5 Downsides of Rent Concessions That Could Cost You Money
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
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It’s common knowledge that monthly rent is typically cheaper than paying a monthly mortgage in most states. However, rents have been climbing for years to shockingly high prices, making renters look for every opportunity to catch a good deal.
As of October, for example, while a one-bedroom apartment in a city like El Paso, Texas, was around $894, in a city like San Jose it was over $2,300 for the same size apartment.
These prices often drive renters to look for “rent concessions” — essentially assistance in the form of free months or weeks of rent, a free parking space or other freebies.
According to Redfin, common rent concessions include:
- Free rent
- Reduced rent
- Waived fees
- Discounted security deposit
- Free amenities
- Lease flexibility
- Upgraded unit features
These may sound like a great idea at the time, but consider some of the downsides of accepting these perks.
Concessions Rarely Re-Up
At first glance, rent concessions look like an attractive offer, according to Nyx Sherwin, CEO and owner of WeBuy502, but he said, “Most of these costs are hidden until it’s time to extend the lease.”
For example, you can get two months rent-free on a $1,500 apartment, which sounds great up front, but, he warned, “Landlords tend to increase the lease renewal rent due to the losses incurred, and it is always above the market price.”
That annual increase can translate into a $100-$200 increase every month, he said, “which erases all of the benefits that have already been enjoyed.”
You Can Get Financially Complacent
Without accounting for the actual costs of these perks, which will come due later on, tenants may not adjust their finances to work around these allowances, Sherwin said, only to be left in a fixed budget when the time comes to reconcile the complete amount.
“A free parking space may not always remain free and over time gradual charges may creep in to balance out the costs … concessions are simply marketing strategies, and although they seem reasonable, they do not come cheap because there are more serious problems hiding behind them when the lease comes to an end.”
You Might Not Be Prepared For the End of the Concession
Before you jump excitedly on a rent concession, do the math to make sure it’s first worth your while financially, and second that you will be able to afford it when the concession term is up. For example, according to Redfin, if they waive your parking fee of $60 for three months, eventually you’re going to have to come up with that extra $60. Or, if they waived your security deposit of $1,000, remember that there will not be $1,000 coming back to you when you move, either.
You Might Not Catch the Fine Print
Additionally, make sure you read your contract very closely, because there may be a detail about the rent concession that you didn’t notice — from the time frame to an increase in price for something that is free or discounted at move in time.
Your Budget May Be Unprepared
The concession may offer you some immediate financial relief, but factor in higher costs in your budget going forward, or put money away into an emergency fund for a time when those concessions are no longer giving you a deal.
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