Should I lower the rent from 1700$ to 1600$

Question

My tenant’s lease is up at the end of august and they don’t know if they want to renew a lease because it’s too expensive. The average rental around the area for a 2b/1ba is around 1500$. They are good tenants and I’d like for them to stay. If I have to list it for rent I’m not sure if I could get 1700, but confident I can get 1600. Should I take the 100$ loss or take my chances

Theresa Harris · Answer

If the rents have decreased in your area, then taking a $100 a month decrease; at the end of the year is less than one month's rent.  How much would a vacancy cost you?

Chris Seveney · Answer

@Daniel Sar

If it was me I would keep the existing tenant if they are a good tenant

Why?

Devil you know is better than devil you don’t and if you have to rent it again you will probably lose a month of rent and have to get it rent ready which is probably $2500+ compared to losing $1200 this year in lost rent.

Chris Varsek · Answer

Could you maintain the rent level, but offer them a $50/mo rebate if they pay early, or a $500 rebate for every six months of on-time payments they make?  Something that maintains your rent level if you decide to sell, but incents the client to stay and provides them a benefit?

Nathan Strahan · Answer

Deciding whether to lower the rent by $100 to retain good tenants or take the chance of listing it at a higher rent is a personal decision that depends on various factors. Here are a few things to consider:

• Tenant retention: Good tenants who pay rent on time, take care of the property, and create a positive living environment are valuable. If you value their tenancy and want to avoid the potential costs and uncertainties of finding new tenants, it might be worth considering a slight rent reduction.
• Vacancy risks: If your tenant decides to move out, there is a risk of experiencing a period of vacancy. During this time, you won't be collecting any rent, and there may be additional costs associated with advertising, showing the property, and screening potential tenants. Taking a small loss in rent might be preferable to facing a longer vacancy period.
• Market conditions: Understanding the current rental market in your area is crucial. If the average rent for a 2-bedroom, 1-bathroom apartment in your area is around $1,500, but you believe you could realistically get $1,600, it may be worth considering listing it at the higher rent and seeing if there is demand. However, keep in mind that there is always some uncertainty when it comes to finding new tenants.
• Expenses and profit margin: Consider your overall financial situation and the impact of the $100 loss on your profitability. If the $100 reduction significantly affects your bottom line or puts you in a financially precarious position, you may need to weigh the importance of tenant retention against your own financial stability.

Ultimately, it's important to evaluate the specific circumstances and prioritize what is most valuable to you as a landlord. If you strongly value tenant retention, it might be worth considering a slight reduction in rent to keep good tenants and minimize potential risks.

Katie Smith · Answer

How much is your PITI monthly? You want to make sure you're adding all of that up and making at least 1% on your DSCR!

Paul De Luca · Answer

If you're not sure you can get $1700 you'd probably be better off just renewing them at $1600. Think about the extra time you'd have to spend to market the unit, show it, turnover costs/vacancy. Plus like you said they are good tenants.

Bill B. · Answer

Is the neighborhood in decline? Might be a good time to sell. If rents dropped 6% this year they might drop 12% next year if any kind of recession hits us. Certainly we’re still increasing rents as I assume most residential landlords are.

Should I lower the rent from 1700$ to 1600$

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