Find your true average monthly rent when a lease advertises free months — the number that lets you compare offers fairly.
Net effective rent spreads free-month concessions across the whole lease, giving the true average. But you still pay the FULL face rent in the paid months — budget for that, not the effective figure. When the concession ends at renewal, rent jumps to face. General information only.
Landlords advertise concessions like "2 months free" using net effective rent — the face rent spread over the whole term. It's genuinely lower on average, but two catches: you pay the full face rent every paid month (budget for that), and at renewal the concession usually vanishes, so rent leaps to the face amount.
Effective rent = face rent × (term − free months) ÷ term
"Two months free" is a real discount and a genuine piece of marketing arithmetic at the same time. Net effective rent takes the concession and smears it evenly across the whole lease: face rent × (term − free months) ÷ term. On this calculator's defaults — a $3,000 face rent, a 12-month term, 2 free months — you pay for 10 months, so the lease costs 10 × $3,000 = $30,000, and spread over all twelve that is $30,000 ÷ 12 = $2,500 a month effective. The concession is worth $6,000. None of that is dishonest. It is simply not the amount that leaves your account.
First, the monthly cash gap. In each of the ten paid months the landlord debits the full $3,000, not $2,500. Budget off the effective figure and you are $500 short every paid month — the free months arrive at the start or the end of the term, not as a discount on each bill. Whether you can afford a "$2,500 effective" flat depends entirely on whether you can afford $3,000 ten times.
Second, and less obvious: the discount and the renewal are not the same percentage. Going from $3,000 down to $2,500 is a 16.7% discount. Going from $2,500 back up to $3,000 is a 20% increase. That is not a trick of presentation, it is what happens whenever you reverse a percentage change — the base moved. So a renewal at the identical face rent, with no increase at all, lands as a 20% rise in what you actually pay, or $6,000 more across the following year. If the landlord also raises the face rent, you are absorbing both at once. This is the single most useful thing to know before signing a concession lease, and it is why "what does renewal look like?" is the right question to ask at the viewing rather than eleven months later.
Used for its actual purpose, the effective figure is the right tool. A $2,500 flat with no concession and a $3,000 flat with two months free cost the same over a year, and only the effective calculation shows that. Two rules keep the comparison honest: compare over the same term, because a concession spread over 24 months is worth half as much per month as the same concession over 12; and compare like for like on what is included, since a unit bundling parking or utilities can beat a lower effective rent outright. A longer term with the same free months is always the weaker deal, even though the advertised discount is unchanged.
One lease, one concession, one term is a calculator problem and this page solves it. Several units, each with a different face rent, term and concession — or a landlord tracking what concessions actually cost across a portfolio — is a comparison table, because the deals only rank correctly when the terms are normalised side by side. That is the job a landlord command center does, holding face rent, concession, term and renewal date per unit so the effective figures stay comparable and no renewal date arrives unannounced. Either way, note the renewal date somewhere you will see it, because the concession will not remind you.
The face rent — that's what leaves your account each paid month. The effective rent is for comparing offers, not for monthly cash flow.
The concession was a one-time incentive. Renewals typically drop it, so a "$2,500 effective" unit can become "$3,000" in year two. Ask what renewal will look like.
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