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General Landlording & Rental Properties
Account Closed
  • Houston, TX
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Is a 2 year lease worth a $200/month rent deduction?

Account Closed
  • Houston, TX
Posted Jun 26 2014, 10:59

Hello, all.

The house is listed at 2,175, but I want to ask the landlord for a monthly rent of 1,975, in exchange for a 2 year lease with a buy-out option. Is this too much to ask?

I have an excellent credit history and a credit score of over 750 FWIW.

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James Wise#3 All Forums Contributor
  • Real Estate Broker
  • Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH
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James Wise#3 All Forums Contributor
  • Real Estate Broker
  • Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH
Replied Jun 26 2014, 11:03

Yes. As a landlord I wouldn't do it.

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Elizabeth Colegrove
  • Hanford, CA
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Elizabeth Colegrove
  • Hanford, CA
Replied Jun 26 2014, 11:03

It never hurts to ask. My husband is active duty and I know many of the spouses have asked for and been successful getting a reduction for a longer lease.

I personally as a landlord do not offer discounts for a longer lease. My discount is the fact that you are locking in today's market price for a longer term. Especially since my markets have been increasing significantly over the past couple of years.

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Account Closed
  • Houston, TX
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Account Closed
  • Houston, TX
Replied Jun 26 2014, 11:06

Makes sense.

But wouldn't you'd rather not have to have turnover, and even the possibility of a missed month of income, each year when the lease expires?

Also, do you offer buy-out clauses in the lease, in the case of a job offer in another city, by chance?

Thanks so much for the responses. BP is a wealth of knowledge.

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Chris Simmons
  • Real Estate Agent
  • Owasso, OK
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Chris Simmons
  • Real Estate Agent
  • Owasso, OK
Replied Jun 26 2014, 11:11

I recently rented a house and since it was a new rehab...basically new throughout for the first tenant, i advertised 2 year lease or longer.  The selected tenants asked for a rate reduction with a 4 year lease and i lowered it from $825 to $800 in exchange for a 4 year lease.  Ask....worse case is no.  After that it's counteroffer or yes.

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Marcia Maynard
  • Investor
  • Vancouver, WA
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Marcia Maynard
  • Investor
  • Vancouver, WA
Replied Jun 26 2014, 11:59

Tenants will move when they want to move. Lease or no lease. Once a discount is given, it can not be taken back. The concession on a longer lease, or a month-to-month, needs to be backed by a sufficient security deposit in case the tenant doesn't carry through on their end of the deal.

An early termination clause should be in every lease agreement, and will often include an early termination fee.

Also, some state laws and municipal codes limit the maximum length of term allowed for residential leases; some only allow up to one year others allow more, so check that out as well.

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David Cook
  • Real Estate Investor
  • Nashville, TN
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David Cook
  • Real Estate Investor
  • Nashville, TN
Replied Jun 26 2014, 14:30

I would never concede $200 a month and my market is not nearly as rent-able as Houston, Texas.  Occasionally I will have someone ask for a significant reduction, utilities included, etc... I typically don't respond to these inquiries because in my experience this a red flag of a high-maintenance tenant.  Understand I'm not accusing you personally of this behavior but in my experience the tenants I have given the best deals to are the ones that ask me to change the light bulbs and batteries in their units or ask for expensive improvements to a property right before it's time to sign a lease.  With that being said I will concede 2-5% of monthly rent to avoid vacancy or for a highly desirable tenant.   

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Michael Noto
  • Real Estate Agent
  • Southington, CT
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Michael Noto
  • Real Estate Agent
  • Southington, CT
Replied Jun 26 2014, 14:40

As a landlord if I have history of renting a unit for $2175, why would I take $200 less per month?

What are you going to do for me as a landlord to sweeten the pot? Pay me a years rent in advance? Then maybe we can have a discussion about your rent decrease proposal.

Not really seeing the upside for a landlord here. Am I missing something?

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Curtis Bidwell
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  • Rental Property Investor
  • Olympia, WA
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Curtis Bidwell
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  • Olympia, WA
Replied Jun 26 2014, 15:04

You may run into a legal issue. Most states won't allow a residential lease for more than 1 year. So it would not be binding in the second year anyway.

