Investor · Seattle, WA · Member since 2015 · 55 posts · 33 votes
Hi BP!
I am renting out my condo and in an effort to be competitive I priced my unit at $1850/mo. I have since received 3 really good applicants from people that I would happily rent to.
Is there any way to claw back and get more for the rent? I am asking because this seems unethical.
Also - any advice on how to eliminate one tenant versus the other?
I am renting out my condo and in an effort to be competitive I priced my unit at $1850/mo. I have since received 3 really good applicants from people that I would happily rent to.
Is there any way to claw back and get more for the rent? I am asking because this seems unethical.
Also - any advice on how to eliminate one tenant versus the other?
Thanks!
Adam
I would not do that - raise rents. You could next time around but it is a damage to your reputation. I eliminate first based on credit score, then work, then rental history. Hope that helps.
I am renting out my condo and in an effort to be competitive I priced my unit at $1850/mo. I have since received 3 really good applicants from people that I would happily rent to.
Is there any way to claw back and get more for the rent? I am asking because this seems unethical.
Also - any advice on how to eliminate one tenant versus the other?
Thanks!
Adam
I would not do that - raise rents. You could next time around but it is a damage to your reputation. I eliminate first based on credit score, then work, then rental history. Hope that helps.
@Adam Sharp You can do anything you want, but I would see that as unethical. As for which of the three to pick, go for the one who you think will stay there the longest and take the best care of it. Otherwise, pick the first one to get the complete application in.
Real Estate Investor · Hayward, CA · Member since 2015 · 134 posts · 88 votes
6y
It is definitely unethical since you have three qualified people already. During Covid, make sure they have enough stable income to cover rent and deposit and also has good rental history. Good credit is a must, and the higher FICO is better (in my opinion). (However, this is not always the case so use your best judgment). Screen, screen, screen. In your rental agreement, let them know that rent will be increased yearly by the amount allowed by law (usually between 3% and 10%) and at YOUR discretion. That way if they are really good tenants who are taking care of your property, you may want to just increase it by the least amount. However, always increase the rent at least $25 dollars so that you don't have to play catch up down the road and the tenants are shocked by an increase. The next time it is vacant, make sure you check on www.rentometer.com to see what the market rents are. If yours is in great condition and has extras, you can increase it to the rent the higher listed rents are paying.
Real Estate Investor · Hayward, CA · Member since 2015 · 134 posts · 88 votes
6y
Afterthought: I do like the applicants who keep in touch with me and immediately get all of their paperwork in, and more, ask questions and send photos of pets with all requested documents. Applications are completely filled in, credit report fee is paid promptly, are not afraid to put down a hold deposit, and want to stay at least two years. I rent to many people who often rent sight unseen and are moving from another state...
Investor · Seattle, WA · Member since 2015 · 55 posts · 33 votes
6y
This is all great info everyone thank you all for the quick feedback! The BP community continues to come through!
I’ll stick w the rent as advertised. I definitely don’t want to be a scum bag and I’m lucky that I have good potential tenants to choose from. No reason to get greedy in the current environment.
Thanks for the sanity check and “gut feeling” validation.
Rental Property Investor · Malvern, PA · Member since 2016 · 1k+ posts · 933 votes
6y
Here's another way of looking at it: Folks selling a home with multiple offers often call for best and final offers, even if they already have offers at or above their asking price. That seems to be your situation with a rental. You could let your applicants know there are 3 qualified offers. Rather than just pick one, you are going to give them 24-48 hours to improve their offer if they so desire. Improvements need not be higher rent. They could also be a longer term, larger security deposit, etc. In the end, all applicants can stay where they are and you are in the same situation, but maybe one or two step up.
I think that just raising the rent does risk offending them and you don't want to damage the relationship before it starts.
Rental Property Investor · CO · Member since 2020 · 1 post · 1 vote
6y
I would not increase the rent that you advertised. You'd be setting up a negative relationship with which ever applicant you choose to be your tenant and that relationship is valuable. As for choosing an applicant, if they are all equally qualified, financially-speaking, I may base my choice on the strength of their personal and professional references and possibly their likelihood of staying longer than just one-year.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
6y
Raising the rent will probably leave a bad taste in the tenant’s mouth from day 1. If they are all good tenants and they have all responded quickly to requests for information and filled out forms completely I think I would be up front. “Your are 1 of 3 well qualified tenants I received the same day. I don’t want to raise the rent and take the tenant that is willing to pay the most. Instead I’m asking each of you how long of a lease you would be willing to sign. I would prefer a tenant with plans to stay and treat the property as their home. In the event of a tie I will use “method x” of determine the winner.....“ (Make sure method x is legal!).
