If you’ve hunted for an apartment in New York City recently, you’ve seen the head-scratchers: “2 months free!” “$0 broker fee!” “Net effective $3,495, gross $4,200.” Great… but which deal actually costs less? Compare net effective rent vs gross rent with real NYC examples. See if 2 months free beats lower rent, amortize broker fees, and pick the best 12/15/18-mo lease.
This guide keeps it simple, uses real NYC-style examples, and shows you the math so you can compare apples to apples—without a calculator-induced headache.
The two NYC rents you need to know
- Gross rent: The sticker price. What the lease says you owe in a normal month before concessions.
- Net effective rent (NER): Your average monthly cost after spreading any free months and tenant-paid fees over the whole term.
Formula you can trust:
- NER (no extra fees) = gross rent × (months you actually pay ÷ total months)
- NER (all-in) = [total rent paid + tenant-paid fees] ÷ total months
What counts as tenant-paid fees?
- Broker fee (if you’re paying it)
- Amenity or “membership” fees you must pay for the term
- Not your security deposit (it’s refundable) or application fee (tiny)
Free months = a clean percentage discount
If a landlord gives free months, they’re giving you a straight percent off the term. That percent is: free months ÷ lease term.
(using a $4,000 gross rent for easy math):
| Lease Term | Free Months | Discount % | NER on $4,000 Gross |
|---|---|---|---|
| 12 | 0 | 0% | $4,000 |
| 12 | 1 | 8.33% | $3,666.67 |
| 12 | 2 | 16.67% | $3,333.33 |
| 15 | 1 | 6.67% | $3,733.33 |
| 15 | 2 | 13.33% | $3,466.67 |
| 18 | 2 | 11.11% | $3,555.56 |
| 18 | 3 | 16.67% | $3,333.33 |
Rules of thumb:
- More free months relative to the term = lower NER.
- One free month on 12 months beats one free month on 15 or 18 months.
- 3/18 free is the same percentage discount as 2/12 free (both 16.7%).
Is 2 months free better than a lower rent? The break-even math
Let’s compare two offers:
- Offer A: $4,200 gross with 2 months free on a 12-month lease (no fee).
- Offer B: No free months, but a lower monthly rent.
What monthly rent on Offer B makes the two deals equal?
Without a broker fee:
- Break-even rent = gross × (1 − free months ÷ term)
- Break-even rent = $4,200 × (1 − 2/12) = $3,500
So, if the landlord won’t do free months but will drop the rent to $3,500 with no fee, it’s the same cost as $4,200 with 2 free months.
But what if Offer B has a broker fee?
Amortize the fee into the monthly cost. If the fee equals F months of rent (e.g., 1 month or 1.8 months for a 15% fee), the break-even rent becomes:
- Break-even rent with fee = [gross × (1 − free/term)] ÷ [1 + F/12]
Using $4,200 gross, 2/12 free months:
- With a 1-month broker fee (F = 1): $3,500 ÷ 1.0833 ≈ $3,231
- With a 15% broker fee (≈ 1.8 months, F = 1.8): $3,500 ÷ 1.15 ≈ $3,043
Translation: once you add a tenant-paid broker fee, that “no-free-months” rent has to be dramatically lower to beat the 2-months-free deal.
NYC examples you can steal for your own comparisons
- Downtown Manhattan high-rise (OP, concessions heavy)
- Advertised gross: $4,500
- Term: 18 months
- Concession: 2 months free (OP = landlord pays broker)
- Total rent paid: $4,500 × 16 = $72,000
- NER: $72,000 ÷ 18 = $4,000/month
- Cash-flow note: You’ll pay $4,500 in 16 months and 0in2months.Security deposit is usually based on gross (0 in 2months. Security deposit is usually based on gross(4,500), not net.
- Long Island City new development (classic “2 free on 12”)
- Gross: $4,200
- Term: 12 months
- Concession: 2 months free (OP)
- Total rent paid: $4,200 × 10 = $42,000
- NER: $42,000 ÷ 12 = $3,500
- Equivalent “no-free” rent: $3,500 (from the break-even math above)
- Renewal caution: Your lease will likely list the gross ($4,200). Next year’s offer often starts from that higher number.
- Upper East Side walk-up (no concessions, tenant pays fee)
- Monthly rent: $3,800
- Term: 12 months
- Concessions: none
- Broker fee: 1 month ($3,800)
- Total rent paid: $3,800 × 12 = $45,600
- All-in cost: $45,600 + $3,800 = $49,400
- NER (all-in): $49,400 ÷ 12 ≈ $4,116.67
- Takeaway: Even a lower sticker price can cost more per month once you include the fee.
How to amortize broker fees into rent (OP vs tenant-paid)
NYC lingo check:
- OP = Owner Pays. The building pays your broker. You pay $0 broker fee.
- No-fee listing = typically OP in practice.
- Tenant-paid = you pay the broker fee. It might be “1 month” or “15% of annual.”
Math to compare two listings:
- Step 1: Compute NER from rent and free months: gross × (paid months ÷ total months).
- Step 2: Add the monthly impact of a tenant-paid fee:
- If it’s 1 month of rent: add rent ÷ 12 to the NER.