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Rolanda Eldridge
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  • Hoover, AL
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Rolanda Eldridge
  • Investor/Realtor
  • Hoover, AL
Replied Jun 26 2014, 15:10

$200 too much of a discount and the 2 yr lease could be a nightmare..Maybe $25/$50 concession for a strong tenant(great credit, rental history, work history and income)...

Account Closed
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  • Honolulu, HI
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Account Closed
  • Investor
  • Honolulu, HI
Replied Jun 26 2014, 15:37

As @Marcia Maynard 

said, the tenant will leave when they want to leave.  It is a common ploy of bad tenants to offer long term leases that they know they will walk on.  A better tactic would be to pay full rent and negotiate for a rebate to be given WHEN  you've proven yourself.  I wouldn't rebate $2,400 on a $2,200 a month lease though. 

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John F.
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John F.
  • Property Manager
Replied Jun 26 2014, 16:21

As a property manager active for over twelve years in two different states: no discount for multiple year leases.
In fact, I insist on year renewals (not month-to-month after initial year expiration); 60 day move out notices (so I can market the property for $50-$100 more during the first 30 days; then $25-$50 more during the final thirty days).
I am contemplating writing into leases a anticipated annual 2.9% rent increase.
In short, I run my properties as a for-profit business and would anticipate increasing rents going forward - not discounting them.

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Jon Holdman
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  • Mercer Island, WA
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Jon Holdman
  • Rental Property Investor
  • Mercer Island, WA
ModeratorReplied Jun 26 2014, 17:02

I certainly would not give you a discount for a long lease.  It you want to leave, you will.  Even if you have no such intentions now if the right circumstances come up you WILL break the lease and there is nothing I can do about it.  Further, its unlikely I will EVERY collect a dime from you after you leave.

In reality, I wouldn't even give you the two year lease.  I do month to month only.

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Pete T.
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  • Las Vegas
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Pete T.
  • Real estate investor
  • Las Vegas
Replied Jun 26 2014, 17:33

I would not- I have agreed not to increase the rent for 2 year renewals for proven tenants.  If it is a good tenant compared to what you normally get and value that, you could do something a lot cheaper at the end of the lease.

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Stephen S.
  • Wholesaler
  • Holiday, FL
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Stephen S.
  • Wholesaler
  • Holiday, FL
Replied Jun 26 2014, 17:36
So you would be asking me to give you a discount in return for you taking away my ability to raise the rent for two years?  

If not;  please explain your offer to me.  What is it exactly that you would be doing for me in return for the almost $5000. fee I would be paying?

stephen
-----------


Originally posted by @Account Closed:

Hello, all.

The house is listed at 2,175, but I want to ask the landlord for a monthly rent of 1,975, in exchange for a 2 year lease with a buy-out option. Is this too much to ask?

I have an excellent credit history and a credit score of over 750 FWIW.

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Pete T.
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  • Las Vegas
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Pete T.
  • Real estate investor
  • Las Vegas
Replied Jun 26 2014, 17:55

Good tenants will ask for discounts.  I asked for and received a $200 a month discount for a 9 month lease because it solved multiple problems for the landlord.  He just dealt w/ a bad tenant and didn't even want to rent.  It allowed him a much lower risk and gave him time to decide if wanted to continue to rent or sell at the beginning of summer.

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Aly W.
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  • Middletown, NJ
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Aly W.
  • Investor
  • Middletown, NJ
Replied Jun 26 2014, 18:03

Like Marcia and others, I've had the experience of a tenant leaving when they couldn't pay the rent and there's nothing to be done about it but hope they don't cause damage. I've discounted the rent for our SFRs on occasion, because good tenants are hard to find in that area, but it's been no more than $25. For another tenant, we gave them a free window A/C and took on paying to cut the lawn, which costs $30 a month.

We've told them we will not raise the rent for as long as they take care of the property and pay on time. For our condos in FL, we rarely raise the rent for good tenants as turnover is far more costly. We also like the option of not renewing a lease if the tenant becomes a problem. A year can be a very long time in that case.

