Rent concessions
Free months or reduced rent used to fill vacant units, especially in a soft market. Effective rent runs lower than the sticker rent whenever concessions are in play.
Get the steps of a home sale by email, in order, one short email at a time.
Eight short emails, free. Unsubscribe any time. What's in them
Part 1 of 4
Why a seller cares
A free month or a reduced rent to fill a unit lowers the real income below the rent on the lease, and a buyer of your rental will find it. Concessions on the rent roll are the first question in a soft market.
Part 2 of 4
A simple example
Your rent roll shows $1,200 a unit, but two tenants got a free first month. Effective rent on those units is $1,100.
| What the lease says | What the buyer underwrites |
|---|---|
| $1,200 a month with a free month | $1,100 effective |
| $1,200 with no concessions | $1,200 |
| Concessions not disclosed | Found in the T-12, and a trust problem after |
Effective rent is the lease rent minus the deal that got the tenant in.
Part 3 of 4
What people get wrong
That a signed lease at $1,200 is $1,200 of income. Only if nothing was given to sign it.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
Your Room defines rent concessions in the step you meet it in, beside the document or the date it belongs to. Free to set up, with an agent or on your own.
Organize my saleFree to set up. Pay once when you list: $89 or $189. 7-day refund.