I'm wondering if anyone has used that. Slightly lower than market rents to keep good tenants and using higher than average deposits to get good tenants? I find that standard one month rent deposits rarely cover my costs during a turnover.
I upgrade my rental, then use high rent and high security deposit to get good income and good credit score tenants.
@Jeff T. I’m a landlord and a tenant myself so I feel I can offer a bit of insight to both sides.
For me as a renter I would personally pay a higher security deposit (say 1.5 months rent, assuming one months rent is typical deposit) for around 100-125 off market rent for a 12 month lease.
As a landlord, I would rather have a normal security deposit and market rent. Market rent gives me my cash flow. Through diligent screening yo can get market rent and still get good tenants
Mary L. @Caleb Heimsoth Thanks for the input.
I think it depends on the area. If Mary's rentals are in Oakland I can see her plan working.
I'm in a more ruralish area of Florida.
I can see Calebs point about cash flow. I'm not talking about a large rent reduction but just slightly below market. My tenant turnovers tend to wipe out months of rent, so I'm trying to guard against that if I can.
Rents are rising in my area. I raise the rents to market at turnover, but limit rent increases to about 3% annually. I also pro-rate the second month. I do not want tents who cannot come up with a full month and a SD. This, plus screening, seems to be working well, and provides an incentive to stay. I give a 60 day notice of rent increases. I want my tenants to shop around and realize what a good deal they are getting. I have never lost a tenant to a rent increase or had a tenant complain about their increase.
@Bettina F. That's a good point about the rent increases. I have been doing about 3%, but increased it slightly more recently (still under market) but caused a couple tenants to leave. Well, one left, the other had to be evicted, but that probably would have happened anyway.
I have an apartment I am upgrading and want to make sure I have a good tenant, so I am thinking of going with a higher deposit, since it is upgraded.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing