Ocean Springs, MS · Member since 2017 · 71 posts · 32 votes
Hi everyone! We have a house we going to rent. We could get $1250/month. We have a couple that has rented from a family member of ours for the last 10 years. They’ve never paid late and kept the house immaculate. They want to move across town and inquired about renting our house. We would rent it to them for $1150/month because that is what they are used to paying. My question is would you take the $100/month loss to get a fantastic tenant with impeccable rental history? Thanks everyone in advance!
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
8y
@Christy Philippoff a $100 is a lot of money. Over the course of one year, that is $1200 which is a whole months rent. You could have a vacancy once a year at the $1250 rent and it would work out the same as renting to these people for $1150. You are avoiding turn over, but on average tenants stay several years anyway so you shouldn't assume a higher paying tenant will leave any faster.
If your market really supports $1250 as a fair rent price, I would hold firm.
Of course every market has a rent range. If you were to tell me your property should rent from $1150 to $1250, that is different than if your property should rent from $1250 to $1350. If the $1250 value is on the lower end, then you will have no problem finding a great tenant who will pay $1250.
Bel Air, MD · Member since 2018 · 35 posts · 11 votes
8y
I would only do it if you're worried about getting a good tenant in that area. Also ask to meet in the middle. They really shouldn't get a discount on housing just because they are "used" to paying that much.
Absolutely Yes! The value of a good tenant, one that doesn't have drama, no issues paying, and genuinely takes care of the place is worth so much more than $100/mo! As others have stated, if you know they're A+, I would do at least a 1 yr lease, and a hefty fine if they terminate the lease early.
We actually rent our properties a little bit cheaper than market value, and focus on getting quality people like the ones you described.. a lot less stress, and better experience for everyone!
Rental Property Investor · San Jose, CA · Member since 2016 · 114 posts · 54 votes
8y
@Christy Philippoff, it's a people business so start off with them with their current rent but be honest and tell them it would go up by $100 in about a year. That way it's up to them to decide whether to rent with you or someone else. Also, before you do that make sure you have couple of good tenants lined up..if not then you don't have much choice. Both Dad & daughter can live happily ever after :)
Investor · West Coast · Member since 2013 · 43 posts · 11 votes
8y
I echo with some of the thoughts others are mentioning with better tenant with lower rent. Recently my unit came up for lease renew and I could have rented easily $250 over the current lease and looking at the tenant situation, I continued with current terms not increase what so ever. She doesn't cause any big issues but does little bit of drama from time to time. She is like in her 50's and by herself. The place doesn't get a lot of wear and tear. It's ok. It's lot less head ache trying to find a new tenant for another $250. I would have paid that anyways in PM fees.
Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
8y
Ask your bank if they will take a lower payment now since you've been paying on time for the last 15 years.
Is you insurance getting cheaper each year? How about your taxes? Labor and materials? Your CapEx stuff getting cheaper to buy? Market rent in your area going down each year or up?
By taking lower rent and never increasing it, each year the discount you are offering is going up...and up...... because NOTHING on your end is getting cheaper
So you really have to balance the "safe" thing to do and never increase your rent vs facing the "fear" of increasing it like every other expense in your life
Ocean Springs, MS · Member since 2017 · 71 posts · 32 votes
8y
Thank you all for the outstanding advise no greatly appreciate it!! I love the ideas of signing a multiple year lease and starting off at the lower rent but telling them it will go up and the future. Those thoughts never crossed my mind. I would really like to have them as tenants because I know they are amazing as I’ve seen them in my dad’s property. The house they will be renting from us is in a better area and a nicer house so the idea of starting with lower rent and raising it slowly is a great one. I just love the peace of mind knowing that rent will be paid and the house will be kept up and even improved while they live in it. Again thank everyone so, so much!!!
Hi everyone! We have a house we going to rent. We could get $1250/month. We have a couple that has rented from a family member of ours for the last 10 years. They’ve never paid late and kept the house immaculate. They want to move across town and inquired about renting our house. We would rent it to them for $1150/month because that is what they are used to paying. My question is would you take the $100/month loss to get a fantastic tenant with impeccable rental history? Thanks everyone in advance!
I would keep them as a tenant no question. $100 is not a huge discount for a great tenant. However I would ask them to agree to a lease which allow for regular increase of the rents set in advance. You don't want to find yourself in a situation where just because they are good tenants, they still pay 10yeras after the same rent they were paying when they first moved in. Depending on where there is rent control, that could make it impossible to bring back to market values the rent if you wanted to.
Hi everyone! We have a house we going to rent. We could get $1250/month. We have a couple that has rented from a family member of ours for the last 10 years. They’ve never paid late and kept the house immaculate. They want to move across town and inquired about renting our house. We would rent it to them for $1150/month because that is what they are used to paying. My question is would you take the $100/month loss to get a fantastic tenant with impeccable rental history? Thanks everyone in advance!
Yea, $100/mo is small compared to the benefits you get from that type of tenant.
If you are operating as a business you should be prioritising income. Finding good tenant's is simple when you know how to properly screen. You should not need to bribe tenants to live in your property or losing money due to a false savings. If you must bribe tenants to stay then you are over priced.
Profits are relative . With one tenant you lose $1200/year. With 100 tenants you would be losing $120,000 per year. Business wise it is exactly the same loss and should be viewed the same. It boils down to whether you are operating as a hobby or as a business. Hobby landlords generally prioritise avoiding managining their investment over maximising income.