But, what do these offers actually mean? At the end of the day, apartments are businesses. Just like any other business, they need to turn a profit. So, when you’re offered a month of free rent, it’s likely that you’ll actually end up covering that cost in some other way.
1. Net effective rent vs. gross rent
Apartment complexes advertise free months of rent through net effective rent. In this case, the rental rates being advertised are not what you will actually be paying each month. Instead, you’ll be paying that “base” rent with the added “free” month divided into equal, monthly payments.
An example of this tactic could be an advertised rent of $1,400 with one month free on a 12-month lease. The net effective price is $1,400 but the true gross price — the price you as a renter would pay every month — would be around $1,525. The “free month” of rent simply is paid over the course of the remaining 11 months of your lease.
2. Long lease terms
Another common tactic among landlords is to solicit a two-year lease agreement in exchange for a month of free rent. This setup typically involves the net effective rent vs. gross rent concept we mentioned last.
For the first year, the tenant will pay the divided “one month free” rent. But, what tenants often don’t realize is that after the first year, they’re obligated to pay the higher gross rent without the “free month” factored in.
A clause signing you up for a two-year lease agreement could be hidden in the fine print, so make sure to be cautious and well-informed.
3. Watch for rent increases
Landlords could easily drop the rental rate for every month to reflect the “savings” you’d be getting by taking the free month deal. However, the free month deal is quite common. One reason for this is that it gives landlords the liberty to increase rent for the subsequent years at a faster rate than they’d be able to get away with otherwise.
If a landlord increases the rent from the amount you pay with a free month, it seems like less drastic of a price increase than if they had lowered the rent altogether and increased the rent from that starting point.
There’s virtually no such thing as a free month of rent
There’s technically no such thing as a “free month” of rent. Apartments and landlords are like any other business — they’re aiming to make a profit. There’s a fixed amount necessary to cover all costs and pay all apartment staff while still turning a profit, and residential developers are very aware of that.
However, you can make educated decisions to make the system work to your advantage. If you need some help upfront, a rental that defers the first month of payment could really help you out. Or, if you’re a transient renter who knows you won’t be renewing your lease, you have the freedom to be less skeptical of future rent increases.
If you do your research, you might just learn how to get a free month of rent. Regardless, it’s important that you’re informed and responsible. Don’t be afraid to ask questions and make sure you fully understand the commitment of renting before you sign a lease.