The direct answer
One month free and reduced monthly rent can produce the same nominal concession but different cash timing and effective rent. The clean comparison is to calculate total contractual rent collected over the same lease term, then divide by the number of months to find net effective monthly rent.
Calculate total concession value
For one month free, the concession is usually one month of stated rent. For reduced rent, multiply the monthly discount by the number of discounted months. Compare total value over the same lease term.
To apply the approach to an editable scenario, use the Net Effective Rent Calculator. For the neighboring question, explore Rent Increase Calculator.
Compare effective rent, not face rent
A lease advertised at a high face rent with a large free-rent concession can generate the same effective revenue as a lower face rent with no free month. Underwriting should use the economics rather than the marketing headline.
Consider cash timing and renewal effects
A concession concentrated at the beginning delays cash collection, while a monthly discount spreads the reduction. The structure can also affect future renewal discussions if the contractual face rent differs from the tenant’s effective first-year cost.
Worked example
At $2,400 per month for twelve months, one free month produces $26,400 of total first-year rent, or $2,200 net effective monthly rent. A $200 monthly discount for twelve months produces the same $26,400 total.
Open Net Effective Rent Calculator and test your assumptions →
Common mistakes and limitations
Do not compare concessions using face rent alone. Convert each option to total lease revenue and net effective rent over the same term.
Does not determine lease legality, fees outside modeled concessions or renewal economics.
Frequently asked questions
Is one month free the same as reducing rent by one-twelfth?
Over a twelve-month lease, the total concession can be equivalent, although cash timing and contract structure differ.
Why does net effective rent matter?
It shows the average economic rent after concessions, making different lease offers easier to compare.
Sources and further reading
The article’s examples are illustrative arithmetic. The references below provide context for operating, valuation or transaction concepts; they do not endorse the assumptions or the calculator.
- IRS — Publication 527 (2025), Residential Rental PropertyRental income and expense concepts; operating/rental expense context.
- Office of the Comptroller of the Currency — Comptroller's Handbook — Commercial Real Estate LendingNOI, direct capitalization, cap-rate valuation and DCF concepts for commercial real estate.
Read our editorial policy for the scope of these educational methods.