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Andy Collins
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  • Dallas, TX
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Andy Collins
  • SFR Investor
  • Dallas, TX
Replied Jun 26 2014, 18:15

A two year lease is great for the tenant, it doesn't do anything for me as a landlord.  It locks me into the same rate for two years,,,why would I give a discount.

I had someone approach me with wanting a discount for two years, I told them I would charge a premium for a two year lease,,,again, great for tenants, not good for landlord

Account Closed
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Account Closed
  • Investor
  • Central Valley, CA
Replied Jun 26 2014, 18:38

@Account Closed  We can always say it never hurts to ask, but I suggest that you be careful here. Get clear about what your goal is.  If you are in a good Houston area, and the property owner has other prospective tenants at his asking rent, then not only will your offer be refused, but you won't get the unit at the higher rent either.  Do you want this unit at the asking price, or only for the reduced price.  Keep your eyes on the prize.  Don't play games if you really want to live there and you have a sense that other people want to live there too. 

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Gualter Amarelo
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Gualter Amarelo
  • Investor
  • Fall River, MA
Replied Jun 26 2014, 18:53

My question is as follows:

Is the landlords request within the range of market rents?

If you want to pay less monthly, due to a longer lease AND you want an option to get out of the lease... Doesn't that seem like a risky deal?

In my market there is no room for tenant negotiations. I post a rent because I know I can get it and I have a long list of people looking for a great place to live. If you want to haggle for lower rent then by all means throw the spaghetti against the wall and see what sticks. Just make sure you have a back up plan if things don't work out the way you would like.

Best of luck!

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Daniel Sanchez
  • Beverly Hills, CA
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Daniel Sanchez
  • Beverly Hills, CA
Replied Jun 26 2014, 22:04

Agreed that multi-year leases isn't an automatic qualifier for a substantial discount. Go in and ask for a 2-3% discount at best.

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Roger Mexico
  • Saint Louis, MO
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Roger Mexico
  • Saint Louis, MO
Replied Jul 1 2014, 11:22

I get 2 years (on average) out of a random tenant so I don't see why I'd want to pay extra for this privilege.

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Jeff Schluer
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  • Rocklin, CA
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Jeff Schluer
  • Property Manager
  • Rocklin, CA
Replied Jul 1 2014, 20:54

I offer two year leases.  There is no discount, however on month 13 there is a 5% rent increase.  The benefit to the resident is that the increase is only 5%!  I manage a portfolio of about 400 homes and get about 5-10% of my tenants take me up on it.

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Scott Stevens
  • Savannah, GA
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Scott Stevens
  • Savannah, GA
Replied Jul 2 2014, 06:58

Well, I wouldn't do it..... but........

Well all know that there are amateur landlords out there. Those who don't factor in capital expenditures and may be content with just having their mortgage paid for because they were greedy and bought at a high price back in 06 or 07. So, it doesn't hurt to ask and like alot of things, rent prices can be priced higher initially to see what bite there is.

Here's why I wouldn't do it, as others have said: A lease means nothing to those who don't care. They'll move out and stop paying and then you'll feel dumb for giving the dirtbag a $200 discount. Rent tends to increase more than it decreases, so you won't be able to raise the rent for 2 years and instead have locked yourself into a discounted rate. Also, if it's a family, how likely would someone be to move after one year anyways?

I have one 2 year lease on a property of mine and it is a single military member. I'm in the military myself and know 2 years is no guarantee, so it will be nice so long as she doesn't have to pcs or deploy anytime soon and break the lease.

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Andrew Syrios
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Andrew Syrios
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ModeratorReplied Jul 2 2014, 07:27

I would say no to that as a landlord (in fact, I don't believe we've ever accepted any reduction in exchange for a longer lease). But as a tenant, go ahead and ask. It can't hurt.

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Tyler Blackwell
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  • Olympia, WA
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Tyler Blackwell
  • Rental Property Investor
  • Olympia, WA
Replied Jul 9 2014, 22:11

I wouldn't accept this as a landlord. There is something to be said about not having to turn the property over once a year, so I do prefer that tenants want to stay longer than one year... One time as a 1-year lease was expiring I waived the monthly pet fee if they were to agree to another 1-year term as opposed to going month-to-month, but I wouldn't do that again.