Rent increase for me, advertised for less

February 19, 2020 1:08 AM

I declined to renew my lease when my rent increased by $50, then found out they turned around and offered my apartment in a listing online for $300 less than that. Help me figure out what to say to the property manager.

I recently got a lease renewal offer from my apartment building, which would increase my rent for around $50 per month. Since last year's increase already had me at the top of my budget, I declined to renew and found a cheaper apartment elsewhere.

After I signed the lease at the new place, I happened to look online at my current building's offers, and was shocked to find out that my exact apartment is being offered for ~$300 less than what was offered to me, and around $150 or $200 less than what I paid when I first moved here almost two years ago. (It is my actual apartment, had the apartment number and everything listed.) I very likely would not have moved, which cost me a decent amount of money, if my rent was decreased, or honestly even if it had stayed the same.

I spoke with the assistant property manager to express my frustration and get some answers. She basically told me that if you are a current resident your rates will pretty much always go up, and that the rates were calculated by some program or algorithm and based on the market rates, so she couldn't give me any insight into why it was all of a sudden $300 less, besides "the market" and "algorithms."

While I understand market fluctuations, and the rental market here is supposedly slowing, there's been no news of it reversing, and I'm prettyyyyy sure it did not decrease by over 15% in the week or so between my lease renal offer and the posting online, which is what the $300 decrease represents.

I'm writing an email to the property manager to let her know basically what I told the assistant property manager - express my frustrations and ask for a better explanation. I'm not expecting to get anything out of this (it would be nice of course but not going to happen), but I would like some advice on what exactly to tell her.

For example, I looked up tenant protection laws and nothing seems to really address this situation. But are there other reasons why it's a bad idea to offer an apartment for so much less to a new resident, besides frustrated former residents? Or to base your rents on a program without any insight into why the program is doing what it's doing? Or anything else I'm not thinking of? Is this as messed up as I think it is?

I'm also open to hearing the other side - maybe this is business as usual. I understand getting new customers in the door, and would maybe understand a $50ish difference, but it's the large amount, AND the fact that it's so much less than what I paid two leases ago, that has me so mad.

Thanks.

(Oh, this is in Denver, CO if it matters.)

posted by anonymous to Home & Garden (20 answers total)

Since last year's increase already had me at the top of my budget, I declined to renew and found a cheaper apartment elsewhere ... I'm prettyyyyy sure it did not decrease by over 15% in the week or so between my lease renewal offer and the posting online

15% strikes me as a plausible margin between what they think they can get for it on the open market and what they think they can ask of somebody who (a) already has a stake in living there and (b) already showed them last year that they could be gouged a little harder without severe pushback.

Real estate is a sharks' market, and if there's a property manager between you and your landlord to prevent a personal relationship from developing, you're just another cell in a spreadsheet to them. Without that personal relationship, landlords will usually try to soak tenants for as much as they can get away with charging. By calling their bluff and moving out, you've done the next occupant a favour.

Bla bla bla algorithms bla bla markets is, in fact, the correct answer. I'm sorry you had to move. Perhaps next time you get a renewal offer, realize that you have another option apart from accepting or declining: you can research what comparable apartments are going for in your neighbourhood and use that knowledge to make a counter-offer. You might even end up wangling a reduction for the next lease period.
posted by flabdablet at 1:33 AM on February 19, 2020 [18 favorites]

The main reason the property manager says that current residents' rates will almost always go up, by the way, is that relatively few current residents actually do push back against proposed increases in any meaningful way. Most of the time, the rent extractable from any given property does follow the pattern you've experienced, where it ratchets up year on year until the tenant has had enough and just leaves, then drops back for the next tenant. That's basically the mechanism that sets the going rate in any given rental market.

If you join your local tenants' union, you'll get better access to the kind of information that all of you need to set the going rate in your neighbourhood via negotiations involving less tenancy churn.
posted by flabdablet at 1:43 AM on February 19, 2020 [5 favorites]

But are there other reasons why it's a bad idea to offer an apartment for so much less to a new resident, besides frustrated former residents?

You were a known quantity: you presumably paid your rent on time without trouble and maintained the property well. The next tenant might not be quite as desirable.

If they're a large management company or landowner, you might also recommend them negatively to other apartment-seekers.

(And, of course, they're losing money.)
posted by trig at 2:13 AM on February 19, 2020 [2 favorites]

(Actually they may or may not be losing money across all tenants, so that's probably a point less worth making.)
posted by trig at 3:02 AM on February 19, 2020

This is how large apartment companies do business. They jack up rent as much as possible per year until they are overpriced for your budget and you hit your pain point and move elsewhere to continue the cycle. They are figuring that your pain point is above what the market will bear, so they make more money that way.

My exact apartment was $400 less across the hall due to this situation but no, they wouldn't negotiate on my rent, but I could get that rent if I moved across the hall. Instead I moved out, and they were fine with that, even though they'd have to relist my apartment lower.

I wouldn't waste the time writing an email expressing your frustration because their low level employees probably feel the same way and get the rules dictated from above.
posted by TheAdamist at 3:49 AM on February 19, 2020 [6 favorites]

If they didn’t value your money enough to keep you, why do you think they’ll value your opinion? Don’t waste any more energy on this company, wash your hands of it and move on.
posted by Jubey at 4:08 AM on February 19, 2020 [26 favorites]

This is absolutely business as usual.
posted by The Underpants Monster at 4:22 AM on February 19, 2020 [2 favorites]

Yeah, this is exactly why I try not to rent from management companies, and try to deal with actual people instead.
posted by Grither at 4:25 AM on February 19, 2020 [1 favorite]

They don't owe you an explanation and aren't obligated to charge you the same rent they would charge a new renter. They'll do whatever they think will make them more money. It probably costs you more to move than it costs them to re-lease the place, so they have the leverage.
posted by grouse at 4:32 AM on February 19, 2020 [4 favorites]

I agree with Jubey. Don’t waste any more time thinking about this. I assume the apt management isn’t either.
I’ve had the same thing happen to be, for much higher amount. I talked to the leasing office, they agreed it was ridiculous, but shrugged it off and couldn’t/wouldn’t do anything about it. Their corporate owners have some sort of algorithm to calculate that. And that’s all there is to it.

