Rents in big cities are falling due to Covid. Here’s how to negotiate your monthly payment

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asset management news magazine
Apartments for rent in San Francisco.
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For those who want to stay in major cities, the coronavirus pandemic has had one benefit: Rents have fallen in some areas.

That means it’s a great time to negotiate a lower monthly payment or snag a deal on a new apartment.

In October, the national rent index fell 0.4%, according to real estate data site Apartment List’s monthly report. While this is generally in line with how rents perform in the fall, it’s coming after apartment prices slumped from March to June, usually the fastest-growing months, according to the report. Across the board, rents nationally are now down 1.4% on the year.

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There’s also a major difference depending on location, with rents falling fastest in large cities on the East and West Coasts, according to the report.

“What has been a huge surprise throughout the year is the precipitous rent decline throughout the summer months, especially in some of the nation’s priciest markets,” said Igor Popov, chief economist at Apartment List, adding that those areas haven’t seen falling rents for some time.

The cities seeing the most rapid change are those with large technology companies that have given employees the chance to work remotely on a permanent basis, encouraging many to leave behind big cities and sky-high rents. As these workers left cities such as San Francisco and New York, it’s created enough vacancies to drive rents down.

In addition, the economic effects of the pandemic may be weighing on apartment prices, as well, according to the report. Workers who are furloughed or laid off may have been forced to move out of expensive apartments, creating vacancies.

“The pandemic really created a recession,” said Popov. “The massive job loss and loss of income led to a lot of people choosing not to form new rental households, or not wanting to move out on their own or not having the money to pay the rent they were hoping to at the start of 2020.”

Due to future uncertainty surrounding both the pandemic and the economic recovery, it’s unlikely that rents in big cities will pick up again anytime soon, according to Popov. That means if you’re considering moving within a larger city, now is a great time. Here’s some tips to get you started.

1. Do your homework

Make sure you understand the neighborhood you’d like to move to and what is on the market.

“We’ve seen that a majority of the smaller apartments have had a lot more vacancies, so overall there’s an amazing amount of negotiability in these smaller apartments,” said Eric Brown, a licensed real estate salesperson at Compass. “Bigger, institutional rental buildings have been hit the hardest in the pandemic.”

In addition, before you make any offers, make sure you understand unit specifics, said Becki Danchik, a licensed associate real estate broker at Warburg Realty. Online listings may show net rent with a month free instead of gross rent, which is the amount on the lease, she said.

Knowing these details can help you determine what you want going into a negotiation, she said. It can also help you spot a great deal.

2. Just ask

The most important part of negotiation is starting the conversation. Renters shouldn’t be afraid to take the first step and ask about lower rent, according to real estate experts.

“Really, don’t be afraid to ask,” said Eric Brown, a licensed real estate salesperson at Compass. “You miss 100% of the shots you don’t take.”

It’s harder for landlords and property managers to price their units when the world is uncertain, according to Popov, making it a good time for apartment hunters to make an offer.

In addition, landlords are likely worried about long vacancies, which can be devastating, meaning that renters have some leverage in the market right now.

3. Be nice

If you’re interested in a specific property, don’t just send the broker, landlord or property manager an email with a low-ball offer, said Brown.

“Reach out, see the property, be courteous,” he said, adding that you don’t want to start off on the wrong foot.

If there’s something you’re generally interested in, send a message that includes the price you’d like to pay, your move-in date, how long you intend to live there and whether you have any pets or would like any updates made to the unit.

That gives the landlord a full picture of your offer and creates a paper trail for both parties, said Brown.

4. If lower rent isn’t on the table, ask about other amenities

If a landlord or property manager isn’t willing to budge on the monthly rent or has already listed an apartment at a significant discount, there may be other things you can negotiate.

“Anything that involves you spending money, try to get that waived,” said Brian Carberry, senior managing editor at Apartment Guide, a site for apartment rentals in the U.S.

Really, don’t be afraid to ask. You miss 100% of the shots you don’t take.
Eric Brown
licensed real estate salesperson at Compass

That could include application fees, premium parking spots, gym memberships — especially if there’s one in the building — or even for help covering a broker fee, if there is one.

“If someone makes me a reasonable offer, I will happily contribute to broker fee to get a new tenant in,” said Brown.

5. Don’t wait until your lease is up

People who aren’t looking to move can also benefit from the current rental market and negotiate for lower rent, according to real estate experts. An especially good time to bargain with your landlord is if you’re nearing the end of your lease, according to Danichik.

Renters should do their homework about what’s happening to apartment prices in their neighborhood or building and then go to their landlord, she said.

“Any savvy renter that’s following the market knows there are deals right now,” she said. If there are lots of vacancies in your area, it’s a good time to ask for a discount.

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