Author Topic: Have you ever lowered the rent for a new tenent?  (Read 3496 times)

K-ice

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Have you ever lowered the rent for a new tenent?
« on: August 18, 2016, 01:42:27 AM »
As a landlord I would hope that rent is always increasing.

Have you ever lowered the rent for a new tenent compared to the last lease?

Why? By how much?

bpleshek

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Re: Have you ever lowered the rent for a new tenent?
« Reply #1 on: August 18, 2016, 09:11:34 AM »
I lowered it by $100/month for the following reasons.

1. I hadn't finished renovating it.  I still had about 2 weeks of repairs to do, including painting.  They agreed to paint at their sweat and price so long as I approved the color.  I had carpet to be delivered in about 5 days and the agreement was that the painting would be complete by the time the carpet would arrive or there would be an extra charge for me to drop everything and finish it the night before.  Since the old carpet was "bad", spillage wasn't a concern of mine.  It went well.

2. They agreed to bi-monthly payments of rent at 50% each.  This helps them with smoothing out their budget and it gives me more notice if there is a problem. 

3. They agreed to move in 15 days early(the two weeks mentioned in #1) so I got an extra half month rent out of it.

4. I had a great personal reference.  My across the street neighbor's daughter and the tenant's daughter are best friends so my neighbor knew them personally.  I also worked with this lady, so I saw her every day.  Putting your neck out for someone to someone else that you have to look in the eye every day seemed a good one any way.

They have been perfect tenants for 2.5 years.  I've been called out to fix things exactly twice.  Leaky shower and bad electric on 220 plug.  The shower was an easy fix and the electric wasn't my issue at all.  Apparently his dryer had a breaker flip.  I didn't know dryers had breakers in them. 

Brian

Bliss

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Re: Have you ever lowered the rent for a new tenent?
« Reply #2 on: August 18, 2016, 09:19:52 AM »
Yes, I also lowered the rent by $100/month for a family that wrote me a nice letter saying how much they loved the house. In exchange they promised to spruce up the landscaping with new plantings. That never happened.

It look me about three years to get back up to that level of rent (same family has been in the house) and I'm still below market value.

Looking back, I wouldn't make that same decision today. 

totoro

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Re: Have you ever lowered the rent for a new tenent?
« Reply #3 on: August 18, 2016, 09:30:23 AM »
I did while there was construction going on across the street to compensate tenants for the annoyance.

clarkfan1979

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Re: Have you ever lowered the rent for a new tenent?
« Reply #4 on: August 20, 2016, 10:22:21 AM »
I advertised my last rental for $1700/month. I was a little late on advertising and only had 3 people look at it. One group, I really liked. I told them I would lower the asking price to $1650 for them. Because they have a 37 pound dog, my pet fees bring it back up to $1700/month. I guess I waived the pet fee or I lowered the asking price by $50. However, I still got $1700/month, which is what I wanted. I ended up getting about 8-12 emails of people really interested, after I showed the property. Next year, I will post on craigslist 2 weeks in advance of showing and not 1 week.

NoNonsenseLandlord

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Re: Have you ever lowered the rent for a new tenent?
« Reply #5 on: August 22, 2016, 09:23:43 PM »
I have lowered it before, by about 10%.  There was a time when rents were dropping.  Even from 2000-20010 or so, rents were fairly flat.

I adjust to market at every rental turn.  Up or down.

arebelspy

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Re: Have you ever lowered the rent for a new tenent?
« Reply #6 on: August 23, 2016, 05:29:08 AM »
Of course.  The market dictates the rent.

It's much more rare than the other way around, but it happens.

+1 to NNL's comment.
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Stachetastic

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Re: Have you ever lowered the rent for a new tenent?
« Reply #7 on: August 23, 2016, 05:54:01 AM »
I have for friends and family. I know to some, that is a cardinal rule not to be broken, but it was worth it to me to have someone in the property who I knew would care for it. I have had some family members who were interested that I knew would not be good tenants, and I didn't offer them a discount. They declined.

For us, it's worth the peace of mind to have good tenants, so it has usually worked out for us to give a discount.

K-ice

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Re: Have you ever lowered the rent for a new tenent?
« Reply #8 on: August 23, 2016, 01:22:45 PM »
OP here. Thanks for the answers. I think our asking price of $1100 is within the market demand. There are nicer places for more, and places further from the center for less, but I think it is within the ball part.   

Smaller places are less. This is a 1+den and has usually been shared by two roommates. Keeping them under $600/month each has been a sweet spot. 

