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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Renting any home or apartment requires . This document outlines many essential details about the landlord/tenant relationship, including the length of time the tenant may live there and the rules they must follow as a resident. But most important is the amount of rent the tenant must pay each month — this amount is the gross rent. Gross rent definition
Gross rent is the amount of rent stipulated in a rental lease. When you sign a lease, you agree to pay a certain amount each month, and the combined amount of all monthly rental payments is your annual gross rent. For instance, if your monthly rent is $2,000 and you have a one-year lease, your annual gross rent would be $24,000. Gross rent may sometimes include utilities (check your lease to be sure), but it typically does not take into account other costs, such as broker’s fees. Gross rent vs net-effective rent
Things get slightly more complicated if a landlord offers a special deal or discount to attract new tenants, such as one month’s rent for free. When you deduct the value of the discount, you get what’s known as . Monthly net-effective rent will appear lower than gross rent because it spreads out the total rent amount over the full length of the lease — even though no rent is charged for that one special month. However, this “free” month often isn’t free at all. In reality, that missed payment is usually split up into 11 equal parts and added to the remaining 11 rent payments for the year. At the end of the lease, you end up paying the same amount that you would have if the full year’s gross rent was split into 12 equal parts. Gross rent example
Understanding gross rent can be confusing if a landlord is advertising the number that’s actually the net-effective rent. Here’s an example: Emily is looking for an using an online listing service. She finds one she likes with an advertised rent of $916.67 per month, and the landlord is offering the last month free. When she goes to see the apartment in person, the landlord tells her that $916.67 is the net-effective rent, spread out across all 12 months of the lease. The gross rent is $1,000, spread out over 11 months, with one month “free.” So over the course of the one-year lease, Emily will write her landlord 11 checks for $1,000, rather than 12 checks for $916.67 — either way, the gross annual rent on the apartment is $11,000. Bottom line
Gross rent is the total amount of money it costs to rent a home or apartment, as outlined in the lease. Landlords may offer what seems like a deal by advertising one month free, but it’s likely that the apartment’s gross annual rent remains the same — the tenant will pay the same total amount over the course of the year, whether it’s in 12 smaller monthly payments or 11 larger ones, with a one-month reprieve in which no rent is due. SHARE: Taylor Freitas is a freelance writer and has contributed to publications including Bankrate, LA Weekly, CNET and ZDNet. Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Related Articles