Many renters and landlords play tug-of-war when it comes time to negotiate next year's lease. Although your instinct may be to go on the offense, threatening repercussions if the landlord doesn't agree to your demands--saying you'll leave or no longer refer friends to the leasing office--will likely backfire. However, many renters can bend the terms of the agreement in their favor if they go in with the right game plan.
While a large part of the landlord's decision rests on whether you've been a good tenant, some are open to lowering the monthly rent--so long as they get something in return. One tactic proven to increase your chances of success: Negotiate the lease in February. According to data from the Bureau of Labor Statistics, families tend to move sometime between late spring and early fall, when kids are on summer break and can get settled in before the school year starts.
With leases less likely to expire in the winter months, there's less demand, says Pierre Calzadilla, a rentals team manager at Trulia.com, a real-estate listings and information resource. "There won't be 25 potential residents applying for the apartment you're in," he says. For those whose current lease started in June or July, Calzadilla recommends trying to negotiate in February for an 18-month lease so their new rental period will expire in the winter--that way, they'll position themselves to reenter the market during the off-season.
Unfortunately, signing a longer lease may not give consumers the same negotiation power it did several years ago, says David Vivero, vice president of rentals at Zillow.com, which compiles a list of rental properties on the market. According to the Zillow Rent Index, average nationwide rent prices are up 4.2 percent from what they were in December 2011. Consequently, Vivero says in high-demand metropolitan areas, "landlords can often have a laundry list of potential tenants."
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Despite a booming rental market, sharp tenants can find a way to gain the upper hand during the negotiation. Consider using these strategies as leverage to build a strong case for why your landlord should lower next year's rent:
Do your research. Go in prepared with numbers to back up your proposition. Know what rents other landlords in your neighborhood charge for comparable units; that information is available for free on sites including Apartmentfinder.com, Trulia.com, and Zillow.com. "Maybe you could move to a cheaper place nearby," says Calzadilla. "Use that data to show that they should keep you here."
Ask their opinion. Another way to approach the conversation is to frame it as if you're asking the landlord for advice, Calzadilla says. You could say, "I love living here, but I can save money if I move to another apartment. What should I do?" Seeking guidance comes off a lot friendlier than barking orders.
Go to extra lengths. Landlords like to think tenants are not only looking out for themselves but also for their landlord. "A tenant could offer referrals to help fill vacant units," Vivero says, or "spread the word about the building to friends via social media." He adds that eagerness to bring the apartment building together, such as offering to throw the summer barbecue in the courtyard, may make the landlord view you as a good tenant for community morale.
Prove your worthiness. Tenants who've exhibited they're reliable, courteous, and trustworthy should highlight why they're worth keeping. "Landlords are looking for good tenants who pay their rent on time, take care of their rental unit, keep noise levels down, and stay on good terms with the neighbors and property management staff," says Kari Taylor, director of rental insights at Rent.com.
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Many times, a tenant's credit score comes into play, Taylor says, since landlords often see it as an indicator of responsibility and financial stability. "Property managers tell us that when it comes to getting an apartment, you need a qualifying monthly income level of two to three times the monthly rental rate and a credit profile showing a good history of on-time payment," she says. "No need to sweat it if your credit score isn't 750; a high score, in and of itself, is less important than your overall financial profile." Showing you have job stability is also a plus, especially in today's shaky economy.
Explain your past mistakes. It's more common for a tenant to make a late payment than you probably think, Calzadilla says. If this year's ride has had a few bumps, be honest and upfront with your landlord about why you were late and explain why it won't happen again. "Landlords are more accommodating and forgiving if they know your situation," says Calzadilla. Of course, a financial fumble here and there can be overlooked, but Calzadilla says, "You don't want to be someone who is nefariously late."
Be reasonable. Asking for a substantially lower rent than what you currently pay will probably agitate your landlord, Taylor says. "Nobody wants to deal with unreasonable people," she says. "Starting a conversation with a completely unreasonable request can offend or put off the very person you're trying to get something from, which is not a good start." If you've done your homework, you'll have a good idea of a rent that's worth aiming for.
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Call for backup. Just because it's your lease doesn't mean you have to negotiate by yourself. "Bringing in parents or other figures, who may be able to sign a guarantor form--attaching their better credit to a rental--can always help provide some leverage," Taylor says. Whether it's a more experienced relative or friend, Taylor recommends enlisting someone who can help steer the conversation in the right direction.
When all else fails. If your landlord is still unconvinced, Calzadilla says you might mention you'll be writing a review of the building on Yelp.com "If a tenant has a bad experience, they will flame the building on Yelp," he says. It breaks the rule of resorting to threats, but at this point you've done everything else you can to get the landlord to lower the rent. This move may be a bit drastic, as negative reviews can hinder the landlord's future ability to attract good tenants, but it could be your last chance to renew the lease at a more wallet-friendly rent.