Looking back in 2014 we got $1180. Last time we took a $80 hit, I had forgotten.

It will probably easily rent with another 10% drop.  The fear is that there is rent control so next time around it is not the market that dictates the rental increase, but it will be fixed at about 2%. 

So if I go from $1100 to $1000 it may take almost 5 years to get back upto $1100. 

Sigh. It is for rent Sept 1st, so time is getting tight. $1050 might be the sweet spot.  Got a bit of feedback and one looker said $1050 but wanted us to throw in the utilities which are estimated $65/month. They had found another place anyway but I was happy for the feedback. 

I would not throw in the utilities, it is much easier to have them accountable. In another heated building the tenets crank the heat and open the windows. Luckily it is separate in this unit. They should be happy for the chance to improve their credit with a utility bill but I know the unknown of utilities are a fear for young renters (our demographic). 

Maybe it is looking a little dated. We have had the building for a decade. This unit got a 100% new bathroom at that time.  It has had fresh paint about 3 times but it could be due for a little lipstick. Upgraded SS stove a few years ago when the other quit. The white fridge works but doesn't match the stove.  Maybe we can find a small SS fridge for $1000 if the new tenants care, but I don't even have SS in my house because I think its irresponsible to get rid of something that works. The entire building has needed some electrical upgrade and a new roof since we owned it. Overall it still makes money, and would with the $100 decrease but, who doesn't want more money?

Any quick tips, other than paint, to make it shine?

This coming weekend should be very important for showings. We will try to get more feedback and maybe offer it for $1100 but let good potential tenets know we are negotiable.


   


 

bpleshek

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Re: Have you ever lowered the rent for a new tenent?
« Reply #9 on: August 23, 2016, 01:44:13 PM »
I agree about the utilities.  There is too much of an unknown.  Unless your have state or local rules that state the landlord pays utilities, I would have them do so.

Brian

NoNonsenseLandlord

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Re: Have you ever lowered the rent for a new tenent?
« Reply #10 on: August 23, 2016, 02:18:04 PM »
Any quick tips, other than paint, to make it shine?

This coming weekend should be very important for showings. We will try to get more feedback and maybe offer it for $1100 but let good potential tenets know we are negotiable.

You can always increase demand by lowering price.  Price too high, and renters that can go anywhere, do.  Only renters that are low-quality will bite at a price too high.  Good renters look elsewhere.

If you go a month vacant, it's costs a lot.  You have control over your vacancies; Vacancies are the number one expense you can easily reduce as a landlord.

Read this post, it may help.
http://www.nononsenselandlord.com/2014/04/marketing-rental-property-bananas/
« Last Edit: September 02, 2016, 05:22:43 AM by NoNonsenseLandlord »

Ebrat

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Re: Have you ever lowered the rent for a new tenent?
« Reply #11 on: August 23, 2016, 02:34:56 PM »
We've had 2 tenants in the time we've had our rental, and both times we lowered the rent $50 from asking (I think...maybe $75?) in exchange for a 2-year lease. The first tenant it didn't work out super great, because she didn't pay reliably. We ended up losing 2 months of rent over the 2-year period I think (she had a payment plan set up with the prop mgmt company, but you can imagine how that turned out). The tenants that are in there now have been there almost a year and a half and have been very reliable.

Ultimately I think we've come out ahead because we potentially reduce the turnover and vacancies between tenants if someone who would've only stayed there a year stays there 2 years instead.

Regular Guy

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Re: Have you ever lowered the rent for a new tenent?
« Reply #12 on: September 02, 2016, 04:13:59 AM »
I did for my last renter, to the tune of $150 a month.  They were a young family and pleaded through the property manager who was renting it out for us (since I was stationed in another state at the time) that they loved the house but just couldn't quite afford it.  My wife and I figured we would help them out with reduced rent and they thanked us by causing about $10k in damage to the house.  They lost their security deposit but we were on the hook for the rest as there was no point in taking them to court when they didn't have any funds to cover it in the first place.  No good deed goes unpunished, right?

NoNonsenseLandlord

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Re: Have you ever lowered the rent for a new tenent?
« Reply #13 on: September 02, 2016, 05:23:24 AM »
I just lowered a rent.  A couple got a divorce, the wife left and took the cat.  I removed the $25 pet fee.

Dicey

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Re: Have you ever lowered the rent for a new tenent?
« Reply #14 on: September 02, 2016, 06:45:33 AM »
(1) They should be happy for the chance to improve their credit with a utility bill but I know the unknown of utilities are a fear for young renters (our demographic). 

