Negotiations are always rough, and it always involves, rightly so, give and take from both sides. We never get the rent we want, but either do they (which is very, very good for our wallets). The grump in me often thinks negotiating isn't worth it. If I'm so unhappy, why not just move?
Besides the fact that I'm truly happy with where I live, and Jason is too, there is a way to calculate if moving is really worth it. And you can use this analysis in several areas of your finances to ensure the cost you're paying isn't truly exorbitant.
In this example, there is a cost to living here month after month and there is a cost to not living here. Let's say our rent is $100 (don't I wish!?!?!), and the management wants to raise it to $103. I have found that a 3 percent increase per year is pretty standard, if the landlord/management attempts to raise rent. We lived for several years in an apartment where we never had an increase in rent, and certainly, there are cases where management may ask a tenant to pay more than a 3 percent raise or less than a 3 percent raise.
Is the $3 extra per month worth staying? If we moved, we would hire movers. Let's say movers cost $50. We painted some walls in our house (which we do every where we have lived, minus our first home). We would need to purchase white paint to paint them back. That would cost, let's say, $10. Then, we would need to purchase paint to paint our new home. Let's say that would cost $50. Then, we would possibly need new items for our new house. For instance, when we moved from our previous home to the home we live in now, we needed curtains in other sizes as our previous curtains didn't fit the new windows. Items like this, let's say, run $100.
I do research and discover that if we moved to a comparable place that we would be happy living at, our rent would be $90, a savings of $10 off what we're currently paying and $13 less than what the management is asking us to pay with our renewed lease.
Let's keep in mind that I haven't even yet figured the cost in time of packing boxes, unpacking boxes, etc. I'm not a big fan of moving, so this isn't fun and isn't something I'm really all that willing to spend time on.
The cost of moving, minus the cost of time in moving, runs about $210. Assuming we agree to pay the full rent the current management is asking us to pay, which is $103, versus what we could pay at a new apartment, which is $90, it would take us about 16 months of living in the new place before we would break even. The money we spent in moving would then be covered, and anything after the sixteenth month, we would actually see the savings of $13.
That is a very long time to break even on moving from one apartment to another and also assumes that after the first 12 months is over, the new property management doesn't attempt to increase our rent, which is unlikely.
We have found, in this particular example, that we can always negotiate our rent at least 1 percent down from what management is asking. In this case, that would save us $1 per month which means it would take almost 18 months before we broke even.
That's not worth it to us. It's better to just stay where we are, especially since we truly love our home.
Other examples you can use this analysis for to determine the right financial action is any tangible item that could save you money in the long run but costs money to obtain. These items may be:
- A blender for making smoothies (instead of buying smoothies from a restaurant/diner/etc.)
- Dryer racks to dry your clothes (instead of using electricity/money/etc. to dry your clothes)
- A heating blanket/mattress pad/pad (instead of using a conventional heater to keep warm)
- Cloth diapers (instead of using disposable diapers)
The important thing is to use this analysis in your life using your own situation to determine if you're doing the right thing for you and your family. It will help you from making decisions you may regret later, and it will make decisions easier and clearer.