Listings that advertise "1 month free" or "net effective" rent can be hard to compare. Enter the face rent, lease length, free months and any other concessions to see the true average monthly rent, the discount you get and a year-by-year schedule, or work backward from a net effective price to the rent on the lease.
Last updated:
I want to
Lease
$/ mo
$/ mo
months
months
Decimals allowed, e.g. 1.5 for six weeks.
$
Move-in credit, waived fees, broker fee paid, TI allowance.
%
Applied at the start of each new lease year.
Optional
sq ft
For rent per square foot (commercial).
% / yr
Adds a present-value effective rent.
Enter your values to see the result.
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How to use the Net Effective Rent Calculator
Choose a mode: find the net effective rent, or find the face rent that hits a net target.
Enter the monthly rent and lease term in months.
Add the free months and when they apply, plus any one-time concessions.
Optionally add a yearly increase, square footage or a discount rate for commercial leases.
Read the net effective rent, discount and savings, then check the yearly schedule.
The net effective rent formula
Net effective rent = (face rent × lease months − free rent − other concessions) ÷ lease months
With yearly increases, the face rent for each month is the starting rent × (1 + increase)lease year − 1, and the value of a free month is the rent it would have charged in that month.
The reverse calculation answers the listing question: if a building advertises a net effective price, what is the rent on the lease? Face rent = (net effective rent × lease months + concessions) ÷ paying months. With no increases, a $2,900 net effective rent on a 12-month lease with 1 month free means a face rent of $2,900 × 12 ÷ 11 = $3,163.64.
Quick reference: net effective rent as % of face rent
Free months
12-month lease
13-month lease
14-month lease
24-month lease
0.5
95.83%
96.15%
96.43%
97.92%
1
91.67%
92.31%
92.86%
95.83%
1.5
87.50%
88.46%
89.29%
93.75%
2
83.33%
84.62%
85.71%
91.67%
3
75.00%
76.92%
78.57%
87.50%
Multiply your face rent by the percentage to get the net effective rent (no escalation, no other concessions).
Tips when comparing apartments or offices
Budget with the face rent. You pay the full rent in every month that is not free, so your monthly cash flow must handle it.
Compare buildings on net effective rent, but compare renewals on face rent.
Check how the concession is delivered. Some landlords give free months up front, others credit the last month or spread it as a monthly discount; the total is the same without escalation, but early-termination clauses may claw back unused concessions.
Include one-time credits such as a paid broker fee or a move-in gift card; they lower the effective cost just like free rent.
Frequently asked questions
What is net effective rent?
Net effective rent is the average monthly rent you actually pay over the whole lease once free months and other concessions are taken off. It is calculated as (total face rent − value of free rent − other concessions) ÷ number of months in the lease.
How do I calculate net effective rent with one month free?
Multiply the monthly rent by the lease months, subtract one month of rent, and divide by the lease months. For a $3,200 apartment on a 13-month lease with 1 month free: $3,200 × 12 ÷ 13 = $2,953.85 per month.
What is the difference between gross rent and net effective rent?
Gross (or face) rent is the amount written in the lease and the amount you pay in each month that is not free. Net effective rent is an average that spreads the concessions over the whole lease. Your actual monthly payment is the gross rent, and renewals are usually priced from the gross rent, not the net effective number.
Why does the timing of free months matter?
Without rent increases, the total is the same wherever the free months fall. With yearly escalations, free months at the end of the lease are worth more because they waive higher rent. For landlords and investors who discount future cash, free months up front cost more in present-value terms, which the optional discount rate shows.
Does my rent go up at renewal after a concession?
Often it does. Because the lease rent (face rent) is higher than the net effective rent, a renewal without a new concession can feel like a big increase even if the face rent stays the same. Compare your renewal offer with the face rent, not just the net effective figure.
How is net effective rent used for commercial leases?
In office and retail leasing, net effective rent also subtracts tenant improvement allowances and other landlord costs and is often quoted per square foot per year. Many landlords use a present-value version, which this calculator gives when you enter a discount rate.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.