I met a guy recently who introduced himself like this… “Hi, I’m Justin. I teach renters how landlords think so they can get better deals for their housing dollars”. I immediately turned starry eyed 🤩🤩🤩 and was thinking, we NEED this dude on the blog!!!
Here’s some Q&A I had with Justin and a little more about how he helps people. Justin also wrote a book called Rental Secrets, where all his research and tips are revealed. All you renters out there, listen up! (and Landlords, please pay attention too because negotiation goes both ways and renting should be a win/win sitch!]
Justin! Welcome to the blog and thanks for sharing your secrets! First off, I’m curious why there are so many hidden tips given that renting is such a common thing. Why don’t renters know this stuff already?
Hey Joel! Happy to be here. I was baffled by this question early on as well. Unfortunately, the conversations we have about rent tend to focus more on complaints than solutions. But on top of that, as we approach adulthood there are typically no classes on financial education in general, let alone specific classes on controlling rent which is almost every young adult’s number one expense. And to make matters even worse there weren’t any books on the subject until I wrote Rental Secrets.
This leaves young adults learning by trial and error, which is among the worst ways to learn. It’s almost as if the goal was to set them up to fail. Clearly, learning from the prior experiences of others would be a much better way to go.
But, there’s another reason as well. We’ve been conditioned to have a consumer mentality. We walk into a store and see an item we want on a shelf. There’s a price on the shelf. We pick up the item, walk to the cashier, pay the price, and leave. Never once did it occur to us to negotiate with the cashier or their manager. And the vast majority of people apply this same mentality to renting.
Correct me if I’m wrong, but you also *own* rental properties… So why would a landlord share rental secrets? It’s your job as a landlord to suck every cent out of your tenants as possible, right? 😉
Yes, I own and operate rental properties and I also wrote Rental Secrets. This is not as contradictory as it may seem at first. There’s an unhealthy conflict between renters and landlords. This conflict results in renters damaging property or allowing it to be damaged. It leads to landlords not caring about renters. It also leads to poor government policy decisions that ultimately serve renters or landlords. I believe renters feel this way because they believe they have no power in the landlord-renter relationship. Rental Secrets is an attempt to correct that misconception and highlight just how valuable the renter is in the landlord-renter relationship. Renters will never put hammer to nail to build their own homes. And landlords choose to invest in badly needed quality housing for their retirement, so renters are living in the landlord’s retirement plan. When you look at it from this perspective, the importance of this relationship becomes much more clear.
Your second question goes directly to the heart of the animosity between landlords and renters. It’s a common misconception that it is a landlord’s job to squeeze every last dime from their renters. And it doesn’t help that some landlords do attempt to do this despite the fact that it isn’t in their long-term interest.
In reality, the landlord’s job is the proper stewardship and maintenance of the properties they are responsible for. There are several factors to doing this well, and yes collecting rent is part of that job. Rent pays for maintenance, upgrades, salaries, mortgages, and other expenses related to keeping the property functioning properly. Those landlords who don’t maintain their properties are asking for trouble down the road as this is a fundamental betrayal of the trust their renters place in them.
Second, Robert Kiyosaki tells this great story about the first investment property his wife bought. She’d just invested in the property the year prior, felt it was time to increase her rents, and typed up a letter to her tenants. Her goal was to increase the rent by a whopping $25. She sent the letters and the renters promptly moved out. The property stayed vacant for three months and the rent was approximately $400 at the time. So in an effort to gain $25 more per month she lost $1200 in rent. In addition to losing that rent, there were cleaning, repair, carpet cleaning, and painting expenses to prepare for new renters. And let’s not forget the cost of locating those new renters. The point being that getting top dollar might be nice, but continuity of cash flow is what’s most important when it comes to proper real estate stewardship.
Third, there’s a conversation I had with one of my clients last year that relates to your question. He owns a property management company in the San Francisco Bay Area. I asked him about how the eviction moratorium had affected his clients. His response was very interesting. He said those landlords who had cared for their properties over time and had bothered to maintain great relationships with their renters by and large fared quite well. Those who cut corners and didn’t bother to maintain renter relationships or their properties bore the brunt of the payment headaches. Moreover, those landlords would also be left to the tender mercy of whatever payment assistance the government offered because his company would not be helping them go after their renters legally.
And finally, renters have economic hiccups occur all the time. Sometimes they lose their jobs. Sometimes their cars breakdown. There are always unexpected expenses that pop up. As a landlord, if your goal is to squeeze every last dime out of your residents, you are setting yourself up for higher vacancy rates and increased interruptions in your rental cash flow because there won’t be any financial cushion for these common economic challenges. So squeezing every last dime from your renters doesn’t really help the landlord in their true job which is proper stewardship of their property.
Give us your top 3 bits of advice that all renters should know…
The first and most important bit of advice is that rent negotiation is possible. Landlords are people with problems but, if you know how to speak their language and know what the problems are, you can help solve them. And people who solve problems get paid. In this case, paid in the form of lower rent.
Second, summer is the most popular time for people to rent. Students are graduating from school and parents are getting situated before the next school year starts. Landlords know this happens every year, so their asking rents are higher in the summer. But, apartments still become vacant in late fall and winter. If you rent during that time of year, you could save up to 7% on your monthly rent.
Third, apartment community amenities are only great if you actually use them. Every amenity in an apartment community has a corresponding surcharge added to the rent for each apartment in that community. The amount of that charge depends on the total cost of the amenity, the proximity of the apartment to the amenity, and the level of convenience that amenity adds. So only choose apartment communities that have amenities you will actually use, because you’ll be paying for those amenities whether you use them or not.
Many landlords ask for a rent increase every single year. It’s ridiculous sometimes! How can a tenant slow down these rent increases?
