Are You Renting an Apartment in Chicago? Here’s What You Need to Know About Your Rent
With over ten years of experience helping our clients find the perfect home in Chicago, Luxury Living Chicago Realty is here to help answer any questions you have about renting an apartment.
One of the areas where we help our clients the most is setting realistic expectations regarding apartment rent. We also ensure our clients are getting the best price possible for their dream apartment.
If you’re getting ready to rent a downtown Chicago apartment, you’ll want to be sure you understand all the factors that go into how apartment rents are priced. There are many factors that go into how apartments are priced such as square footage, lease term, views, and finish level to name a few.
We’ve put together some tips to help you better understand rent and everything that goes into the price of brand new Chicago apartments.
Why You Should Care About Net Effective Rent
Net effective refers to the total amount of rent that a tenant will pay over the entire length of their apartment lease after any concessions, or rent specials, are factored in. Some Chicago apartment buildings offer one or more months free when you sign a lease as an incentive. This leads to a discounted rent on monthly payments over the duration of a lease.
This discount can save the renter lots of money, as the month free offering, or other discount means each month can be distributed over the entire lease term. This concept is sometimes referred to as “prorated” pricing.
Simply ask the landlord or leasing agent when you are on showing if any rent specials are being offered to take advantage of net effective pricing. Or, work with a knowledgeable real estate broker who can help navigate the current apartment market and arrange for you to view properties that are currently offering rent specials.
Effective Rent vs. Actual Rent — What’s the Difference?
Effective rent is found by taking your total concession (i.e. one or a few months free) and dividing it over the course of your lease term. The result will be your monthly, prorated payments.
Actual rent is the price per month of your lease before the concessions are applied. This is the list price of your apartment and is often referred to as the “market rent.”
Effective rents are great for the renter because it means there is a discounted price. It’s important to pay attention to both effective rent and actual rent when searching for an apartment because both numbers determine what your monthly payments will be. If you have any questions about these numbers, your real estate broker will be able to break down the pricing and help you make a more informed decision on which apartment you should rent.
How to Get Apartment Concessions
Apartment concessions are a reduction in price, rebate, or allowance when renting an apartment.
Concessions often come in the form of free rent (anywhere from one to several months free), paid moving expenses, gift cards, free or discounted parking and a waived or reduced security deposit/move-in fee.
You can get apartment concessions by asking your broker what buildings are currently offering specials. Concessions can vary depending on the time of year and how many vacant units an apartment building may have. There may be more concessions offered during the winter apartment hunting season because not as many people are looking to move during this time. In some cases, the longer your lease term, the more likely you are to get a concession.
What’s the Right Rent vs. Salary Ratio for Chicago?
Most landlords or property management companies require tenants to earn at least three times the monthly rent in gross income to qualify for an apartment. We typically recommend that one-third of your monthly paycheck should be spent on rent. However, there are always exceptions whether to allocate more or less.
Note, it’s important to stay within a safe rent range as there are other payments required while living in an apartment such as parking, pet fees, and monthly utility costs.
Negotiating Your Rent — Should You Do it?
Sometimes rent prices may appear to be set in stone. However, things aren’t always so final it just takes some communication to see where compromises can be made. You may not be able to haggle back and forth, but there are other ways to present mutually beneficial scenarios and lower rent costs.
One way to negotiate your rent is to offer to sign a longer lease which could incentivize the owner or landlord to offer a month, or two, free.
Negotiating a lease at the time of renewal is another option. When your current lease is ending, it’s good to make a plan and speak to your landlord or property manager before agreeing to renew your lease. This includes evaluating the current apartment market. If you haven’t looked for an apartment in awhile, do some research. There are thousands of new apartments available and you may be surprised to find that moving to a new Chicago apartment will save you money.
Pricing at many buildings fluctuates on a daily basis and is largely based on market conditions. To get the best deal, make sure you’re working with a real estate agent who knows the market and can tell you whether you’re getting a good deal.
Now that you’ve learned about the logistics of apartment rent in Chicago, it’s time to start looking for your new home! If you’re in the market for a new Chicago apartment, click the link below.
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