Looking for a deal on rent is challenging, but it can be done!
The apartment market is splitting
Older apartments that are not desirable are having by far the fastest increases in rent. This is a category of real estate called class C apartments. There is absolutely zero construction of class C apartments in the U.S. at the lower end of the market.
Compounding the problem is the fact that the typical class C customer is not a candidate for home ownership. So the apartment management companies don’t have to worry about pricing too high and driving their customer base away to the suburbs.
As you can see, there are multiple issues facing class C apartment rents. They’re getting pricier with less availability.
Ironically enough, the high end of the market is getting crowded with new construction. This is a category of real estate called class A apartments. Too many units are coming online. In many cities, rents will start dropping among the class A supply.
It’s a classic supply and demand issue. The irony is that people at the high end of the market may be finding deals and seeing their rents go down while people in the class C category are having to pay more.
The price is not the price
If you are a renter coming up for renewal, or you are looking for a place to rent, be aware that you could go to a rental complex on three different days and get three different rents on the same apartment each time! The value of that apartment changes as often as every 24 hours based on market conditions in the area and what’s going on in that complex.
For example, let’s say two tenants unexpectedly give notice that they’re leaving. Suddenly, the property manager has more inventory than planned. Big property management companies use software to dynamically adjust pricing based on market conditions. So in this example, the software will then trigger a special to fill up those vacancies.
The key point to know is that the larger the complex you’re shopping, the more likely it is that the price is not the price and can continually change. So shop methodically and keep a list of quotes. Checking back several times for new quotes will make a big difference in what you have to pay for rent.
Know too that rents may be different even on the same floor plan, depending on location in a given complex. One strategy might be to look for a less desirable unit that meets your square footage needs to save money.
Read more: The $15 insurance policy all renters need
How you can find a deal
I want you to start your apartment search about eight weeks out before your lease is up, unless you’re required to give more notice.
You can hold the advantage if you’re willing to walk out of your current situation when your lease comes up for renewal. If you’d rather stay put, you should still search for apartments and then show your current landlord what you find. Ask if he or she will compete against the other cheaper rents out there. You won’t save as much as if you’re willing to walk, but you’re likely to save something.
One special tip here. There’s a sweet spot in the market right now with what’s called the ‘shadow market’ — essentially condos and single family homes that are being rented out by investors. The dangers of the shadow market include a possible risk of landlord foreclosure and the chance that you won’t get prompt response on maintenance issues.
To recap, follow this advice if you want the best deal:
- Six weeks out before your current lease is up, go shop the market.
- Shop the shadow market.
- If there’s one complex you just love, but it’s too expensive, check the price once or twice a week. Pricing can change that much.