Sucks! The industry standard sucks for us tenants.
posted by Neekee at 5:08 AM on February 19, 2020 [1 favorite]

It's a fairly common tactic across industries - those who renew get charged more - see also your phone, cable and insurance bills. Once you've signed on the dotted line, your moving expenses / hassle of switching providers are worth some money and they're counting on you being willing to put up with rate increases because of that. It's not surprising that new customers might be charged less to get their foot in the door, even though it sucks.
posted by peacheater at 5:15 AM on February 19, 2020 [2 favorites]

I'm with Jubey and Neekee. This is something in your circle of concern (obviously) but not in your circle of control (or circle of influence, if you prefer). There is nothing that you can do about it, so dwelling on it -- or writing an email -- does nothing but make you unhappy. You shouldn't focus your energy on this for another moment. You should forget about it and move on.
posted by jdroth at 5:50 AM on February 19, 2020 [4 favorites]

In the property management industry this is called "revenue management" - there are several software platforms companies can use, or modules added to their bookkeeping or other tools, that spit out rent numbers to them. The leasing agents likely have little to no flexibility in what the software generates and may not even understand the factors that go into it.
posted by misskaz at 6:56 AM on February 19, 2020

The price someone might pay to stay in their home of X years (+$50/mo) versus the price needed to quickly rent the place to a new tenant (-$300/mo) are not necessarily the same.

Also, once you declined to renew, the LL was looking at a monthly loss on an empty apartment and had an incentive to reduce the rent to get it filled. From your figures, it sounds like your rent was about $2k/mo. The LL "loses" $3600/year by reducing the rent by $300/mo, but the LL loses more than that if the apartment is empty for 2-2.5 months.

The part of this that seems to represent a market failure is that the LL may have been better off keeping you at last year's price rather than having you walk out over $50/mo. But they may administer so many apartments that perhaps they don't have time/resources/care to negotiate these things on a unit-by-unit basis, which sucks for tenants.
posted by Mid at 7:16 AM on February 19, 2020

You can write basically exactly what you wrote in this question on apartment review sites and hope you empower future renters to push back against the increases. Writing to the property manager seems unsatisfying due to the almost guaranteed apathy from them and feeling of wasting time on you end, but until I read the answers here I also never thought to negotiate a rent increase by seeing what new tenants are offered, so why not share that newfound knowledge. It will help you express your frustrations and possibly help more people feeling like you do now. I’ve rented countless apartments and have never encountered this. Any rent increases have been reasonable and still made my apartment cheaper than equivalent places nearby, even in places like Ballard in Seattle where the market was insanely competitive. Guess I’ve been lucky — why not help educate people like me?

There is zero drawback to writing a couple reviews as long as you’re not spending too much time writing them, but you’ve essentially already written the review here. If the property management company has a yelp or google business profile you can also write something there. I’m talking factual, non-emotional — not that you’ve been overly emotional in your question here, I just mean I’m not talking about bashing them for wanting to make money, but being clear that tenants should be aware they won’t have any incentive to stay long term in this rental. It’s good info that you (and I) now know.
posted by the thorn bushes have roses at 8:52 AM on February 19, 2020 [5 favorites]

Red Peak? Sounds like Red Peak.

DM me if you like.
posted by 2soxy4mypuppet at 10:36 AM on February 19, 2020

What everyone said, but it is also worth considering that on a $2000 (?) rent, $50 is a 2.5% increase, which is not an absurd rate of increase (NYC rent-stabilized tenants this year saw 1.5% for a one-year, 2.5% for a two-year). Not that that helps at all if you're at the top of your budget, but maybe it will make the original increase seem less dastardly and so make it easier for you to let it go.
posted by praemunire at 1:04 PM on February 19, 2020

Well, 1.5% is an absurd rate of increase if market rates have dropped 15%. Part of the tradeoff with rent stabilization is that it acts as a bulwark to prevent market rates from ever dropping.

The landlord knows that moving costs money and time, which you may not have. It'll likely cost you more than $600, so they figure you'll be willing to pay $600 extra over the next year to stay in place, especially since you don't need to come up with it all in advance. It doesn't hurt to negotiate, but your best weapon is to call their bluff-- which you did.
posted by alexei at 1:37 PM on February 19, 2020

Market rates haven't necessarily dropped 15% over the course of a year (which would be pretty extraordinary and something you'd be unlikely to see outside of the context of a recession or similar localized economic downturn). Landlords like this pitch the initial rent a bit under market so they can attract tenants whom they can soak in later years. First year is akin to a loss leader. In more sophisticated markets they offer you one or two months rent free, so that the discount doesn't affect their actual rent roll.
posted by praemunire at 8:07 PM on February 19, 2020

I managed to negotiate a rent decrease from a property manager once when I was in this situation. I think it was an increase to $1100 vs 800 or 900 to new renters.

Everyone told us it was impossible, unheard of, but we got them to agree to $950 iirc.
posted by billjings at 12:36 AM on February 20, 2020 [1 favorite]