Last week I received a lot of emails asking for more information on how we tripled our savings rate from 20% to 60% in less than a year. One of the themes I noticed, was questions relating to negotiating rent with a landlord. The time we spend on our lease yielded a $2,400 return, so I’m happy to detail our experience. This is how you negotiate with your landlord!
First off, there isn’t one factor that leads to a successful negotiation. At the end of the day, negotiations are between people and so there a hundred factors which all need special care and attention.
As mentioned above, I feel negotiation is a very powerful tool we can all utilize more often. I’m a firm believer that success is highly correlated with the number of crucial conversations we are willing to have.
The trick of course is having that conversation in a non-confrontational manner that does not burns bridges.
It truly is a skill at the end of the day, but once we learn it, it can pay dividends for many years. We benefited with a $2,400 gain in this scenario, but I know we will have future negotiations that will yield even higher results.
Know the right time to negotiate.
When it comes to negotiating rent, the WRONG time is when both parties are ready to sign. Too little, too late. AND you’ll probably upset the other party as it shows you’re trying to get away with a better deal at the last possible moment. We wanted to be respectful of everyone’s time, and as such, we took the opposite approach.
We had a game plan in place when we first viewed the place. We scheduled a time to visit as soon as the landlord was available even though it was inconvenient to our schedule. We were prepared and had the landlord walk through every question we had. We connected over our backgrounds and established a basic connection, so we knew we would work okay together.
Lastly, before we left that day, we expressed deep concern over being able to afford the place. We wanted our landlord to see that we were a great fit, but that the price might be too high.
That very night, we prepared the lease with our negotiated rent and sent the landlord two potential options, already signed and ready to go. We prepared all the documents needed for her to complete a background check and credit check.
We handed her the offer on a silver platter, albeit with a change in the rent amount. 🙂
Our ability to immediately fit into her schedule, while being friendly and open about our backgrounds, left the landlord with a lot of positive feelings towards us. At times, part of the negotiation is being liked by the other side so that they want to do business together.
What isn’t mentioned in our story above is that we had already been to a few places in the area. We knew what was considered a good price and we knew what was considered a laughable price.
Knowing the numbers can be difficult, but luckily we live in the information age where we can fully research an area online within 15 minutes.
Be Willing to Walk Away.
We absolutely loved the place but we were careful not to show just how much we loved it. Of course, we would have gladly paid the full price, but we knew we could save thousands on rent and had to pursue that avenue.
Where negotiation is concerned, I’ve always liked the famous author Steven Covey’s approach. He described it as striving for a win/win (mentioned below), but he added the extra bit of “win/win OR walk away.” I absolutely agree.
Give the Landlord Options.
In our case we actually handed the landlord two offers. One was for $200 below the rent amount for a term of 12 months. The second offer was for $100 below rent for a term of 24 months.
Find the Win/Win Scenario.
In our case, by offering two options, we feel we would find a win/win scenario. Asking for $200 less on a one year lease WITHOUT offering a 2nd option feels to me like a win/loss scenario if our landlord accepts it. She might have felt like she was backed into a wall without another option.
Instead, by offering the 2nd option of only $100 less, she was able to arrive at a number closer to what she originally wanted. We also benefited because we would not see a rent increase in our 2nd year.
So while we saved $2,400 up front, we might have saved closer to $3,600 at the end of the day, assuming she would have raised our rent by $100 in the last 12 months.
Don’t Reject Yourself
This subtitle could also be called, “Don’t be Afraid to Ask,” because that’s the first response I hear when I bring up this approach to friends and family. I hear the laundry list of excuses.
Don’t say no to your own idea before you even given your landlord a chance to tell you no.
“My landlord won’t budge on the rent. He would never go for…”
“Our landlord is the worst. I wouldn’t even want to have a single phone call with…”
“Sure! That worked for your landlord, but our landlord is an attorney and she’s super smart and wouldn’t…”
If you offer a negotiated rent in a respectable manner, then the worst case scenario is a simple, “no.”
In conclusion, I hope that clears up our approach and helps you negotiate with your landlord!
Have you negotiated your rent? Or salary? Or anything that led to big financial gains in your life?