HOW TO GET A LANDLORD TO ACCEPT ONLY 1 YEAR RENT IN ADVANCE

As a real estate professional, I have encountered so many scenarios in which prospective tenants finally find their desired home after an exhaustive search only to be turned down by the landlord because they just couldn't afford to pay the high rent coupled with paying multiple years in advance. Prices like N600k per annul by 2yrs rent in advance for a 3bedroom flat in posh neighborhood in Enugu, Nigeria is quickly becoming common place in the Enugu Real Estate market.
In fact, every prospective tenant searching for accommodation in Enugu must have come across circumstances like this. I'm sure you have.

Despite the time consuming effort it takes to find your desired home, high rents with multiple years advance payment has yielded many unfavorable consequences. Prospective tenants are denied of the homes that they have already fallen in love with, that they are willing to rent as a consequence of high rental rates. Such rejection can fuel people's in securities, it can reduce morale causing the person to be less productive at home, at work and in the society. Such rejection can also cause depression due to the psychological letdown associated with being forced to rent and reside at less desirable home that is more affordable to the prospective tenant. Prospective tenants aren't alone in suffering the consequences of such high rates, landlords also share in this suffering. First of all, if the rent of the property is high or higher than comparatively similar properties, prospective tenants won't be that eager to pay the high premium even though the apartment is tastefully finished to feature the most coveted attributes a rental property is expected to have. By setting such high rates, landlords risk losing potential rental income, income that can be otherwise used to satisfy immediate needs. The landlords also risk having their property remain vacant for a very long time without high prospects of renting it out.

Based on these observations, we have come up with an idea of how to help prospective tenants to get the house that they want no matter the cost. The solution we propose is a win-win situation for both the prospective tenant and the landlord meaning that everybody will get what they want.

Most landlords shy away from accepting 1yr rent in advance because they are mostly afraid that a prospective tenants' financial circumstances could change over time and such tenant may not be able to renew their rent in the subsequent years to come so they insist on collecting 2yrs rent in advance as a way of reducing that risk.

So the only compromise here is installmental payments. A prospect can get a landlord to accept installmental payment by following the steps below.

Step 1:

After you have selected the house you want to rent, (We will talk about how to select a house at a later time) Inquire from your estate agent if the landlord is open to negotiation. The agent will most likely say 'NO' but don't let that worry. Insist on negotiating with the landlord/lady.

Step 2:

Determine the rental rate; Most landlords insist on 2yrs rent in advance. Be on the look out for those who are willing to accept 1yr 6months rent in advance. This indicates that the landlord is flexible. We like flexible landlords.

Step 3:

Reassure the agent; Real estate agents are motivated by their commission and perceive your meeting the landlord and a reduction in rental rates as a threat to receiving their potentially high commission so they sabotage your efforts to get a bargain. You will have to reassure the agent that their agreed upon fees are protected irrespective of the final rental price you pay to the landlord. That way the agent will see the incentives for helping you get a bargain. We need the agents.

Step 4:

Always accept to pay 2yrs in advance.
Step 5:

This is the most important step, the deal maker. As a prospective tenant, after you select the house you want to rent but find that you don't have enough money to pay 2yrs rent in advance, offer the landlord a negotiable instrument. This instrument will serve as a guarantee/collateral that will assure the landlord that his balance will be paid no matter the eventual outcome. Examples of negotiable instruments are bank post-dated checks and or a bank guarantee popularity called BGs by bank official. The BGs are more preferred by landlords when compared to post-dated checks because a BG means that the bank is undertaking to pay the debt on behalf of prospective tenant in case the tenant defaults on payments. This is not to say that post-dated checks aren't safe. As a matter of fact, issuing a bounced check has legal consequences, offenders are at risk of spending 6yrs in prison if found guilty by a court of law in Nigeria.

Case study:

Suppose you eventually find a home,(a tastefully finished 3bedroom apartment) you fall in love with it and decide to rent it but the rent is N600k per annul and the landlord insists on collecting 2yrs rent in advance bring the rent to a total of N1.2m(excluding fees).

Suppose you can only dispose of N700k at the moment for rent because you will still need money to furnish the apartment and can't dump your entire budget on rent alone.

In this case, you should accept to pay 2yrs rent in advance but offer to pay in installments. The offer should look like this,

-Full payment of the 1st year's rent.

- N100k down payment on the second year's rent.

- offering the landlord a post-dated check or a bank guarantee from a reputable bank covering the balance. You will however need to be clear on how long you will need to pay the balance in full(usually within 6mths)

- other incentives like paying a 5%interest the balance also helps in convincing the landlord to take the deal.

From my experience, this offer structure has a his success rate and only a foolish landlord will reject this offer.

Note: the requirements, commissions, legal fees and conditions for getting a BG varies from one bank to another so be sure to inquire from your bank for more information.

In conclusion, the real estate market in Enugu is constantly evolving, consumer preferences are always changing. People are looking for ways to rent the homes that they want at a lower cost and a convenient payment schedule. The solution that a flexible payment plan offers the market has the potential of stimulating financial growth and satisfying more customers in a some what stagnant market environment.

If you have another solution to offer or have something that you feel that was left out but is important to add to this post or if you disagree with this post, please feel free to leave a comment and share your views with us. Your contribution could be the solution we are looking for.

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