Yesterday I spoke to a lady from California who is interested in renting a Miami Beach Luxury Condo in the South of Fifth Area for a year. She wants a two bedroom unit in one of the luxury buildings. Her budget is between $5000 to $7000 a month. She would prefer not to spend more than $5500 a month and asked if paying in advance would help her reach this goal? She went on to explain that where she is from this is a common negotiation tool and most owners would gladly accept a year’s rent in advance in return for a big discount.
She was quite surprised when I told her that that bargaining chip usually doesn’t work here and for more than one reason I don’t recommend it.
Why I don’t recommend offering a year’s rent in advance in order to get a discount.
1. First & most important. Quite a few of these buildings are going to require that you sign an addenda that is part of the application process and is an agreement between you, the owner and the building that if for some reason the owner doesn’t pay maintenance during the term of the lease, the building can effectively collect your rent directly from you to make up for the owner not paying. If you pay your rent a year in advance and the owner for some reason decides to stop paying monthly maintenance, you could find yourself in a challenging situation. This is probably the #1 reason I wouldn’t do this.
2. I have never really seen this work. There isn’t really a mentality here that paying in advance is advantageous to anyone. Most owners in the Miami Beach luxury condo scene and their agents know ultimately what they can get per month and if you make an offer that is reasonable, they will take it. If you are talking about a $2000 discount off the top of a month’s rent (within the $5000 to $7000 price point) generally speaking there are plenty of luxury renters in this price point in Miami Beach and most owners in this price point can afford to hold out for their number. Unless the property is highly overpriced per month based on what comparable units are renting for, I wouldn’t expect to get such a deep discount. Now if you are referring to a $20,000 to $25,000 a month rental, $2000 in this price point is different than $2000 in the $5000 to $7000 price point.
3. Do you really know the numbers for offering a year in advance? In Miami Beach, two months of advanced rent plus a security deposit is pretty standard. Some buildings also require a common area deposit and of course the standard application fees and other deposits. Therefore, in just a standard lease in Miami Beach, you are already going to be laying out a lot of money in advance.
In the end we are always happy to do whatever our rental customers feel is the best for their situation and we are more than happy to test out offers and work the offer to our customer’s best interest. In our professional opinion, offering a year’s worth of rent is not necessarily a good idea and in the end, it’s doesn’t necessarily give you a better bargaining chip.
Copyright © By Jamey Prezzi 2011 * All Rights Reserved* Why Offering a Years Rent in Advance for a Miami Beach Luxury Condo Is Not a Good Bargaining Chip