True Monthly Cost After Concessions
Updated October 2026
Net effective rent is your true average monthly rent after factoring in concessions like free months. Landlords advertise the "net effective" (discounted) rent to make a unit look cheaper, while the "gross rent" — the actual amount on your lease — is higher. Understanding the difference is critical, because when your lease renews, the increase is calculated from the gross rent, not the discounted figure you’ve been paying.1 This calculator shows both numbers and the real total you’ll pay over the lease.
Here’s the trap that catches renters every year. An apartment advertised at "$2,750/month net effective" on a 12-month lease with one month free actually has a gross rent of $3,000. You pay $2,750 on average this year — but next year’s renewal starts from $3,000.2
| Lease Detail | Amount |
|---|---|
| Gross (face) rent | $3,000/month |
| Free months | 1 month |
| Total paid over 12 months | $33,000 |
| Net effective rent | $2,750/month |
| Renewal anchor (next year) | $3,000 (the gross) |
Landlords prefer offering free months over simply lowering the rent because it keeps the face rent high. A high gross rent protects the building’s valuation (which is based on rent rolls), sets a higher baseline for renewals, and makes the discount feel temporary. For you, this means a "two months free" promotion can mask a unit that’s genuinely overpriced — and create a painful jump at renewal when the concession disappears.3
Always compare apartments on net effective rent for the first year, but budget for gross rent in future years. When negotiating, you can sometimes ask the landlord to spread the concession differently or convert it to a lower gross rent — which protects you at renewal. Factor your true housing cost into our Budget Calculator, and if you’re weighing a purchase, compare against our Rent vs Buy Calculator. Watch for renewal increases with our Rent Increase Calculator.4
The biggest financial risk of a concession-heavy lease is renewal shock. Imagine you sign a lease at $2,500 net effective ($3,000 gross with two months free on a 12-month term). You budget around $2,500. At renewal, the landlord offers the same unit at $3,090 — a 3% increase on the $3,000 gross. From your perspective, your rent just jumped almost $600 a month, or 24%, even though the landlord only "raised" it 3%. Renters who don’t understand net effective rent are blindsided by this every year. The defense is simple: always know the gross rent, budget for it in year two, and build a cushion for the disappearance of any concession.
Concessions come in several forms beyond free months: some landlords offer move-in credits, waived amenity or application fees, or a flat rebate. Each one lowers your effective cost and should be included when comparing units. This calculator lets you add one-time fees (which raise your effective rent) and credits or rebates (which lower it), giving you a complete picture. When comparing two apartments — one at a lower gross rent with no concession versus one at a higher gross rent with two months free — net effective rent is the only fair basis for comparison in year one, while gross rent tells you which will be cheaper long-term if you stay.
→ Always find out the gross rent. The advertised "net effective" rent hides the real face rent. Ask for the gross rent before signing — it determines your cost at renewal and your true budget for year two.
→ Budget for the renewal jump. When a concession disappears at renewal, your rent can jump 20%+ even with a small "official" increase. Build a cushion for this in your budget from day one.
→ Compare year-one and long-term costs separately. Use net effective rent to compare first-year cost, but compare gross rents for long-term value. A no-concession unit at a lower gross rent may win if you stay.
→ Try to convert concessions to lower gross rent. In a soft market, ask the landlord to turn free months into a permanently lower gross rent. It protects you at renewal, though landlords often resist because it lowers the building’s valuation.