You have one apartment to lease, and the quoted rent is $750 per month. The lease term is 12 months. A concession of one months free rent is being given in the market, and you are concerned about how this will affect property revenues if one months free rent is needed to seal the lease deal.

1. What would the effective rent be for the year if no concession is granted?
2. What would the effective rent be for the one-year term of the lease if the concession is granted?
3. What is the average rent/month for the 12-month period if the concession is granted?
4. What would be the impact on effective rent if the rent is reduced to the average rental rate found in #3?
5. How much income is lost (what percentage) from lowering the quoted rent in this way?
6. Suppose it is necessary to increase rents by 6% when leases are renewed. How would this change impact effective rent for the year if the concession is granted but the rental rate is unchanged? What would be the effect if the rent had been reduced as in #4?
7. How much additional potential income would be lost in the second year due to the rent reduction?
8. How much of an increase (percentage) would be necessary to bring the reduced rent up to the required new level?