In this blog I redacted specifics to our rent. Honestly, it is probably a stupid fear but I am not sure what I am allowed to share publicly – and with the off chance more than a few people read this post I don’t want any issues popping up! So, I will keep everything in percentage terms and redact any specific $$.
I live with my girlfriend, and we have been in our current apartment for almost a year now. We really like it! It is close to school / work for her, there is a coworking space for me, pool, gym, etc. It is a nice place to live, and we have really been enjoying our time. So much so, this was going to be the first year we were going to stay in a place for more than one lease.
Until… we got hit with an increase in rent of 14.7%. If this rental increase compounded year over year, our annual rent would be over a half million dollars when I turned 50 years old… that is not sustainable.
In a vacuum, the dollar increase is manageable, but you can see how over the long term this is not sustainable, which is the bigger concern.
And it was a concern. We really liked this place and our city – when we got that quote, it almost felt like it was the start of being forced out. We were disappointed to say the least. But instead of complaining, we weighed our options and decided it was at least worth the fight to see if we could get this down.
Art of Negotiation
I am certainly not an experienced negotiator… but at the end of the day I think it's important to know that the point of negotiating is to find a compromise. Make sure your negotiation helps both parties.
We would love to complain and tell them what a headache they are causing us and squeezing our finances in hopes they feel bad – but they don’t care. They are business and need to make money. So, our focus was to highlight what we bring to the table, and how working with us to stay will help their business.
I’ve never negotiated a lease because I’ve never renewed a lease. It is much easier in my opinion on a renewed lease because we have some history and proof that we are good tenants. It is much harder to negotiate when you are first applying, especially in a hot rental city like ours. Rentals go in a snap and if you are going to try to negotiate their market rates, they’ll easily find somebody else that is willing to pay.
The main things we focused on in our negotiation included:
1. Why we are good tenants.
2. How retaining us saves them money and lowers their risk.
3. A specific counter.
Again, we did not mention once why it benefits us, except of course the fact that we wanted to pay less. We focused on why it helps them and their business (and a slight guilt trip you will see below because I could not help myself).
My final piece of advice is to have a backup plan so you are prepared to walk away if needed. We had another 3.5 months before we had to move so if we couldn’t get them lower, we had the time we needed to find our next place.
I feel slightly weird sharing what was said, but I think it helps us all learn! I paraphrased some of the below for summary purposes.
I am not sure about copyright laws or what is public information, so I will only be sharing what we sent via email below. After the apartment told us the amount of our new monthly rent, here was our response:
Us: “Hi, a 14.7% rent increase is not acceptable for us. Here are some of the benefits of keeping us as tenants: 1. No complaints have been made on us for the entirety of our residency. 2. Payments made 100% on time. 3. We both have stable jobs, high credit scores, and good income to support on-time payments going forward. 4. We have many connections in the Tempe area and are open to recommending this complex.
I know the security of having financially strong tenants is a benefit for you. We would be comfortable with a 3% raise, or a $*redacted* increase to our base rent. Not only does this increase income for your business, but it also keeps responsible tenants with a strong rental history in your community. We would also be happy to do a 14-month lease to lower your turnover.
Let us know if you accept this offer.”
They did not budge and quoted increased market rents as the reason for such a steep increase. They were not wrong on market prices based on our preliminary back-up search in the area. But we did not give up quite yet. Below was our next response; I was nervous that I was coming off “mansplainy”, but I was just trying to show them that I know how this works.
Us: “Thank you for that information. We understand market rents, but we both know there is a risk every time you place a new tenant as well as a cost from both vacancy and getting the apartment prepared for the new tenant.
Our current difference right now is $*redacted*/mo - if we are talking about a 12-month lease that is $*redacted* that we are negotiating over. It is our opinion that the $*redacted* of foregone income is worth avoiding the risk and cost of placing a new tenant, but of course that is a decision for your business and just our opinion.
It is one thing to say you value us and another to prove it - we are trying to get to a place that benefits both parties and it doesn't feel like we are getting that from you." (Guilt trip)
"Let us know if you are willing to reconsider.”
They budged a little from this and went down from a 14.7% increase to 10%. We felt good that they were willing to compromise and decided we would accept.
My hopes in sharing this is to help others understand that even in a hot rental market, you have some power if you have demonstrated that you are a good tenant. I understand those that choose not to negotiate because it can be intimidating, but it does not hurt to ask and can even be done via email like we did.
It may be silly that our negotiation made a minimal difference, but at the end of the day it made us feel good that they were willing to compromise a little. Additionally, as I mentioned before the rental market around here is crazy, and this apartment ultimately remains a great option for us.
It is concerning about the future of rentals in our city and I am sure in most cities. On top of that, home prices are really high and unaffordable for most – the rental and housing markets are not sustainable as they currently stand and grow year over year.
To my fellow renters out there: stay strong and remember that homeownership has plenty of its own struggles.
We’re locked in to another year and a half in Tempe – from there, I suspect the world and our situation will be in a much different place and we’ll have to decide what is next. If anybody is reading this and can make a case as to why their city is very live-able, I would love to hear!