You don’t have to make the lease for as long as the winning offer if it’s 10 years or any other number you’re not comfortable. But rather you can choose them and use a shorter lease with extensions where either fo you can say no.
Flipper/Rehabber · Phoenix Arizona · Member since 2020 · 1k+ posts · 686 votes
6y
Adam, good for you. DO THIS..........
When you get multiple applications and people wanting your place bad , you can let them know, text, call, etc , and say I have several applications and I just can't make up my mind yet.
I can almost promise you one of them will offer you at least 5% more if you will rent to them!
Do it.
Don't you wish you had a dozen of these properties right now?
Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
6y
Yes, you can ask for best and highest. The applicants won't be happy but I have done this and gotten $100 extra and a 6 month longer lease out of one of them. It's common practice when buying so why not.
Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
6y
So, here is the deal.... good tenants have friends that that might be good tenants....and they will recommend your place(s) if you treat them fairly, have a good product at a fair market price etc..... which works in your favor as less vacancy means more money in your pocket.
it also works the other way...... they also will be happy to never recommend one of your places.....
Soooooo..... I strive to have tenants want to recommend my places - they do the marketing and advertising for me..... I get great tenants, less vacancy etc.... win/win.
Also, lets please dispense with the tired idea that somehow its better to pick a family where the husband works and the wife stays home. It is discriminatory to pick one applicant over another due to familiar status. just sayin'
Of course a single person with no kids or pets would be your best tenant as far as wear and tear!
Working husband and wife and a very good tenant.
You can be pretty picky and still get more than you asked by letting them know .
They will raise the bar on rent if you handle it tack fully!
A friend of mine has found a niche is purchasing condos in emerging markets, and marketing them to young professionals (single, no kids or recently relocating to area for job). He has over 15 units in Jacksonville, FL and has never had issue going that way. Rents may be under market but for him hassle free tenants is worth the discount.
Rental Property Investor · NH · Member since 2018 · 50 posts · 28 votes
6y
@Adam Sharp
Be more aggressive with the price next time from the start. Number of qualified applicants shouldn’t change the way you value your rental. We always list for a week with a delayed showing, collect all the applicants, then choose the best based on credit (payment history) and income. We can quickly see if we’ve been too aggressive with price just by the number of inquiries we get each day.
Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
6y
@Adam Sharp also be sure to check your local tenant/landlord laws - for example in Portland we have to pick the first qualified applicant. So highly suggest you read your state/local laws so you are familiar with them. Good luck :)
Investor · Minneapolis, MN · Member since 2015 · 20 posts · 21 votes
6y
@Adam Sharp - I would strongly recommend to glance through Fair Housing Laws (for your own protection!) (HUD +your local state, and sometimes city as well). The thought behind what you are asking, and some of he suggestions below are at most borderline... you are likely in violation by taking multiple applications if not properly disclosed. Although, this may change if you charged an application fee or not, and also may change if you are renting a room within a property that you are residing in ("house hacking").
As a guiding principal - create a one pager “qualification” document and provide it to your applicants before they apply to avoid discrimination. If you have a document as such, approve the 1st person that submitted an application and is qualified. Having a document like this in hand will help protecting you from discrimination claims in the future, and turn you into a more serious real estate investor.
I’ve seen some comments with comparison to “highest and best” in real estate transactions, and this comparison is simply wrong and does not apply here; By accepting an application and application fee you established a contract between you and the prospect. An offer on real estate, on the other hand, is not a contract YET until signed by both parties...
@Adam Sharp it could open up Fair Housing Violations due to the content contained within the applications and then raising the rent. It could also potentially be a “bait and switch” issue.
@Adam Sharp it could open up Fair Housing Violations due to the content contained within the applications and then raising the rent. It could also potentially be a “bait and switch” issue.
Fantastic point. Pick the best tenant based on criteria you can legally consider and just move on. 3 qualified applicants means you can raise the rent next time around if you want. I'd rather get 3 qualified applicants than 1. Or even worse, zero. Start the landlord-tenant relationship off on the right foot and move forward with the terms (price) you originally laid out.