The rental market, like any industry or market, has its ups and downs. As it changes, so does this thing called Rental Concessions. So what are they you might ask? Rental concessions are benefits or incentives offered by the landlord to the tenant, usually to draw more interest to their vacant apartments. A singlur building can have apartments that have different rental concessions, meaning that different apartments in the same buildings may have different rental concessions.
There are two common ones, but let's start with the more popular one: reduced rent, which is also commonly referred to as "One Month Free". One month free is exactly what it sounds like, a free month of rent. This is usually given at the end of a lease term. For example, if you signed a 12-month lease, your last month you would just simply not pay rent. This is also where the term "net effective rent" comes into play.
The other type of rental concessions landlords offer are more broker based but are still a tactic used to lure renters, and is called an OP (also known as "Owner Pays"). This means that the landlord is willing to pay your broker fee, ultimately signaling that the apartment is "No-Fee". The amount that is paid out from the landlord to the broker is in the amount of one month's rent. This is why many times landlords advertise the concession and/or property, as one month free and/or an OP, see below for examples advertised by Icon.
There is one note every renter should be cognizant of, and that is if you go with a broker to a building that is paying an OP OR a month free (which is most common) you will lose out on collecting the free month because that sum will be paid to the broker, in these cases it might be smarter to go sans the broker so you can benefit the most from the concessions. However, if you go with a broker to a building that is offering an OP AND a month free you can be entitled to collect one month free and have your landlord pay your broker fee.
But what happens if you go to a landlord that is offering an OP AND a month free and you don't have a broker? Great question. Although brokers are trained to have your best interest and their fiduciary obligations are to you, it does happen that if you represent yourself in the transaction you can actually gain the best value and negotiate to have the OP relayed to you instead so you can benefit from TWO months free!
Check out these OR vs. AND examples below to see what we mean:
In these examples, they offer to pay your broker fee, but if you came without a broker you would be entitled to get TWO months free! That's a big deal, it means in a 12-month lease, you will only have to pay 10 months of it!
Let us know if you were able to get any of these types of concessions and drop us a note at email@example.com