A Question For Landlords…?

I have received an offer on my house and will be moving to a 3 bedroom apartment. The lease will be $1500 per month.
Is it reasonable to ask for a discount if I pay the full $18000 at signing? If so how much could I expect?
Thanks

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2 Responses to “A Question For Landlords…?”

  1. Donald says:

    It’s reasonable, and the amount is really what the two of you agree. However, that may or may not be the best thing.
    As for the discount, just as a ballpark number, 10% comes to mind. But the question, beyond that, is what rents are going for in comparable units. (Pretty much the same exercise you went through prior to selling.) If you’re overpaying–if comparables are $1,400–you certainly could ask for more. If you’re getting a real bargain, there may be less flexibility.
    Be careful before doing that, though. You have some protection when you’re paying month by month (even with a year’s lease). The landlord has an incentive to keep you reasonably happy and to make necessary repairs. If he doesn’t, you could have grounds for breaking your lease. Although you certainly can break your lease when the entire amount is pre-paid, he’s got your money, giving him a lot more leverage. With that amount of money involved, you certainly should check with a lawyer on ways to protect yourself.
    Another consideration–and this just has to do with your personal finances: Make sure that you’ve fully funded your IRA or 401(k), paid off your bills, etc., before paying the full $18,000 up front. Now, technically, you should look at the interest you can get on your IRA or 401(k), your rate of return on other uses of the money, and compare that with the discount you’ll be receiving from pre-paying your rent. For instance, if you got a 25% discount, that’d be equivalent to a 25% rate of return. And that’s awfully hard to beat with any reasonable confidence. On the other hand, if you only got a 5% discount, you might feel (as I personally do) that I can earn more than that in my IRA and 401(k). Another example: If you’re paying 19% on credit card charges and you only get a 10% discount, then it makes more sense to pay the credit cards off. So there’s a point at which the discount becomes so attractive you should do it financially.
    Hope that helps.

  2. loanmast says:

    You may do as you outlined in your statement and pay the lease up front. You might also ask for a discount. The landlord might be accommodating, as most would allow some new tenants to move in and pay no rent for t he first month or ½ off the first month rent.
    This might be a offer of your landlord, after which, you would be required to pay the full lease amount.
    Each landlord is different, therefore to actually give a figure as to what one landlord would accept and you might make an offer, might be beyond this forum.
    There are many disadvantages I find in doing this.
    You would be tying up a significant amount of funds tied up into your lease. You could use these funds to draw some type of interest if places in your savings account. You receive no interest, if you pay this entire lease off. Advantage landlord as he is now getting the interest on your money.
    If there is an emergency your funds are tied dup with the lease.
    If there are problems and your landlord evicted you for a lease violation or for any reason, how much of a problem would it be for the landlord to return your upfront funds to you.
    The same would be true if you were able to find a way to cause the lease to be null and void based on your landlord failure to uphold his end of the lease.
    This is not a good financial decision on your part. You would have to take charge of your financial situation and not allow others to control you financially.
    I hope this has been of some benefit to you, good luck.
    “FIGHT ON”

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