Tenant requesting lower lease

11 Replies

I have a single family house with an in-law apartment. There are five bedrooms, three bathrooms, two kitchens, and two living rooms. I'm giving background on the house because it's not a typical SFH. I have a renter that has been living in the house for three years now. She's been a pretty good tenant. Her initial lease was $2500 per month and that included lawn care. Last year I opted to reduce the lease by $100 a month and drop lawn care. It was costing me more than $1200 a year and I didn't want to be responsible for it. Her lease is up at the end of August and she is asking for a rent reduction because she's decided to have the lawn mowed every 10 days plus other yard maintenance. Her choices. She also mentioned that the lease was initially advertised at $2000 a month before she originally signed and was increased to $2500. That's true. I'm considering a slight reduction in exchange for a multi-year lease. What would you do in my position? I have a property management company, but I do the leasing and renewals to save some money.

@Steve Fitzgerald

Your statement, "I have a property management company, but I do the leasing and renewals to save some money" is telling. 

If you have a management company taking care of the unit, why are you getting involved?  You now have no distance from the tenant, no third-party to check with, making it much more difficult to negotiate.  Focus on the big picture and let the pros (if they are indeed good managers) do their job.  Sounds like you are stepping over dollars to pick up nickles.  

@Marc Winter depends....if they charge a month's rent to lease to someone new that's not small change. I'd do the same and usually do a better job screening that some companies would since you know it's your home they are moving into. There's usually a fee to do a new lease and I'm sure they charge on renewals as well. If the property manager allows it (I'm actually surprised they do) I'd be all for it myself. I self manage my local stuff currently but would absolutely be on board with screening my own candidates until I got to the point I couldn't do it myself. 

Originally posted by @Marc Winter :

@Steve Fitzgerald

Your statement, "I have a property management company, but I do the leasing and renewals to save some money" is telling. 

If you have a management company taking care of the unit, why are you getting involved?  You now have no distance from the tenant, no third-party to check with, making it much more difficult to negotiate.  Focus on the big picture and let the pros (if they are indeed good managers) do their job.  Sounds like you are stepping over dollars to pick up nickles.  

I agree with you.  Why have a property management company if you do the most important thing a PM does for you?  What is left for the PM to do?

I wouldn't say he's stepping over dollars to pick up nickles...pennies maybe.  If the PM of choice doesn't do as good a job as you can screening tenants, then find a different PM...and before you say, "that takes a lot of time", how much time does it take to find one good PM, vs all the work you should be paying them for...and, the reduced rent you are put into a position to negotiate (and shouldn't)?

 

@Adam Odom , you are right, it depends.  In this case, it's a renewing tenant.  As managers, we do not charge any fee to re-up an existing tenant or write a new lease.  If your managing agent is not doing complete, detailed screening, and you can do a better job, you have the wrong manager.  

All in all, I'd rather have some distance between the tenant and the owner, even when the owner is me.  But again, that will require a professional manager and a solid relationship of trust.  

Keep moving forward!

@Steve Fitzgerald the most difficult part of managing properties is leasing and renewals. For a house, there should be very little month-to-month time spent. One option is to drop your PM and pass the savings along to your tenant. Assuming your PM is 5%, then you could pass $100 back to her and still net $25 extra. 

I don't know what the fair market value of your property is, but that makes a difference too. If fair market is $3000, then obviously lowering rent makes no sense. If fair market is $2500 give or take, then a small concession to keep a good tenant in place is probably smart business.

Originally posted by @Steve Fitzgerald :



That's true. I'm considering a slight reduction in exchange for a multi-year lease. What would you do in my position?

Why would you want a multi-year lease?

My expenses go up every year, not down, and that's what my rents do too.

What is the market rent for your area for a similar unit (as best you can compare)?

Unless you are way over market rent, then NOPE..... no reduction

So you dropped the rent and the yard maintenance ....... and turned that job over to the tenant......and now she wants to pay someone to do it.....and drop the rent more so you basically get to pay it again? Ummmmmm .....no?

I would go by the market rent in your area. If they moved out would they be able to find the same kind of house for the price they are asking? Generally a renewal might include an increase in rent, not a decrease. Maybe you would be doing a favor by leaving it the same instead of raising it. It's all in the numbers.

Originally posted by @Steve Fitzgerald :

I have a single family house with an in-law apartment. There are five bedrooms, three bathrooms, two kitchens, and two living rooms. I'm giving background on the house because it's not a typical SFH. I have a renter that has been living in the house for three years now. She's been a pretty good tenant. Her initial lease was $2500 per month and that included lawn care. Last year I opted to reduce the lease by $100 a month and drop lawn care. It was costing me more than $1200 a year and I didn't want to be responsible for it. Her lease is up at the end of August and she is asking for a rent reduction because she's decided to have the lawn mowed every 10 days plus other yard maintenance. Her choices. She also mentioned that the lease was initially advertised at $2000 a month before she originally signed and was increased to $2500. That's true. I'm considering a slight reduction in exchange for a multi-year lease. What would you do in my position? I have a property management company, but I do the leasing and renewals to save some money.

Well I don't really have an answer yet. I've got a few questions 1st.


How much money is it going to cost you to get it back to rent ready status?

What will the property go for on the open market?

How many months of lost rent will you incur getting it back to rent ready status?

Why are you putting one toe in the Property Management pool & another in the self managed pool?