HOW LOW ARE YOU WILLING TO REDUCE RENT FOR A DESIRED TENANT

10 Replies

Hello All, I am a new house hacker living in Saratoga Springs, NY. I have a two bedroom unit that will be available mid 11/2017 and I want to make sure I fill it with a respectful tenant. The market is slow at this time of the year and I have not had much success with finding tenants (Utilizing an agent have it listed on Zillow and Craigslist). 

My unit is listed at $1,400 a month (confirmed to be a competitive price in this market by two active agents and $1,400 is $200 under Zillows estimate). 

I believe I found a respectable tenant (steady job, great references, etc), however she states her budget does not allow her rent to exceed $1,100 a month. 

Do I let her move in for $1,100 a month or do I risk the unit going vacant until the busier season (February-September)? 

One approach could be to rent the rooms to two tenants.  Given school season right now you may have more individuals who need a space.  Rather than $1100 you could try for $650 x 2 to some young professionals or students.  This was a strategy on one of the podcasts.

Zillow rent estimate is not very accurate around here.

You can also try posting on the facebook garage sale group for saratoga.

21% reduction in price.

Are you making enough to take a 21% hit in income. Are you going to be willing to sign the tenant for another lease at loss the next year?

If the price is competitive, I personally would take the time to find the right tenant at the right price.

Brian, that is a very useful tactic however, there is a huge discrepancy in the bedrooms and bathrooms that it wouldn't be fair for one of the tenants.

Alex, where does 21% come from?

After hundreds of tenants I have never once reduced my rent to buy a tenant. It does not fit my business practices.

No tenant is worth undervaluing your property.

$1400 is definitely fair market price. Saratoga is one of the most desirable locations around this area. If I were you I'd suggest waiting it out. Are there any small cosmetic upgrades you could do in the mean time to give you a competitive edge?  Fresh coat of paint, slapping down some pergo could go a long way.

@Alexander Felice Sometimes I want to rush to comfort, taking the easy way out - especially with everything else going on. Great questions I have to ask myself. Side note - Initially I thought "21% reduction in price" was your rule of thumb.

@Joshua Tobin  it is a very nice location, it is very slow this time of year though. Good advice utilizing time now to spiffy everything up. Do you have any properties in Saratoga? 

I’m not familiar with Saratoga area.

But if $1400 is the fair market price, I would not reduce it by $300.

I would rather wait for the next right Tenant.

During the meantime, I would have minor upgrade while waiting for the next right Tenant.

Originally posted by @Michael Craig Piesnikowski :

@Alexander Felice Sometimes I want to rush to comfort, taking the easy way out - especially with everything else going on. Great questions I have to ask myself. Side note - Initially I thought "21% reduction in price" was your rule of thumb.

@Joshua Tobin  it is a very nice location, it is very slow this time of year though. Good advice utilizing time now to spiffy everything up. Do you have any properties in Saratoga? 

 LOL

ask yourself why you are rushing. Is it from emotional fear, or calculable risk that can be mitigated? 

Don't worry, this is extremely common for new renters, I did it when I was new too. Just trust the process, you're not going to sink in the first month, find the right tenant not the first tenant. you'll do great.

Since her budget does not allow her rent to exceed $1100/month, it makes her not an ideal long term tenant. How can she afford a rent increase if you need to raise the rent?

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