When you left high school or college and entered the world of renting residential real estate, there were no classes providing any guidance on the language landlords use. And there’s a key phrase that relates to your question. “Our rents are competitive with the market”.
It sounds really nice, right. They’ve done all the work for you. You don’t need to lift a finger. And you can’t get a better deal. But, unfortunately it’s a lie. What they do is compare themselves to properties nearby, within a mile or two. It’s not a lie because they didn’t do the research. It’s a lie because their research has nothing to do with you or your situation. They don’t know anything about you or what you need. They assume the properties close by are their competition. But, their competition is really any property that fits your needs whether it’s close by or not.
You can slow these rent increases down by showing them who their competition truly is. You may have chosen their apartment community because it’s 30 minutes east of your job. But, there may be really great options 30 minutes west of your job. These other options aren’t considered in their pricing analysis to determine your renewal offer. So the trick here is to use market data to counter their renewal offer because you have options.
Got any tips for people that aren’t great at negotiation?
When renting an apartment it can feel like the landlord has all the power. As if they were the “Great and Powerful Oz”. But, it’s important to remember that landlords are people too, with challenges and problems. So the first tip is to remember the landlord is a person just like you.
People think they aren’t good at negotiation because they don’t know how. Negotiation is just a conversation between two parties who each have something the other wants. But the key is knowing what’s important to the other party. That’s where my book, Rental Secrets, comes in. It gives you a window into the landlord’s head and allows you to negotiate with the landlord in their language. So, the second tip is knowing what’s important to who you’re negotiating with, in this case the landlord.
Lastly, just remember that if you are working, have a decent credit score, and know how to play well with others then you are exactly the kind of renter that landlords vigorously compete for every day. You are bringing something very valuable to the table and it’s not just about the money.
Your books says something about “FREE RENT”. How is this even possible? 🤯
Free rent may sound like a fairy tale, but it happens all the time across the country. And it might surprise you to learn that Rental Secrets describes not one, but two ways to get it. The most common way is that free rent is used as a marketing tactic. Landlords are in serious competition for you, the quality renter. The person who has a decent job, a good credit score, and knows how to play well with others. And nothing says “Please tour my apartment community” like an offer of free rent. In this case, the free rent offer will last for a specific number of weeks. I’ve actually seen some communities offer up to 6 weeks of free rent.
The second way you can get free rent often never occurs to people because they think of the landlord as their enemy. But changing this perspective can reveal an amazingly powerful opportunity to get free rent. And that strategy is to work for the landlord. Yes, you can obtain free rent by working for your landlord.
And what makes this strategy so powerful is it typically has the same time requirements as a part-time job or side gig. Some US states require property owners to provide residents with an on-site employee. While specific laws will vary, there’s no reason why you can’t use these laws to your advantage. And even without such laws, the landlord still benefits from having a representative live on site.
In this role, you’d be responsible for keeping the property clean, being the first point of contact for your neighbors, letting vendors in, and showing apartments when necessary. When you consider that rents are as high as $2600 per month or more, you can see how this can be an amazing side gig. But, it gets even better. This free rent is an after-tax benefit because if you were actually paying that rent, you’d be using after tax dollars. In my book, Rental Secrets, I tell the story of one young man who took advantage of the strategy and he had absolutely no prior experience.
[**Note from Joel — there’s also the method of house hacking! It’s when you buy a small multi-family house (like a duplex or tri-plex), live in one of the units and rent the others out. In the right scenario, the other renters could potentially cover all your property expenses so you are living for free.**]
The market in my area is just SO HOT right now. How can I find more affordable options?
Every apartment is different. Even those in the same apartment community have differences. Some of these apartments are less desirable than others just because of where they are on the property. The apartment might face a busy street. It might have a poor view. It might be on the third floor with no elevator. It might not come with enough parking. But whatever the reason apartments can and do sit vacant even in hot markets.
This actually happened to me. It took two months to rent an apartment in one of the hottest rental markets in the country – Mountain View, CA. We had lots of people tour the apartment but no one ever rented. I asked my leasing agent what was going on. He said they’d get to the master bedroom door, turn around and leave.
The problem was the view from the master bedroom’s window which you could see from the bedroom door. Because of where the apartment was on the property, the view was obstructed by wire mesh in the window that was required by the local fire code. But, that obstruction was only part of the reason the apartment didn’t rent. Since people stopped their tour at master bedroom door, they never saw the double closets or the fully remodeled master bathroom. And if they don’t see it, as far as they’re concerned, it doesn’t exist. They likely completed the full tour at the other properties they visited. Since they’d only completed a partial tour of my apartment it’s at a distinct disadvantage. So yes even in “hot” markets it is not unheard of for apartments to experience significant vacancy. And in those two month’s that apartment community lost $6000 in rental revenue. And that vacancy pushed property managers to make deals.
Dude! Thank you SO MUCH for coming on the blog and sharing your tips! Any last words?
Joel, this was really fun and I hope we chat more in the near future. Here are a couple of thoughts I’d like to leave you with.
The landlord isn’t the enemy. In fact, thinking about them that way prevents people from identifying money saving opportunities. Landlords are people too and they absolutely have problems. By teaching renters how to save money on rent, I’m teaching them how to make being a landlord easier and making it easier for more people to choose to become landlords. We need all the quality housing we can get and housing only comes from people choosing to invest in it.
And I have a free gift for you! Moving to a new place is seriously stressful but if your looking to make your next move easier, check out my FREE e-book Apartment Search Secrets!
Justin Pogue is an award-winning author and real estate consultant based in San
Have a great day!
P.S. I have one last secret to share… I downloaded Justin’s book for FREE at the LA Public Library as an audiobook. Shhh… 🤫