Request to lower the rent.

28 Replies

Just had to share - the request went something like this --we have kept our dog in the yard and paid our rent on time,  we want to stay another year or two then  buy a house so we want to go month to month, and can you consider reducing the rent? So I am doing what I am supposed to do as a tenant please reduce my rent.  They are coming up on one year and said they wanted to stay long term, probably like 10 years was what was said at move in.

They like the place so that isn't the issue and I never believe move in statements like I am going to stay here for 10 years. People are gonna do what they are gonna do.  I know my answer given this particular tenant  but I am wondering what experience other people have. What kind of reduce the rent requests have you received?

@coll

Yeah, people often think that the longer they stay the less they should pay. Although long term steady tenants are desirable, like you said, 10 years is a long time and you never know what can happen.

I've been getting these sort of requests quite often. Their pitches usually go something like "We're looking to stay for a long time, can you reduce the monthly payments?". A lot of these tenants have no idea what it costs to own/ manage real estate. Property taxes aren't going down so you have to rent out the property accordingly.

@Colleen F.  undefined

Huh? They sound like nice people but I'm still going to go with "no". At most, if you feel generous, is to say you can hold the rent at the current rate for about 6 months before increasing it as you had planned to do. Say that you are very grateful for them being such great tenants.

I  had to stop myself from just dashing off a "No" reply.  the thing is  I was there Monday and the dog was not tied up he chased the UPS guy. So they are okay tenants that always pay for almost  a year....  If they had been there five years and were asking if we do this or that can we have a decrease I would think about it.  On move in they said we want to  stay a long time now it is reduce the rent and leave sooner hello... 

@ function is not working?

I would ask them if they would consider moving into one of your less expensive units. Or if there are none available, I would explain that you don't have any less expensive units at the moment..

@Joseph Catalano    I  agree and I am not biting.  @Stanley Okazaki  

There initially was we really like it we want to stay a long time but now they are backing off but  I think they just want to move wherever they find a place. hence the month to month.

@Wendy Noble    I was  not planning to increase them at the moment but I think I will just put in my letter in consideration of your request I won't  increase. I just spent like 1100.00 on repairs for her some of which I think would not have been needed if she called sooner to tell us about an issue.

Explain to them that with a month to month arrangement, the landlord is going to get a vacancy - very likely to be at an inopportune and inconvenient time for the landlord. That sort of risk commands an INCREASE rather than a decrease. 

And a side note. If they are truly going to qualify to get a mortgage to eventually buy, your decreasing the rent will just make it possible to save the down payment sooner, bringing on that vacancy even sooner. This benefits you in no way whatsoever unless you wanted them out; and if you wanted them out you could just go ahead with non-renewal now. 

@Wilson Churchill   I don't have anything at the moment.  This is the only unit I allow dogs in  and I think it is unlikely they will find a  dog rental easily.

@Colleen F.   The month to month is a give away in your context. They want to be free to leave whenever they choose. So much for being long term tenants. @Steve Babiak is right, I would be looking more for an increase. Explain to them that your costs are rising, not falling, as others have mentioned, and that you have to pass these costs along. I would not be too concerned if the increase causes them to leave, because from the sound of things they are leaving anyway.

Good luck with this.

What's the market like in your area?  How are you prices vs. your competition?  If you have a strong market, I'd be raising rents, not lowering them.  So you might say "yes, I'll do a month to month lease, but the rent will now be (5-10% higher than it was.)"  That assumes you can find a new tenant if they leave.

Personally I only do month to month leases.  If tenants really want to leave, a lease won't hold them in place.  

Of course the answer is no. I have never heard this request before, but it's a NO.

I've been thinking a lot about the collaborative tenant that helps the landlord make more money via ancillary income. An example would be a tenant that allow landlord to rent the side of a SFH for boat parking.

Under collaborative tenant situations, the tenant only receives a check when there's a parking rental. Basically they share in the ups and downs so their motivated.

Just a thought - add to their income a bit and yours as well, in leiu of rent reduction.

I wonder if they are doing this to avoid/decrease a rental increase in renewing a lease?  

I think you should be charging a significant premium for a month-to-month rental.  It seems the worst rental vacancy would be in 9 or 10 months, so I would charge a 10% premium if possible.  I would offer them a 12-month renewal with a moderate increase or a 6 month renewal with a significant increase.

If we use 5% as the 6 month premium - I would approach it like this:  

"The standard increase based on the rental market and expenses would be 5%.  Since you have been good tenants and would like some flexibility, I will offer you a renewal for a 6 month term at this rate.   Or if you want the rent locked in for a longer period we can sign a 12 to 18 month with a 2% discount(3% increase) fo that period.  Month-to-month is our last choice, but if you need that flexibility it will be $X per month."

Personally if they want to go month to month I would increase the rent as there really is no long term commitment on their part. If there were willing to sign another year lease I would consider leaving their payment alone or maybe even reducing it a little as turnovers are expensive. We have a 1 page renewal we send out 60 days before expiration that gives them an option to renew at 1 price go month to month at another price offer their own price or vacate. They just check the box sign and return. It's not valid until we sign it and return a copy. Works great and so far no one has returned it with their own price. We do have a couple that went month to month and their rent went up $25 a month. Most renewed for a year and we left the rent alone as we did some large increases the last couple of years since we took over. We are now at 100% occupancy. Again if they are good tenants and it's cash flowing I would consider their request if they commit to another year but not for month to month.

