The first thing any potential renter wants to know is whether there is an upfront broker fee or not? In many cases, most renters prefer No Fee apartments. It's a no-brainer, right?
No so fast! Lets take a closer look at how the system of fee or no fee really work -- and what ends up costing less or more!
When looking for an apartment in any neighborhood throughout New York City, including FiDi, the same questions apply: What are the benefits and drawbacks of the neighborhood, are the rents within reason, is the transportation easily accessible, does the building provide security and services? All of the answers are personal choices, you must weight the pros and cons of each question, of which most are personal preferences. When it comes to the question of rent, it is pure math, and rental fees must be taken into account when calculating the actual cost of the rent.
First, Rental Fees vary and are often negotiable. Some Rental Fees are a percentage of the yearly lease, while others amount to one month’s rent. There are a lot of variables to consider when deciding whether it is best to pay a Rental Fee or not.
On the surface a No Fee Rental seems like a no brainer, why pay a fee when you can get a no fee rental in the same neighborhood, it does not only come down to the math, it comes down to the services you receive when paying a fee to an agent..
Taking two identical apartments in like buildings in the same neighborhood, apartment one has a rent of $2200 per month with no fee for a first annual rent of $26,400, while apartment two has a rent of $2200 with a 15% Rental Fee, for a first year annual rent of $30,360, in this case it would appear that the No Fee is a the better deal.
However, when paying a Rental Fee it is negotiable, and some owners will include an extra month to make up for the rental fee. Negotiating the Rental Fee down to 9% with a thirteen month lease would bring the monthly cost of apartment two to $2213, while in apartment one the thirteenth month would be on a new lease with a 10% increase bringing the average monthly rent to $2215 per month for thirteen months.
The No Fee Rental many call an OP, which means that it is not really a No Fee Rental, OP means Owner Pays. The owner is willing to pay the fee for a number of reasons, lots of vacant apartments, they don’t have to spend advertising money or because of market conditions. If the owner is paying the fee, they are making it back somewhere, and it may be on your increase in your lease renewal.
To Fee or not to Fee is not all in the math, with a no Fee Rental you are giving up the services provided by a rental agent, who may just save you money in the long run. To pay a Rental Fee or not to pay a Rental Fee is not a simple decision, it takes careful calculation, and the willingness to look for and negotiate with the owners without the services of a Rental Agent, who can provide you with invaluable services when looking for an apartment that meets your needs precisely.
To learn more about the pros and cons of Fee and No Fee Apartments, contact us.