Investor · Mission Viejo, CA · Member since 2016 · 78 posts · 36 votes
If you have 4 highly motivated prospective tenants who are interested in renting your townhouse, how do you properly ask them what is the best offer they can do for the rent. They all have submitted their rental amd Smartmove applications. I would like to find out who is the most interested and is willing to pay above the $2k rent I am asking. If someone offers $2100, that would be fine. If no one offers, that's fine too. The going rate for this rental is $2000 - $2200.
Do not make tenants enter a budding war. You do not ask, that is extremely unprofessional. Set your rent and accept the most qualified not the applicant stupid enough to offer more than you want for rent.
Or tell them all you are processing 4 qualified applications and they will need to be patient, then leave it at that. If one or more then choose to offer to bribe you with a higher rent payment so be it but if you compromise your screening standards for a bribe you will be sorry.
Do not make tenants enter a budding war. You do not ask, that is extremely unprofessional. Set your rent and accept the most qualified not the applicant stupid enough to offer more than you want for rent.
Or tell them all you are processing 4 qualified applications and they will need to be patient, then leave it at that. If one or more then choose to offer to bribe you with a higher rent payment so be it but if you compromise your screening standards for a bribe you will be sorry.
Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes
9y
To me that's being greedy. As a current renter (and landlord), if someone asked me how much I'd be willing to pay, I'd say $0, you just diminished the value of this property, and I can see now that you are going to raise rents unreasonably every chance you get.
Residential Real Estate Broker · Saint Louis, MO · Member since 2014 · 1k+ posts · 567 votes
9y
@Ruel K. You chose your rent when you listed the property. If you're getting multiple qualified applications quickly at your list then you priced too low. That's your fault, not the tenant's, so it does seem unfair to come back and propose raising the rents on the tenants unless someone suggested that they'd pay more rent because they're so in love with the property.
I fully admit that this might just be a situation where it's not a common practice so people are reluctant to proceed are you are suggesting, but you're also risking having people move on to another property if you're already talking about raising rents and they haven't even paid a security deposit. That could cost you more in vacancy than the increase in rents if it sits longer.
Investor · Brookfield, WI · Member since 2014 · 110 posts · 99 votes
9y
I would think you could easily be accused of bait and switch. You advertised the property for one price and now you want prospective tenants to bid? I wouldn't be surprised if they all walked away at that point. To say it makes you look shady is an understatement. That is the kind of activity that gives landlords a bad name.
Investor · Mission Viejo, CA · Member since 2016 · 78 posts · 36 votes
9y
Awesome answers here. Yes $2k is the starting rent and is too low. It's not about greed but I should have advertised it at $2100 on the first place, which the going rent for the area. I had already mentioned this to one prospective tenant prior to posting here and they do understand and very receptive to it. I will just have to take it back and not ask for a better offer.
Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes
9y
A qualified applicant isn't a signed lease holder yet.
You set your price, now you either accept a applicant, at price unit was marketed at, or take the unit off the market for a day. Return the application fees and start all over.. It's your business they could reapply with the new rate, or just plain go on to the next apartment where they won't feel ripped off.
Investor · Mission Viejo, CA · Member since 2016 · 78 posts · 36 votes
9y
@Deanna Good idea. The only fee they paid is for Smartmove. I don't mind refunding them, relist it at a new rent, and start all over again. I haven't talked to the other prospective tenants yet about best offer. I am going to see how the discussion goes with the one who is okay with it. If they don't agree, fine. We stick to the original rent and will accept them.
Investor · Mission Viejo, CA · Member since 2016 · 78 posts · 36 votes
9y
@Russ I see your point. I did fully explain to the prospective tenant that I was getting tons of inquiries and applicants, so I wanted to get the best offer. They are aware of the fair, going rate in my condo complex and told them another unit rented st at higher price. I did my due diligence for this and not just did it on a whim. I work closely with Fair Housing Authority here and have done their workshops. There is no intent of being shady or bait and switch. You don't know what conversation I had with my tenant and they are very, very receptive to it.
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
9y
You are going to present your word as worth nothing and what's more do it over $100 on a 2K rent? And whats your time worth? Greg S. is absolutely right.
And--incidently--how much goodwill would you buy by saying the truth "people are willing to pay more but I advertised it at this and I keep my word"
Don't you want it at the price you can choose from qualified tenants?
It is unfortunate but some new landlords believe it is necessary to set their rent below market to attract and hold good tenants. This is not necessary and only costs the landlord money. Tenants, regardless of your rent, do not have any loyalty.
Take the best applicant and raise to the full prevailing market rent for your area each year.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
9y
@Ruel K. of course it is about greed! You knowingly priced it under market to rent it quickly and then after getting four applications you realized you made a mistake and your greedy side said, lets start a bidding war. Just because your perspective tenant is receptive doesn't mean it isn't a bait-and-switch or shady.
California Fair Housing Handbook says on page 24 “The landlord should take the time to check out the information and make a selection based on the first qualified applicant(s).”
You offered the unit for rent at a price you chose and applicants paid money to apply based on that offer. First qualified application should be approved.
Investor · Richmond, VA · Member since 2017 · 32 posts · 12 votes
9y
If I am in your shoes, I would stick to the price but let all applicants know that I will give it to the one who can move in / start the lease right away. In this way, you keep your word but recoup some money by reducing vacancies rate. And I will clearly tell the tenant that I will raise the rent to market price at renewal.
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
9y
Actually, Greg S. I agree with you. I meant to focus on a market price that is desirable and reflects the value of the apt. Do that and I do think you get multiple tenants
"Market rate" is a concept much bandied about but little thought about. Would you agree that at any given time its a range? A reasonably narrow range that is pegged to the specifics of the micro neighborhood and condition.
I like the notion of being equal in price and slightly superior in function (size, condition) to the competition. You can have success the other way too. Like any other product, people see value as a function of both price and quality.
I should stress I'm not trying to start a debate, just clarifying what I meant in the last post. I think you consistently offer excellent advice, advice that I've been reading for a while now.