The Net Effective Price is the monthly rent paid by a tenant to the landlord after factoring in free rent incentives included at lease signing. The term is common when searching for apartments for rent in NYC, especially during the off-peak winter season when landlords increasingly offer rental incentives. You can find a deeper discussion of net effective rent on our rental guide.
Here is a simple example. When a landlord is asking for $3600 monthly gross rent, but is offering 1 month free on a 12 month lease. The net effective rent is the gross rent * (12 months – 1 free month) / (12 months). In this case, $3600 * 11/12 = $3300 net effective.
Net effective pricing is useful for comparing rent in a building offering renter incentives to a building that is not. However, keep in mind the net effective is not guaranteed after the initial lease period – in fact without further negotiation, you can expect to pay the gross rent after the initial lease period.
Also, not all net effective calculations are 1 month free on 12 months. This week’s inventory from the 2 Gold Street, a popular financial district high rise, has 3 different net effective structures in the fine print! You get 1 month free on 12 for a studio, 1.5 months free on a 2 or 3 bedroom, except one listing, unit 5012, offers 2 months free on a 16 month lease. In every case, the “rent” column shows the net effective already, so to compute your gross rent at renewal, you would need to do the math backwards!
