1 - How many other potential tenants you have lined up
2 - How bad you want to make money
Keep this in mind. If this becomes a long term tenant, you just established/allowed 2 things to happen:
1 - You just established a lower rate as a starting point, with all rent increases to them coming off this amount. That means you just lowered the rent for all the increases too.
2 - If you allow them to dictate the rent, you will have a harder time raising it down the road...that's if you can at all since they've already established they want a lower rent than the going rate in the area...and they are well aware of what that going rate is.
I’d probably split the difference and go 50 bucks lower. Really depends how long it’s been sitting.
At my last turnover we listed 100 bucks higher the previous rent and had it rented in 3 days of posting photos (3 weeks total, but most of that was without photos due to work being done).
So at that point I could probably argue we were still under “market” a bit at the new price, but seeing as I’m already over the 2 percent rule by a lot at the current rent an extra 50 bucks doesn’t do much for me
Grayson, If the rental price you set is market standard for the updated home you're renting out, then wait for an applicant who can pay that amount. The prospects should not have had a showing at the property if they're not able to pay the rent. If you still haven't gotten a qualified applicant after 1-2 weeks I would consider lowering the price at that time. Good luck!
Thanks everyone! They’re making about 5 times the rental income amount and the property isn’t vacant until July 1. But they also seem like quality tenants and they’re going to be here 4 years because of their job. So that’s the other side of the coin.
If they make five times the rent they should easily accept the asking rental price. I would stand firm.
Perhaps they're simply trying to negotiate then if their income and all else truly checks out fine. Stand firm. Good on them to ask, but that doesn't mean you have to give it to them.
You need to know three things:
1) What the market rent is
2) What amenities the average unit has at that average rent
3) What is your tolerance for an empty unit
If your rent is average and they just want a discount stay the course you may get a call back once they've shopped around. If your rent is a hundred dollars higher than average, in most markets, that is with in what is tolerable if you have a reason for it. Is the average unit 3 beds one bath and you have a 3/2? Does the average unit have street parking and you have a driveway and garage? That worth a hundred dollars easy to the right person.
However, if you just have an average unit, haven't had much interest and you rent is a hundred dollars more than the market then you will need to drop the price to be competitive. Even if you feel your unit is nicer do the math. I once calculated that it was better for me to rent a unit at a discount if it enabled me to rent in immediately than wait. This was during winter months when there isn't a whole lot of interest to move. I found when I listed it at the higher price that I still had enough interest I decided to hold off and wait for the right tenant but by the time I found a qualified tenant, a month had gone by, and that's money I'll never see again.
I wouldn't haggle at all. This is the rent, take it or leave it. If you allow them to negotiate the rent, they will negotiate EVERYTHING, because you have just shown that you have no hard and fast rules, and you have no backbone. If you think maybe the rent is to high, lower it for the next applicant, but do not haggle the rent.
I wouldn't haggle on rent at all, purely because this sets a standard that rent is negotiable. If every applicant wanted to pay lower rent, and I was unable to find an applicant after an extended period of time I would relist it at a lower rate. If those same tenants come back, then so be it, but at least you have lowered rent on your own accord.
As a side note, just because those other homes are listed at a certain rent, does not mean they are renting at that.
Thanks everyone! It’s in a small military town so the competition is not very high. Zillow shows that we have about 500% more views than all the other houses but that might just be because we are the only ones that took professional photos.
The houses here are usually older without updates. The only downside is they include washers and dryers and we don’t. We’ve gotten two applicants now and it’s not vacant for another week. Both asked for $100 lower.
I haggle on every purchase I make, and I expect others to do the same.
this is why I list my rentals at the top of market rate. So I have room to move.
Hey Grayson! Like the previous posts have mentioned, the amenities play a large role in determining the rent price. I would maybe think about lowering your rent slightly to accommodate for the missing washer and dryer. This could incur a potentially large cost for renters, making them hesitant to accept your higher rent price. Best of luck!
We had a couple of people ask if they could pay less on our last rental. Our response was, “the rent is the rent”. We try to price the rent competitively. If there was no interest in the property, we would consider lowering it because we may have misjudged the market. However, we would not do it based on an applicant’s request because (as others have said) we feel it sets a bad precedent for the future.
So many good perspectives. I’ll have to figure it out. I think it might be better to get great renters for a little less. Plus it’ll help with financing the next one!
I am 100% with @Karen Johnson . I have certainly had people come in and say "if it was a bit lower..." but I turn them away because that is the first step in surrendering control of your asset to a tenant. That will not happen with me and I have certainly reduced rent- but I would not take that prospect back into consideration.
I dictate the terms of my rental units and do not allow a tenant to believe for a second that they are so important as to change my list price. Very bad precedent to set before the lease is even signed. Especially if they can very much afford it!
I realize that with a SFH landlords can be somewhat more beholden/fearfull of tenants and that is why SFH and duplexes are a no go for me.
I’m looking at a fourplex next. I’m not managing this property myself.
I would get a kick out of a prospective tenant trying to haggle on price. It hasn't happened to me yet, but I would really wish I would.
I’m a newbie with a property manager and it’s happened twice on my first deal already.