- If it’s 15% of annual: add 0.15 × (rent × 12) ÷ 12 = 0.15 × rent.
Example (12-month lease, $3,900 rent, 1-month fee, no freebies):
- Base NER: $3,900
- Fee add-on: $3,900 ÷ 12 ≈ $325
- All-in NER: $3,900 + $325 = $4,225
Example (12-month lease, $4,300, 1 month free, 15% fee):
- Base NER: $4,300 × (11/12) ≈ $3,941.67
- Fee add-on: 0.15 × $4,300 = $645
- All-in NER: ≈ $4,586.67
No surprise why folks chase OP buildings with concessions: the all-in NER is often lower.
12 vs 15 vs 18 months: Which term wins?
Landlords often attach more free months to longer terms. But not always. Use this table to see how it plays out at a $4,200 gross:
| Term | Free Months | You Pay (Months) | NER |
|---|---|---|---|
| 12 | 1 | 11 | $4,200 × (11/12) = $3,850 |
| 12 | 2 | 10 | $4,200 × (10/12) = $3,500 |
| 15 | 1 | 14 | $4,200 × (14/15) = $3,920 |
| 15 | 2 | 13 | $4,200 × (13/15) ≈ $3,640 |
| 18 | 2 | 16 | $4,200 × (16/18) ≈ $3,733 |
| 18 | 3 | 15 | $4,200 × (15/18) = $3,500 |
Strategy tip:
- If you want the lowest NER, ask the leasing agent how concessions scale by term. Sometimes asking for a slightly longer lease (e.g., 15 months) unlocks an extra free month that flips the math in your favor.
Cash-flow vs total cost: Which matters to you?
Two deals can have the same NER but very different monthly experiences.
- Upfront free months: You might pay $0 the first month or two, then the full gross for the rest. Great for move-in costs; tougher on budgeting later.
- Prorated “net” rent: The building charges the net number every month (e.g., $3,500 instead of $4,200), spreading the concession evenly. Easier to budget, but less common in NYC because landlords like to preserve the higher gross rent on paper.
Renewal risk and “the sticker shock problem
Concessions are for the initial term. At renewal:
- The new offer is usually based on the gross rent, not the net.
- If you stretched for the apartment only because of the free months, make sure you can afford something closer to the gross when the discount disappears.
Negotiation tip:
- If you can, prioritize a lower gross over more free months. It reduces renewal shock and can keep future increases smaller.
- If a building won’t budge on gross, ask for more free months or OP (no broker fee). Run the numbers again.
A quick NYC scenario showdown
| Option | Gross | Term | Free Months | Broker | Total Rent Paid | Fees | All-in Total | NER |
|---|---|---|---|---|---|---|---|---|
| A) FiDi tower (OP) | $4,500 | 18 | 2 | $0 | $72,000 | $0 | $72,000 | $4,000 |
| B) LIC new dev (OP) | $4,200 | 12 | 2 | $0 | $42,000 | $0 | $42,000 | $3,500 |
| C) UES walk-up | $3,800 | 12 | 0 | 1 month | $45,600 | $3,800 | $49,400 | $4,116.67 |
Moral of the story: OP + concessions often beat “cheaper-looking” apartments once you factor in the broker fee.
How to compare any two listings in under a minute
- Write down the gross rent, lease term, and free months.
- Compute NER base: gross × (paid months ÷ total months).
- Add any tenant-paid broker fee amortized monthly:
- 1-month fee: add (monthly rent ÷ 12).
- 15% fee: add (0.15 × monthly rent).
- That’s your all-in NER. Lower wins.
If you’re choosing between “2 months free” vs “lower rent, no freebies,” use the break-even rent:
- Break-even rent (no broker) = gross × (1 − free ÷ term)
- Break-even with 1-month broker fee = break-even ÷ 1.0833
- Break-even with 15% fee = break-even ÷ 1.15
Updated NYC context (what’s normal right now)
As of 2025, concessions remain common in:
- New developments and amenity buildings (FiDi, Downtown Brooklyn, LIC, Hudson Yards) especially on higher floors or larger lines.
- Off-peak move-in dates (late fall and winter) and during lease-ups.
They’re rarer in: - Renovated walk-ups in hot neighborhoods.
- Smaller landlords with high demand and low turnover.
Typical patterns we still see:
- 1–2 months free on 12-month terms; sometimes 3 months on 18-month terms.
- OP on new developments; 1 month or 15% broker fee on walk-ups.
- Rent-stabilized units follow different rules; focus on legal regulated rent and any “preferential” rent language.
The “American playbook” for negotiating in NYC
- If you see 1 month free, ask for 2. If you see 2 free on 18, ask for 2 free on 12—or 3 free on 18.
- Prefer lowering the gross if the landlord will play ball. If not, push for OP (no broker) and more free months.
- Use move-in timing. A later start date or longer term can unlock more concessions.
- Compare total cost, not vibes. A prettier lobby doesn’t pay your bills.
FAQ/ Frequently Asked Questions
It cuts through the marketing and tells you what you’re really paying per month. Two months free on a 12-month lease is a big discount (16.7%). If the alternative involves a broker fee, the “no-free” rent often needs to be shockingly low to win. So Net effective rent calculator is your friend.
