lease.
At 225 East 39th Street, there is a 1 bedroom, 1 bathroom apartment available with a listed price of $4256 per month when you sign a 14 month lease. The actual price of the apartment is $4965 per month for 12 months, but you get to live there for 2 months before you have to start paying rent. One would be wise to set aside at least a portion of the rent during those two months. The listing on Streeteasy.com also indicates you won’t be charged a broker fee.
At first, the incentive made sense to me, but then I sat down and really considered what was being offered. The advertisement makes it appear as though you are saving just over $700 per month, but in reality you are paying the original $4965 per month, you just have 2 months to prepare for it. In my mind, the incentives don’t make it more affordable, it just defers the amount you have to pay up front.
What happens when it is time to renew your lease? Do you get the same deal or do you have to renegotiate your lease terms?