So you’ve found your dream apartment and the price is right, except you’re totally lost in translation when your locator or leasing agent mentions “self pro-rating”, wtf?!
Rest assured that we’ve been there too (before working at Smart City), and we want to simplify and break down rent specials, prorations, and concessions for you. Because let’s face it Houston, we know you love a good discount and we’re just here to help you understand it!
Prorating a Special
Ready to dive in and figure out how to effectively divide up your monthly rent expenses over the course of a lease term?
Let’s say, hypothetically, that you sign a 12-month lease and your rent is $1,200 per month.
The amount in full that you would pay over the lease term would be $1,200 x 12 which equals $14,400.
When you have a special added on to this, some properties allow you to keep this month as a credit on the account so you can stretch it out over the lease term.
Let’s use the example of a one-month free special (bless up for free rent!)
Calculating the Incentive
Say your rent is $1,200 per month and you signed a 12-month lease. If a property offers a one-month free special, you automatically save $1,200!
$1,200 / 12 = $100 saved per month! So you’re effectively only paying $1,100 per month!
When a property has a special that’s “upfront”; this normally is one month free or two months free that is given at the beginning of the lease. When a property has an upfront special, you are totally in charge of managing the special they give you.
The way we like to handle self-prorating an upfront special is by using a savings account! Let’s use the same example as above.
Your rent is $1,200 per month plus one month free. Using the above example, we know that the prorated amount is $1,100 per month.
So, say you move in in January. You would put $1,100 into a savings account that month and pay nothing (yes, zero dollas) to the property. Then, every month, you take out $100 from your savings. Each month you will pay the $1,200, but $100 will come from savings! Effectively you are still only paying $13,200 for the lease term!
Left as a Credit
The property puts it on your account for you, and you can self-prorate it from there each month when you pay your rent! Basically, the money is automatically applied and you only have to pay $1,100 each month (based on the above example).
Basically, it doesn’t really matter if the credit is on the account or not. In the long run, it saves you big $$!
Curious how much you can save? We can help you find a stellar deal with a great special! Contact us today!