06 Aug How to Live Rent Free and Negotiate for a Lower Rent
The most critical part of any business venture is how prepared you are for the next step. It’s no secret that you need to own property to rent it out. But, did you know that rent is often negotiable?
What Is Subleasing?
I’ve talked previously about how to handle landlords when it comes to subleasing a rental. Subleasing is when your name is on the lease, but you’re not living in the apartment, and other people pay the monthly rent. In the case of Airbnb, you’re hoping that guest bookings will fill up for the time you aren’t there.
While Airbnb is a trusted company, many folks are still nervous when it comes to allowing strangers into their place. Some people are wary simply because it’s never how they’ve done business. New is intimidating; technology is intimidating.
If you’re not ready to do it alone, we have a sublease template that assists in everything you need to handle potential landlords here.
Research Local Rentals
Don’t even think about stepping into the leasing office without being aware of the local market. Nothing is more insulting than coming in with a lowball rate and lacking anything else to offer.
Research is an invaluable tool to be utilized. Not only can you make sure you’re not getting scammed, but it gives you an idea of what the value of your property should be. If your monthly rates for your Airbnb do not cover the current cost of rent, its time to either move or negotiate.
There are plenty of market research tools like AirDNA and even Airbnb. AirDNA is a paid tool, but is the current leader in artificial intelligence and search technology for web-scraping rental data. They use their machine learning to distinguish between booked and blocked days on Airbnb calendars, making the prices as accurate as possible.
Be Prepared For Landlord Involvement
It’s easy to forget in negotiations that the landlord will always want the upper hand. With the location being their property, they may have a few things to say about the sublease documentation.
I can’t stress how important it is to be prepared before going in. A sublease agreement can lead to a lengthy approval process. At that point, the landlord hs the right to charge you additional fees. This would be for their consent and for the time from their workday.
With so many parties involved, some hosts like to go the legal route of inviting a commercial property attorney or broker. This can significantly cut into your startup allowance, so only go this route if you feel like you absolutely need to.
Carefully Read The Sublease Agreements
We’re all too intimately familiar with documentation that has caused us to get the short-end of a deal. Don’t let it happen! Carefully read through all parts of the sublease and make sure there are no hidden surprises. In fact, it doesn’t hurt to read all of the sublease and master lease forms early on.
Look up similar documentation and terminology before you go into the encounter. The top issues the landlord will be interested in are property damage, reliability, and insurance.
Why Negotiation for a Lower Rent?
The first thing to realize about negotiation is that it’s not about trying to hustle the other side. Negotiating is about the compromise and how both sides can benefit. There are plenty of values you can bring to the table if you crunch your numbers.
Offer to Prepay
Landlords are thrilled at the idea of not having to chase down monthly payments. See if they would be interested in getting paid six months at a time. With this upfront opportunity, they may even be up to offer lower rent.
Commit To A Longer Lease
Much like the last one, landlords want to know what favors you can do for them. Another offer could be to commit yourself to a longer lease. Now, this one you obviously need to be careful about.
There are a lot of factors with Airbnb arbitrage that are out of your control, Noisy neighbors, leaks in the apartment upstairs, and pest problems can just be the start. But, if your research checks out that this area is right for you, go for it.
Committing to a longer lease can be your biggest negotiation factor. Think about it, if you plan on being there for a while, ask if they would be willing to drop the monthly rate in return for signing up for a two-year lease. They want to make money just as bad as you do, and this is a guarantee of payment for two years.
What If I’m An Existing Tenant?
It’s going to be harder, without a doubt, if you already rent a place to get your costs down. The main thing an existing tenant lacks is leverage. While not impossible, it can be all about how you frame your case.
First of all, the most important aspect is your current standings. If you’ve previously paid all of your rent and can be considered as a good tenant to have, you’re already a step in the right direction.
The next item is dependant on timing. It’s good to pick a slow season of the year or before your current lease expires. Coming to a leasing office seeming desperate is never ideal. You need to have a solid stance to negotiate on.
Preparing For A Lower Rent
Compromise can be tricky, but the number one rule is to be confident in your requests. Realize your expectations, be respectful, but go for something higher than what you expect. This way, when you compromise, you can be on a lower ground for something you can both agree on.
Documentation is vital to have on hand. Bring prices for other units, payments for previous rent, your credit score, my subleasing template, and whatever else you need to get your case in order.
Think You’re Ready To Live Rent Free?
Once you get the property, renting enough days out of your lease to live rent-free is a cakewalk! The hard work is worth getting there, as long as you come into the business with a level head and clear expectations.
Need a template for another business occasion? Check out everything we have to offer!