Padzilla Blog: Tenant Tips for Living Large and More

Photo credit: therichbrooks

You’ve heard that phrase… It’s a buyers market. Today, it’s true. If you have cash, there’s much to buy and lots of desperate sellers. It’s true for real estate, true for cars, true for travel, clothes, etc. Today, a buyer with cash can negotiate a very good deal for almost anything.

The same holds true for renters!

Today, it’s a renters market. I hear from Owner/Managers often, and they tell me their vacancy rates have crept up. That means you, as a renter, have the bargaining edge. You can negotiate a better deal if you are willing to follow these tips:

1. Look at several units.
2. Compare rental rates, and politely let owners know you’re checking.
3. Negotiate.
4. If necessary say no.

Let me tell you. “No” is one of the most powerful words in the language. When a seller or property owner/manager realizes you truly are willing to walk away, suddenly, their knees can grow very weak, their negotiating position can erode. But, it only works if you are truly willing to walk away.

Now, something may seem so great you do not want to walk away. OK. It’s possible. But my experience with cars, houses, etc has been that no matter how good something looks today, there is something equally good, or even better, you just haven’t seen or found yet (hence point number 1 above).

So, look at this way, once you’ve found a property that’s equal or better, you have the ability to negotiate from strength. Why, because you have the power to say no, the power to walk away. Remember whether its sellers and property owners/managers, these folks rarely want you to walk away, particularly if they are sitting on 1, 3, 8 vacant units.

SNEAKY TIP: Try to assess how many vacant units are at a property before you see the Owner. The number of vacant units increases your negotiating position as the owner is more hungry, more willing to discount. Ask some other tenants living around the building, or neighbors.

GOOD LUCK!

Tim Murphy, Owner
Padzilla.Com

So your brother is visiting from Whatsamatter U. and he wants to couch crash in your Pad. Should you tell the Owner, do you need permission, should I even care?

All good questions. The answer is being open and above board with your Owner will, as I’ve noted before, win you points. Deceit and deception, probably a bad idea… So, my recommendation is let your Owner know that “BRO” will be crashing but its only 4 days until classes resume. In most cases, they’ll be OK, and will appreciate your asking.

If you do this sort of thing, make sure you live up to your word. Do not push the license the Owner has kindly extended. In other words, if you said your brother will be gone in 4 days, that’s the deal and stick to it!

Never ever take in a roommate without letting the Owner know and securing permission

Such arrangements are almost always a violation of the Lease. That’s means you can be evicted, and your odds of winning are slim, very slim.

Oh, you think no one will find out! I see. Owners are blind, and never have any idea what’s going on. Or so you think.

OKAY, that might work for a while, but Owners almost always know what’s going on. If they don’t, they know to ask your neighbors in the building, and you can count on being ratted out… it’s only a matter of time.

Think of it this way. I’ll bet you keep close tabs on your iPhone , your car, your girlfriend or boyfriend… you know, all the things you value.

Well… owners value their property the same way you value your assets. If a building like you are living in has a fair market value of 1.5 million, don’t you think the Owner will keep an eye on what happens there? Trust me, they watch more than you probably realize.

You may be leasing it, but they own it!

It’s great to have guests, to show off your posh PAD. That’s a privilege of LIVING LARGE. Remember though, there is a difference between guests and virtual tenants.

Tim Murphy
Padzilla.com

Photo credit: super-structure

Those were key words to you when you saw an ad, and applied for a unit. Heat Included meant you were protected from exploding oil or propane prices. It meant you could keep the heat up to 72 not 65 because…well… someone else is footing the bill. No more extra sweaters, no more kid’s runny noses. Heat Included. Yes!

Let’s face it…we live in Maine. That means basically 9 months of winter, and 3 very cool months in summer to round out the year. Heck this past August, some nights were down to the 50’s. We are a “heat” state. Florida, that’s an AC state.

So, heat is a fundamental aspect of LIVING LARGE in Maine.

If you are a “heat included” renter, please bear in mind how rents get calculated. You see rents are set by Owners, in advance, after factoring expenses, to run a building (insurance, mortgage, taxes, equipment, management, utilities like heat, etc) and adding a profit percentage in, and then dividing that required survival number by the number of units in the building, and by further dividing by 12 months.

Bear in mind, this process requires the Owners to guess or estimate a bit. When they plan utility expenses for 12 months, believe me, they are guessing what they’ll need/spend.

So, in those buildings where heat is included, the Owner front loads the estimated cost of heat into the rent. Your heat, your neighbor’s heat, its all factored into the rent and essentially amortized over all the units of the complex/building.

In effect, you are pre-paying every month for your heat.

Now, this can be helpful when and if like last summer (summer 2008) petroleum prices dramatically spike upward. You have price protection because your lease fixes your rent, and it’s the Owner who gets burned because they are obliged to provide heat even when the price of oil goes through the roof!

But, it has some disadvantages to you as well. If you do not heat as much space, or can live at a lower temperature in your apartment, too bad. You get no credit towards the rent, no thanks for dropping your thermostat to 67. The total heat bill, like all fixed expenses, is amortized over all units regardless of usage.

In effect, you might be paying for heat you never really used.

Worse, suppose one year your Owner got seriously burned by high oil bills. Guess what. They will over-estimate utility costs the next year to account for and off-set the risk, and that means your rent the following year goes up even if oil prices do not rise, and even if oil prices fall. In that scenario your Owner pockets the windfall.

Heat included means you are trading the ability to self manage a cost, in exchange for one year of price protection. That’s maybe a great bargain, but you need to understand the risk of that trade.

It also means you pay the same share of the freight if you are careful, and the same as your neighbor who leaves his kitchen window open in February because they are thoughtless. In other words, you pay the same if you are frugal and the same if your neighbor is a thoughtless wasteful jerk.

There is no FREE anything. Heat is simply factored in by Owners in some fashion. Were it not, your rent might be less.

So, consider whether you are willing to give up the ability to manage a cost element like heat. You do gain assurances from price spike and that can be a good trade.

Just understand the bargain you are striking.

Tim Murphy
Padzilla.com