I am a firm NO on this. Your rent should be a number you came up with based on objective market research. Our tenants would be very lucky if rent did not go UP at lease-renewal. The cost of maintaining the property goes up each year. Frankly, also, the purchasing power of $1 today is more than it will be in a year due to inflation. That said, my rents always increase by at least 2% and no more than 5%. My tenants know that when they sign a lease as we place verbiage in the lease that reads, "Should tenant opt to sign a new lease at this lease's expiration, tenant knows and accepts that the monthly rent may increase up to 5%."

Of course, there is leeway. If there is a significant market shift, well, we need to shift. But, otherwise, I'm sticking with my system. It's a business :)

My standard non-"no" answer that is really a "no" answer is ... "That would be very difficult."

In my mind I am thinking.... "That would be very difficult... let me get back to you after I check to see if my property taxes will be less in the coming year. I will also ask my lender if she will reduce my mortgage payments, without me paying for a re-fi. I will see if I can get a guarantee from my suppliers and vendors that they will be able to cut me some slack in the coming year and charge me less for their services, and that goes for supplies/materials as well." 

I already know our current rent prices are competitive and we are offering good value for a a fair price. If our tenants can find better elsewhere, more power to them!

Rents only increase.  They NEVER decrease.  If a tenant needs a rent decrease, they probably need a new address.  I do nothing with my buildings that would result in cheaper rent and the utility companies and contractors that I employ feel the same way.  All my units are full and they should be.  All my renewals ALWAYS include a rent increase.  It is always small but it is always there.  

@Steve Babiak  

that will be included in what I say to them and I wanted to take a more considered approach then my initial top of the head "no "  response.    @Stephen E.  

Yes my thought was they are leaving it is just a question of when. As Steve said it is probably sooner if they save more so I would just be contributing to their deposit for a house. 

@Jon Holdman   Our market is good but not really hot like yours is. My rents are market but this particular house is attractive to familiies due to the size and affordability there are not a lot in this price range. I have heard you talk about people leaving when they are going to leave and that is generally true but we have a very seasonal market with the students and the beach as well as schools so I am can offer some flexibility but month to month has some limitations. I would find someone but the best options are May to August.

 @Al Williamson  

there is not much flexibility in this respect. This single family is on the multifamily property so the driveway is adequate but not excessive and although there is a large yard there isn't anything they can really do with that. I don't think she could tolerate anyone else using the property either.

 @Jesse T.  

I  am wondering the same thing as you if they are playing me.  I like your proposal on language.

@Trevor Haasch  I like the checklist we have tried something similar in advance of a lease but never instead of it.

@Jason C.  

@Andres Piedra  

I am with you on the NO ,  I like what you said about the market Andres, my initial reaction was like what @Marcia Maynard  said and I had to refrain from saying it in a dashed off email what was in my head. @Douglass Benson  

I am with you on modest increases to keep things market rate and not have to make big adjustments. We do that (sometimes every other year for good tenants) or for justifiable decreases in what we do with the property which decreases our costs.

I am going to send her a letter with her lease to give a couple of options. (None of which is decreasing the rent), lets see where we go from here.

What are the other option ideas you're going to offer? I would love to learn from those, as I suspect I will get similar requests at some point :)

@Andres Piedra   Not sure what she is after here but she mentioned the lease "stressed her" so one of my choices will be a two month extension of her current agreement. It leaves me in a good position to get a new tenant and if they want to leave now or at the start of the summer they can.  Anything beyond that would be an inconvenience for me.  It is beautiful in south county in the summer and there is town beach access so it is attractive for a this couple to stay for the summer and in September move on. I want to have them out before summer so I can attract students and families. It is a 4 bedroom.

I also had been planning to get rid of checks so one option is the same rate for one year lease as long as it is ACH on the first. Another is a renewal at a higher rate for one year.  The last option will be an increase on a month to month lease.  That will be significant.  The lease already has a buyout clause in it so I am still debating if I will even give this month to month choice. I prefer a straight fee to cancel the lease.  In our area if tenants stay for the summer and then leave it is harder to get another tenant.  You have the university, the beach, and the school year.  I am still giving it some thought.

I would reply back with

Thank you for your interested. Since you are such great tenants we are offering renewal lower than usual at a $25 increase for a 2 year lease or $50 for a one year lease. We only allow month to month leases at a $300 dollar increase.

We look forward to having you long term!

I don't lower rents and I increase them even on great tenants. 

@Elizabeth Colegrove I  like that wording.  My first response was  Email received and now I am  letting them stew.

@Colleen F.  

I like that too!

I have enough houses that I can blame things on fair housing. While I try to always say "yes" with options. Ie yes you can have a month to month lease but it is at a $300 a month increase with 60 days notice required, etc. 

Good luck!

@Colleen F.  

We had that request last summer.  As @Marcia Maynard  covered in her reply, I simply pulled my phone out in the drive and told them I was calling the bank to see if they would lower the mortgage interest, because my tenants want a rent reduction.   Two months later, we informed them we were not renewing their lease at the end of term {Not because they asked for a reduction ... but because they were a nuisance to the rest of the building}.

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