(2) Maybe it is looking a little dated. We have had the building for a decade. This unit got a 100% new bathroom at that time.  It has had fresh paint about 3 times but it could be due for a little lipstick. Upgraded SS stove a few years ago when the other quit. The white fridge works but doesn't match the stove.  Maybe we can find a small SS fridge for $1000 if the new tenants care, but I don't even have SS in my house because I think its irresponsible to get rid of something that works. The entire building has needed some electrical upgrade and a new roof since we owned it. Overall it still makes money, and would with the $100 decrease but, who doesn't want more money?

(3) Any quick tips, other than paint, to make it shine? 
(2) Well, that's a problem. By your own description, your building looks rundown, with appliances that don't match, a bad roof, electrical issues, is in need of paint and has who knows what other visible deferred maintenance? Mismatched kitchens and poor maintenance send a powerful message that the landlord doesn't care. That attracts potential renters who also don't care or who know they can't afford anything nicer or worth their effort to maintain. Quality units tend to attract quality tenants. You've dropped the rent in the past and now the market is pressuring you to do it again. As your unit deteriorates, so will your rents and the quality of the tenant pool. (Your appliance argument is weak: sell the white one and buy a used SS or vice versa so they all match. Someone will be using them, so they won't be wasted.)

(1) This sounds rather condescending.* Could you frame it more positively? Something like "I encourage conservation by having tenants manage their own utilities." Also, older appliances tend to be less energy efficient. As a tenant who knows utilities are not included, I'd consider that a strike against renting your unit.
*So does calling a potential tenant a "looker". Like it or not, a tenant is kind of a partner in your business. Treating them respectfully is key to obtaining and retaining excellent tenants, IMO.

3) You've deferred maintenance for ten years and now you seek a quick fix?  Are you sure you are being a good steward of your investment?

To answer your specific question, I have lowered rents directly and indirectly. In a bad economy, I once reduced the rent slightly before seeking a new tenant, because all rents were down, not because my unit was worse than the competition. I have also skipped annual rent increases on occasion to reward an excellent tenant. I have been repaid in longevity, which is worth a lot. Better to retain a good tenant than to miss even a single month of rent.
I have never lowered the rent on a vacant unit because someone asked me to. If they can't afford it prior to move-in, they can't afford it, period. If someone wants my unit, but they can't afford it, I politely decline and seek a better-qualified tenant. Since all my rentals are attractive and well-maintained, I have plenty of applicants.

K-ice

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Re: Have you ever lowered the rent for a new tenent?
« Reply #15 on: September 02, 2016, 04:06:05 PM »
OP here.

So it's the 2nd of the month and time for an update and clarification.  It is rented.... for $950 the tenant pays the utilities as usual. 

The roof and all electrical were updated since we owned it. But a renter can't easily appreciate that.

We did put in a new SS fridge and fresh paint.

We had two people very interested in it over the weekend. One was a young guy with his 4 friends who appeared to be scoping out a party place. Not all 5 were going to live there but we kind of had a bad feeling. It is one thing to get a friend's opinion but this felt a bit odd. He was willing to pay $1000 (what we had it listed at last Friday). 

At about the same time we were getting nervous and lowered it to $950. A couple on Sunday saw the place and signed Tuesday morning for $950.  They seam keen to stay 2 years at least, but it is just a 1y lease.  She is just starting grad studies with a good scholarship. 

Missing a month's rent, & a September signing, was not an option as this is really in a student friendly area.  I think the couple would have considered $1000 too, but they saw the $950 add so of course we honored it.  I hope they don't balk at an increase next year.

I kind of hoped that being close to a University was a rental recession proof bubble. We honestly didn't notice any problems in 2008. But over 5000 apartments were currently listed for rent in our area. Sure they are not all "walking distance" but a bus pass is cheap.  Unemployment is higher than in a long time, and Canada is just being squeezed more than we are used to.

lhamo

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Re: Have you ever lowered the rent for a new tenent?
« Reply #16 on: September 02, 2016, 05:15:39 PM »
Good decision.  Grad students are typically excellent tenants, and if you are a good landlord they may well be able to line you up with fellow students to take over the lease when they are moving on (we did this all the time in my program, since for tenants finding a good landlord is almost as important as the other way around). 

The party crew would have been a disaster. 

Novicestache

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Re: Have you ever lowered the rent for a new tenent?
« Reply #17 on: September 08, 2016, 10:32:09 AM »
If lowering the rent within reason gets you a higher quality tenant, it can most certainly be worth it.