I have a multifamily property and would like to know if agreeing to a request from a prospective tenant to reduce the rent after showing the property would expose us to any liabilities? For example, if we advertised the property for $2,000 per month and then agreed to rent it for $1,850. For example, could someone else reasonably claim discrimination. If so any steps to mitigate this? Any thoughts?
Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
3y
Aloha,
Are you negotiating blind, or have you already done your background and credit check on the applicant? There is no good reason to reduce the rent just because someone is waving hundred dollar bills at you. Next they will want to change the due date. Then they want to paint a bedroom. It never ends. Better to stop them now. If you feel you are over priced based on responses, change your ad prices, or upgrade the unit to be competitive.
Rental Property Investor · Laurel, MD · Member since 2016 · 378 posts · 382 votes
3y
First question is, do you have a lot of interest in this unit? If so, tell them no, you have too more applicants willing to pay full price.
If demand is low, double check other similar rentals and see if you're in the same range. If so, it may be worth to counter at $1,950. No one can claim discrimination unless someone else is asking and you said no.
Personally we do not barter our rental pricing. Good luck.
I have a multifamily property and would like to know if agreeing to a request from a prospective tenant to reduce the rent after showing the property would expose us to any liabilities? For example, if we advertised the property for $2,000 per month and then agreed to rent it for $1,850. For example, could someone else reasonably claim discrimination. If so any steps to mitigate this? Any thoughts?
Thanks
There's no reason you cannot negotiate the price of a rental property, but as you alluded to, this could be dangerous territory, depending on the specifics of your situation. Your best bet is to have a clear paper (digital) trail indicating why you agreed to lower the rent for this applicant.
We use the phrase: "context of the property" to help guide our approval process. Context from one property to another may vary greatly in terms of how much interest the property gets, area and demographic challenges, time of the year, type of property, condition of the property, etc.
As @Tim Miller said, when there is high demand, the context is such that a price drop usually doesn't make sense anyway, and there is no reason to consider one.
I'm guessing your multifamily property is hard to rent. If you believe you have a qualified candidate and your analysis supports a lower price for said candidate (vs. leaving the property vacant), then this is not discrimination in any case. Still, as a CYI, you should have objective data to support this decision, and I suggest having this risk profile analysis codified in whatever system you use to track the approval of a tenant.
If you have no other candidates for the property now, negotiating the rent is your prerogative.
When there are other applicants, you should move forward with the strongest one at the advertised price. If you offer one of them a deal other than "as advertised," this is where you could potentially be in hot water.
In the future, you may consider advertising "Applicants with over 700 credit scores are eligible for a discounted rental rate" or something along those lines.
Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
3y
Aloha,
Are you negotiating blind, or have you already done your background and credit check on the applicant? There is no good reason to reduce the rent just because someone is waving hundred dollar bills at you. Next they will want to change the due date. Then they want to paint a bedroom. It never ends. Better to stop them now. If you feel you are over priced based on responses, change your ad prices, or upgrade the unit to be competitive.
I have a multifamily property and would like to know if agreeing to a request from a prospective tenant to reduce the rent after showing the property would expose us to any liabilities? For example, if we advertised the property for $2,000 per month and then agreed to rent it for $1,850. For example, could someone else reasonably claim discrimination. If so any steps to mitigate this? Any thoughts?
Thanks
If you aren't getting qualified applications it could be that your rental price is too high and you need to lower it. If you are considering lowering it for one person "blind" ie..without an application and screening, then yes, you could land in trouble if you don't for others. What I suggest is that you tell them if they apply and are strong you will consider a price reduction. If they don't apply then you have your answer.
Thank you all for the responses. I plan to list the 5 units next week and am thinking ahead. So no one has asked yet and those were just example numbers.
We havent rented these units before and I am having a hard time with comps since there are no properties just like ours in the area. Ours is kind of a like a little compound with walking paths and houses that are in close proximity to one another.
It's a relatively small town, a lot of vacationers, and we are looking to rent long term.
I wanted to post units at the upper end of what I thought market would be, but not having a great idea of what the demand would be, to have some flexibility to negotiate.
Thank you all for the responses. I plan to list the 5 units next week and am thinking ahead. So no one has asked yet and those were just example numbers.
We havent rented these units before and I am having a hard time with comps since there are no properties just like ours in the area. Ours is kind of a like a little compound with walking paths and houses that are in close proximity to one another.
It's a relatively small town, a lot of vacationers, and we are looking to rent long term.
I wanted to post units at the upper end of what I thought market would be, but not having a great idea of what the demand would be, to have some flexibility to negotiate.
FWIW, most qualified tenants won't attempt to negotiate. They simply will make a determination on value based on the property and price and either reach out for a showing or they won't. Keep track of interest by day and you will know if you're priced appropriately.
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