Security deposit negotiation

[Daniel Alegre]

So we finally found tenants that have good income, great credit, no eviction or criminal records, and plenty of money in savings. But for some reason now they don't want to pay a month and half security deposit, they only want to pay 1 month. 

My wife is tired of searching for tenants and thinks we should accept the month security deposit but i feel like if we give in to this request that the tenant is going to be very high maintenance being that she did a power play from the start. Am i being unreasonable?

[JD Martin]

Originally posted by @Joe Splitrock:

Originally posted by @JD Martin:

Consider this a learning process:

1. Have a policy and stick to it, especially when they're not even your tenants yet. You are never in a stronger position than when you have a house they want and do not have. Any other discussion will always be from a lesser position of advantage on your part - i.e., they have possession of your house. If the policy is 1.5 for deposit (an odd amount in my opinion), then that is the policy. Don't change your policies out of desperation for a tenant - change them because they make no sense, or need to be tweaked.

2. Negotiating on the front end is going to cause you all kinds of negotiations going forward. Treat it like a retail store instead of a flea market. 

I am curious, you seem to have a one-price thought process for rent. I have always been the type who is willing to negotiate anything if it is in my best interest. I will sometimes test the market at higher rent prices and reduce to get it rented. I have a minimum rent level, but I am open to a little negotiation if I can get someone in faster. 

Do you think any negotiation on the front end puts me in a lesser position of power? I have never felt that way, but I see your concern.

 Hi Joe,

That's not to say I would never consider changing the rent amount - only that it's not going to be done in discussion with the tenant. (Knock on wood) I haven't had the situation arise to date where I've had a unit be uncompetitive enough to stay vacant, but if I had something overpriced for my market I would consider changing the rent amount - but that change would be irrespective of any tenant, and without their input. 

I absolutely believe that your strongest position of power in sales is when you hold an item that someone else wants. I tend towards an Apple strategy of pricing, in that I have the best product out there for the price - it may not be the cheapest, but it's not going to be beat in terms of features as related to cost. Because of that, I always have heavy demand and no need to negotiate any of my terms. Just as Apple can't charge $10k for a cell phone, so too I cannot price at some absurd level of the market - but when people see my place compared to another place, the choice is clear. And my experience is that if I treat the transaction as if things are negotiable, tenants come to see themselves as equal partners in a business relationship, to which (in my opinion) they clearly are not. I own the property and maintain the property. I am letting them use the property for a fee. If I treat the transaction this way, if/when something comes up down the road, and I agree to it, the tenant gets more of a "by my good graces" impression than "through our mutual negotiation" impression. And that is the way I want it. I rent to nice people, and I like all of my tenants, but at the risk of sounding like an authoritarian fascist, I want the tenants to understand they stay in my property through my graces, which are going to be maintained by paying the rent on time, not damaging the property, and being good tenants. 

It's all in the way you look at it. If you consider yourself lucky to have tenants, you will have tenants that will pick up on this and treat you accordingly. If you carry yourself as that the tenants are lucky to have such a nice place, with such a good landlord, at such a good price, they will carry themselves accordingly. There's a lot of psychology involved here, but such is life when you are dealing with people :)