Tom's Apartment

Sad as it may be, I may have to move out of my apartment at the end of the year. The luxorious Royal Crest Estates is trying to increase my rent. When I originally signed my lease, I was given a “discount” so that my rent was only $879 a month. Now that it’s a new year, they’re simply removing the discount and trying to charge me $1,179. A little steep in my opinion.

If you look at that listing though, you’ll see it listed at $1,019 a month for the same apartment. I asked about that, and apparently again that’s a “move-in discount.” So they basically just offer sweet deals to people to get them in there, and then promptly raise the price to the “fair market price” after a tenant’s first year.

This makes very little sense to me for a few reasons. I think the ultimate problem is that tenants find moving too much of a pain and choose instead to suffer through this nonsense (I surely won’t be one of them) rather than move out when they raise the rent. If tenants were more price-sensitive and didn’t mind moving so much, I think we could finally convince apartment complexes that the way it works is like this…

There are two rules I think we can assume are true:

  1. An apartment complex makes the most money in any given year by having all of the rooms filled by paying tenants (I think they understand this)
  2. When a given room is empty, it costs the apartment complex money to get it filled. It costs them to advertise, have people on staff to demo rooms, offer referral bonuses, etc. (I hope they understand this).

Given these facts, consider my apartment as a single unit. If I leave, that unit becomes open and based on rule #1 they will have to fill it. Filling it, based on rule #2, costs them money. If they do fill it, they will most likely charge the new tenant the “move-in discount” price for the next 12 months. So assuming I move out, my unit will earn the apartment complex the discounted rent minus the cost of finding people who will pay it.

Now, if I choose to stay in the unit it won’t cost them anything to get me in there – I’m already bought and paid for as a customer. If they force me out, it’s going to cost them to replace me.

If I stay and pay the rent they offer to new tenants, my apartment will be making them slightly more money. If I stay and pay a higher rent, that will of course give them even more money, but I’m not going to do that. Reason being, from what I can tell, they are totally misusing the term market price. The market price is actually what they are calling the “discounted” price. It’s the price they have to offer to the open market to get new tenants to purchase.

So, from the apartment complex’s perspective, it should make more sense for them to offer me a lower price than to replace me with someone else who will end up paying that same (lower) price.

From my perspective, there are plenty of other apartment complex’s in the area. I swung by Windsor Meadows and got a price quote. It is, of course, lower because to them I am a “new tenant” and so they’re going to offer me those prices.

Next week we’ll see how this all turns out. I’m hoping that if they realize I don’t find the cost of moving very high, they’ll see that it’s in their interests to offer me the lower price. If everyone was so open to moving, it would limit the amount of leverage these companies have, and we could all be paying less year-over-year for apartments. Or, I should say, we’d all be paying closer to the fair market value for them.

4 thoughts on “Tom's Apartment

  1. “So, from the apartment complex’s perspective, it should make more sense for them to offer me a lower price than to replace me with someone else who will end up paying that same (lower) price.”

    Only if we assume that the new tenants will stay for a short period of time. If they stay longer, and end up paying the “real” price for the room, then over the long run it might be better for the apt. complex to boot you out.

    I agree that the determining factor is how much it costs (the actual price as well as the sociological price) people to change locations.

    Another problem in this situation is lack of information. The apt. owners have really no way of knowing how much you in particular value staying in your apartment. Although they might be able to make a general prediction that in your case, being single and not having very many possessions, not being tied down the particular area, etc., they still might just be better off in the long run with a general prediction of how much the average consumer values not having to move.

    And finally, lots of times the prices are set so high up the food chain that the person you’re dealing with may have only a very small amount of discretion to change the price, even if they realize that the apt. complex would definitely be better off keeping you as a tenant.

  2. Then again, on the bright side, you can just move in with Schulte and his “roommates” if the whole thing doesn’t work out.

  3. Yeah that’s the funny part. I can envision me moving to another apartment complex this year, and then moving back here the next year. That would be hilarious.

    Coon, you’re right though. If they can find some sucker to move in who will suffer through the rent hikes, than this time next year they’ll be better off.

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