Please raise your right hand and repeat after me, “I (fill in your name) hereby promise to never again pay the full deposit amount when I rent an apartment/condo/house. I promise to always use my superstar negotiation skills and negotiate my rent deposit to a lower amount.”
Good, now we’ve got that out-of-the-way.
Why You Should Never Pay The Full Amount
If nothing else, I want you to tuck away one guiding money principle- any extra money is just that, extra money. Most landlords will set the deposit amount that they are requesting equal to what they classify as “last month’s rent.” You are familiar with the term first and last month’s rent. Your deposit = last month’s rent.
Technically, yes, you should pay the entire amount due, but since you are paying your rent in advance, last month’s rent is a tricky way to get you to essentially pay an additional month’s rent as a “security deposit.” I don’t like it, and in fact it is one of the secrets that most people don’t know you can actually save a bit of money on.
How Do I Negotiate My Rent Deposit?
Yes, repeat, I can negotiate my rent deposit.
Negotiation scares most people. However, there are some rare people out there that really get excited at the thought of making someone else’s pits sweat from an unrelenting negotiation pressure. I know a few people like that, and I bet you do to.
For the rest of us though, negotiation takes some practice before we feel good at it. I remember the first time I negotiated for a lower rent deposit and I think my heart skipped a few beats in between me asking and the response on the other end. Actually, I had no idea that you were not “supposed to” negotiate, so I initiated out of pure desire to save as much of my money as possible. It is funny what you can do when you are staring at an empty bank account.
Negotiation works best when you have 2 factors in play- 1) good credit score above 680, 2) good rental history. If any of those are missing, then negotiation is a bit trickier.
Your Negotiation Game Plan
Probably the best way to illustrate this is to take an example.
Over the past few years I’ve lived in a couple of different apartments, but by far the most amazing place that I had the privilege to live in was in Long Beach. There were a few cons of this beach house, but let me talk about a few of the pros:
- The ocean as our backyard
- Dream kitchen
- Amazing, and sometimes cooky, neighbors
- Newly remodeled 1920’s architecture
- Large communal area with BBQ and fire-pit
As you might guess, with all those amazing pros came one an amazing price tag.
I had already made up my mind when I rented the apartment that I was not going to give them the full deposit they were requesting. Now, let me say, I’ve never thrown a number out for negotiation in which it was not okay on the first go-around. So, essentially, there was little negotiation and more flat-out acceptance of my offer. I do however offer what I think is fair.
I do not expect that it will always be that way, and I always prepare my friends to negotiate a little if needed.
I suggest you start by offering 30-40% off the “sticker price.” That is usually a good starting point and leaves you room to maneuver. The goal is to aim to save at least 25%, worst case scenario. Take what you’ve saved here and sock it away somewhere. Chances are you will need it later.
How Do I Ask
You actually do have to roll up your sleeves and do a little of the dirty work. You never ask- you never know.
Here is how I say every time I rent, in my exact words:
I know you can’t lower the price of the rent, however I would like to offer you ($ name the amount) for the deposit. I am deciding between two apartments and I like yours the best, but the other apartment is willing to negotiate on the deposit. Can you match this?
Works like a charm, every-single-time.
By the way, you can use this negotiation trick for almost everything you do in life. It has saved me a ton of money that I’ve been able to use to pay off debt, or maybe splurge for a nice weekend with my hubby.
Put the money in your pocket, not in theirs!