What a concession is, in one line
Free rent, given once, spread across a whole lease term. That means the monthly number it produces is never the number on the sign.
Take a sample Houston offer: two months free on a 15 month lease at $1,450 advertised. That’s $47.67 a day. Two free months are 60.84 days, so you pay 395.16 of the lease’s 456 days. That’s about $18,837 total, or $1,257 a month. Not $1,450, and not the “$1,208” you’d get if you spread it over twelve months in your head.
That gap (between the sign, the quick math, and the actual figure) is where renters lose the comparison. Everything below is how to close it.
The formula
Three steps, and you can do it on a phone:
- Daily rent = advertised rent ÷ 30.42 (the average days in a month)
- Days you pay = lease days − free days. A 12 month lease is 365 days and a 15 month lease is 456. A free month counts as 30.42 days, a free week as 7.
- Effective monthly rate = daily rent × days you pay ÷ lease days × 30.42
That’s it. The only trap is dividing by the days you paid instead of by the full lease. That just gives you the rent again.
Worked example: two offers that look identical
Both units advertise $1,450.
Offer A: two months free on a 15 month lease. $47.67 a day × 395.16 days paid = $18,837. Divided by 456 days = $41.31 a day, or $1,257 a month effective.
Offer B: one month free on a 12 month lease. $47.67 a day × 334.58 days paid = $15,949. Divided by 365 days = $43.70 a day, or $1,329 a month effective.
| Comparison | Offer A | Offer B |
|---|---|---|
| Advertised rent | $1,450 | $1,450 |
| Free months | 2 | 1 |
| Lease term | 15 months | 12 months |
| Months paid | 13 | 11 |
| Total paid | $18,850 | $15,950 |
| Effective monthly rate | $1,257 | $1,329 |
Offer A is better by about $72 a month. It does tie you in for three months longer, and “two months free” made the gap sound much bigger than $72.
Why 15 months?
A longer term spreads the free rent over more months, so the effective figure looks lower. The advertised rent doesn’t change, and that’s the number your renewal starts from. It’s the number reported to the market too.
There’s a second effect: a 15 month lease signed in June ends in September. When your lease ends matters. A renewal that lands in a busy month gives you less room than one that lands in a slow month.
Neither one makes the offer bad. The offer just has a shape, and now you can see it.
The two questions the effective rate doesn’t answer
What does it reset to? Your concession applies to the first term only. At renewal, the community starts from the full $1,450, not your $1,257, then adds whatever increase they’re putting through that year. That’s covered in what happens to your rent at renewal, and it’s an expensive thing to skip.
What if you leave early? Many concession leases have a clawback clause: leave early and you pay back the free rent, often on top of a reletting fee. On Offer A that’s up to $2,900. It usually sits in the concession addendum, not the main lease, which is why people miss it.
Three questions, every time
What’s the effective monthly rate? What does it reset to at renewal? What happens to the concession if I leave early? If a leasing office can’t answer all three, that tells you something too.
Add the fees before you compare
An effective rate without the monthly fees isn’t a fair comparison. Houston leases routinely carry garage or parking charges, valet trash, an amenity fee, pest control, and sometimes mandatory bulk internet. Many add RUBS water billing too, which splits the building’s water bill by formula. Together those can add $100 to $250 a month.
A $1,450 unit with a $1,257 effective rate and $180 of monthly fees costs $1,437. A $1,520 unit with no concession and $40 of fees costs $1,560. The gap is $123, not the $70 the advertised rents suggest. And it moves again if one of them has a garage you’d otherwise pay for.
Where the heavy offers are right now
Houston softened modestly through 2026. Occupancy slipped to 88.1% and average asking rent eased to $1,368 in Q2 2026, from 88.6% and $1,380 a year earlier (Greater Houston Partnership). The metro averaged $1,625 asking and $1,558 net effective, meaning after posted specials (SparkAPT, November 2, 2026). Class A buildings lean on concessions when leasing slows. The heaviest offers sit in the high rise buildings around Galleria/Uptown and Downtown, plus newer suburban lease ups along the Grand Parkway.
Those figures are math on terms advertised on a given date. They’re not price quotes. Communities set their own rates and change offers often. If you’re shopping those buildings, see how we handle luxury and high rise searches, where the recurring fees usually matter as much as the concession.
The short version
Do the three step math. Add the recurring fees. Ask for the renewal number in writing. Read the clawback clause. Then compare.
Or send us the two offers you’re comparing and we’ll walk you through them, free. The property pays our fee after you sign, so the answer isn’t tied to which one is more expensive.