Everyone I know who has asked for a discount has got the discount.
After several months of the pandemic, and noticing the adjacent apartment being relisted by my landlord at a discount I emailed my landlord and asked if I could have my rent adjusted by the same discount. They said yes, if I committed to another years lease.
Saving 5% of rent, at the cost of a one year commitment didn't seem like a win, so I politely declined explaining my reasoning, and suggested we leave things as they are.
A week or so later, out of the blue by my rent got adjusted by 10%+ instead of 5% with no need to commit to stay.
Sufficed to say, if their intention was for me to stay put, it worked!
Another data point. Tried to get a discount in our Inner Sunset 1BR that we paid $3250 for. Other units in the same building listed for the past few months for $2700 with 2 months free (effectively $2250).
Denied a decrease (citing CA Fair Housing and not giving anyone a decrease) so we paid 1 months rent to break the lease. Now living in a 2BR by the beach for the same price as before with 50% more space, W/D, garage.
Old apartment went from ~10 vacant 1BR to ~25 vacant 1BR listings during the past couple of months during our negotiation and move.
I had a corporate landlord in Foster City and asked, they wouldn’t budge and invited me to reapply for a different apartment at a lower rate as the lease was up. I live in LA now.
If you have 6-8 months left in your lease, and they do not have demand, they got you locked in so their incentive is less. They do not have demand so obviously the unit you vacate will also sit for a few weeks at least so you need to pay. That's the contract.
If you have 2 months left, they know you are high risk to move out so they will throw discounts to avoid yet another vacancy.
As a data point: I asked for 25% off my 1 bedroom rent (which seemed like roughly market rate). They said something along the lines of "we're not lowering any rents because we're struggling due to the economy".
So, I left and they got nothing. I doubt they're going to rent it out again for a while.
This behavior is very common and just baffling to me. In many markets right now, there is just no way they are going to rent that out.
The only explanation I have heard is that lenders allow a certain amount of vacancy increases in the terms without triggering a reevaluation of the property value. Whereas lowering the rent will more quickly trigger that new valuation.
And the way many commercial loans are setup, they may require immediate payment of the difference of the value of the property if it drops.
But this just seems short sided on the part of the banks. And why do seemingly so many of them have this policy? If I am assessing property value and vacancy sky-rockets, I'm going to be a lot more concerned than if rent has to drop a bit.
SFHs are assessed by looking at comparable properties because there isn’t a liquid market continually providing feedback of the current value of the asset. With rental property you get a pretty good signal on an ongoing basis - the rent! So investment real estate is based quite strongly on the Net Operating Income, and the value is the net operating income divided by the sale price which gives you what is called a capitalization rate (how much money you get coming in for how much you had to come up with to buy the place.) cap rate is impacted a bit by market and a bit by segment (upscale property vs housing for lower income folks) but it is mostly impacted by current interest rates. Cap rates can be like 4%, or where the sales price is like 25x NOI. So, at a 4% cap rate, differences in rent have a 25x impact on the value of the property (big expenses like property management costs tend to be proportional to rent, etc.)
So now that you know about how NOI is the thing that drives property value, some other practices make sense — “concessions” (free months of rent) are only sometimes valued as part of the rent roll, but usually ignored unless the property has a pattern of excessive turnover. This is why landlords are more likely to give you free months rent instead of lowering your rent!
Anyway, it’s all a game that serves to transfer wealth from workers to capital holders and our tax system incentivizes this in many ways. Used to be that people spent way less a portion of their income on housing, but the move to create an “ownership society” actually made it way more expensive relative to wages, to the benefit of land owners. This also explains a large part of the wealth gap between white people and Black people with redlining and refusal to loan for black neighborhoods, etc.
They’re able to slip this into agreements because conventional wisdom (even post 2009) still thinks real estate never drops in value. Momentum is the strongest inefficiency in most financial markets because humans have short memories.
If I’m a dumb real estate investor in SF pre-2020, I don’t care if the bank puts that kind of requirement on me, because rents in SF always go up!
There was a great comment on Reddit who is familiar with the commercial real estate industry. These loans are combined and split up among thousands of investors. Its basically the same thing that happened back in the last recession with residential loans.
