Investor · Dublin, OH · Member since 2015 · 4 posts · 0 votes
Background:
Good tenant, pay on time. Property was in good shape when I inspected.
Tenant asked for rate reduction. Area rent rates are flat to very slightly down from last year when they signed.
Tenant is asking for around 45 (4%) dollars off per month(and signing a 18 month lease vs 12). Having them move out will cost me around 2,000, maybe slightly more.
Out of principle I want to keep the rate the same or raise it however I know financially it makes sense to keep them in the place if they are not bluffing.
Any advice?
Thanks
if the lease expires between now and next 3 month, you may be expecting a slower listing on the market. $45X18 = $810 loss from you to keep them for another 18 month.
2 actions I would do if I were in your position.
1) Check the rental history of the area in the past 1 year period to understand the rent difference between summer and winter and days on market for a full evaluation of this Market you are about to face.
2) What would be a reasonable rent in the market today? will this $45 deduction hurt you much in cash flow?
3) I would take this opportunity to REdesign the lease and expire the lease in summer time when rental rates are at its peak instead repeating again (12-month lease) in winter time to allow tenants play this game on you in their advance.
After reviewing these, you should have a good idea about the lines and should help you find a direction.
I would keep tenants if they are good and takes care property well. That's something you can't buy w/ $45 dollars.
It does hurt the cash flow and doesn't follow my "safe" projections of flat or increased rent however I have came to the same conclusion that the math does say I should keep them on.
I suppose when the next renewal comes along I'll have to hold a harder line as theoretically the rent will have increased during that part of the year.
Were you planning to lower her rent, if not then why consider it now. Is it because she asked. Is that how you operate your business. if it is it sounds like you are at the mercy of your tenants.
Lease signing is not a negotiation. I would tell her the rent stays the same as opposed to being raised, as you planned, and only offer her a M2M lease.
If you have her sign a term lease of any length she will own you.