In Seattle, I asked for them to fix the internet and run an ethernet cable to my unit instead of relying on their spotty wifi. They said they wouldn't and they're raising rent a few percent. I declined to renew my lease as well. Some landlords are ridiculous. Hope they enjoy their massive spiking vacancy rates.
It's still a better deal for them, sometimes. Decreasing the rent can decrease the implied value of the property, which can be problematic with financing of multi-family or commercial properties. Letting it sit, collecting no rent, won't hurt the property's value. Which is a strange loophole in the system.
I am in bay area, but my apartment complex refused to readjust rent to reflect the drop in rent (2500$ to 1800$!). I decided to break the lease and move to a better area.
Great on you! To complete the math, what was the "break" penalty and how much did your new rent save you? These economics are fascinating, SF is crazy.
Unless the lease had other terms written in, California generally allows landlords to continue to charge rent until the unit is rented again (or the end of the lease term).
The last time I moved, I had 2 months OR rent responsible till end of lease (or until they lease it again). It depends. I picked "rent responsible" per their friendly advise and paid 5 days of extra rent since they could clean and re-rent that fast (this was 2018).
Not necessarily. I’ve lived in three rentals in LA over the past five years and each one had a clause that allowed me to break my lease in exchange for two months rent. Not saying the OP had that clause, but I’ve never had to ask for it and it’s been baked into the lease.
I know my current landlord is going to be excited about me leaving in a month, as rent had gone up about $1,300 a month in this area over the last two years, but my increase are capped.
I see. I am in NYC and read my lease break to see if I could brake it. Im from europe and this clause looks like illegal in my country but I guess USA is on a whole other level... If I move I could end up paying 1200$+ double rent for months...
"In the event the lease is broken during the middle of the term, and the applicant did
not pay a year up front due at lease signing, the lease break fee is $1,200.00 made
payable to the Shareholder. The penalty fee is charged by the coop board to the
Shareholder due to the lease break. Lessees are immediately relieved of his or her
contractual obligations to the Shareholder & coop upon successful take over by the
next Lessee(s) identified by the broker, and is board approved for move in."
Sublet for a smaller amount till the lease runs out, at least you will lower your loss or even come even (considering that you'll be paying way less in the new place you move to)
Assuming that's allowed: many lease agreements in major cities in the US explicitly disallow sublets, or require landlord approval. Landlord wouldn't have any (financial) incentive to approve since they get money either way, and taking on a temporary subtenant is usually higher-risk than a regular renter.
Then again, if the current tenant has a lead on someone to potentially take over the lease and become a long-term tenant, then everybody wins.
The move did not save me money considering the security deposit and moving costs despite the lower rent, infact it cost me 200$. But i got a bigger home in a nicer area. Well worth the 200$ it cost me overall.
Our landlord proactively offered! We pushed back a little and got an overall savings of around $6000 for committing to another year in an apartment we love. Well worth it.
Added bonus: The apartment is rent controlled so it will take 2 to 3 years before rent climbs back up to our old level, if we stay.
I'm not sure rent control works that way. I think it only depends on the base rent, which is the rent in the year you moved in. I don't think later reductions reduce the base rent.
Which implies if you want to lock in lower rent with respect to rent control, you have to start a new lease in a different location.
> Everyone I know who has asked for a discount has got the discount.
Just one data point, but a couple I know who lived in a 1BR in a largeish apartment building was denied a rent adjustment, despite other identical, vacant units in the building being put on the market at a somewhat lower rate. They ended up moving into a 2BR in a nearby duplex at the same rent (plus a couple free months), but nearly twice as much space.
A month after they moved, my friend told me that their old building had something like a 35% vacancy rate due to similar departures. My theory is that they're banking on the rental market going back up by mid-2021, and, being a rent-controlled building, don't want to allow people to lock in much lower rates.
Everyone I know who has asked for a discount has got the discount.
After several months of the pandemic, and noticing the adjacent apartment being relisted by my landlord at a discount I emailed my landlord and asked if I could have my rent adjusted by the same discount. They said yes, if I committed to another years lease.
Saving 5% of rent, at the cost of a one year commitment didn't seem like a win, so I politely declined explaining my reasoning, and suggested we leave things as they are.
A week or so later, out of the blue by my rent got adjusted by 10%+ instead of 5% with no need to commit to stay.
Sufficed to say, if their intention was for me to stay put, it worked!