Thoughts on decreasing rent?

[Brittany Varen]

Hi all, I'm a newer investor. My husband and I bought our first LTR 2 years ago and are coming up to the end of our 2nd year with the same tenants. They're a great family, we have great communication, always pay rent on time (a few days early, actually).

The market was very different when we signed our first lease in June 2024. We did not change rent last year. We're coming up to lease signing soon, and I'm very mindful that what they're paying is $200 - $300 higher than market.

While this all still feels very new to me, I completely understand the value of good tenants and maintaining good relationships. I'm wondering if I should be proactively reducing rent for the upcoming year?

A few quick notes:

- Our tenants have always expressed they're very happy with the property, but I haven't spoken with them about renewing yet. They may not even plan to.

- I'm acting property manager, but my husband is vehemently against reducing rent (he doesn't share the property management philosophies I do, hence me managing). Our compromise last year was a small gift basket to the family @ renewal - about $400 value

- Right now our plan was to do a similar renewal gift, but that doesn't feel great either

- We purchased the property with 100% financing (combination of HELOC & conventional mortgage), which means our cashflow is negligible. A reduction would technically put us in the red, but we can also make a larger ump sum payment to reduce our financing payments.

This was longer than intended. If you've read this far, thanks very much! Would really love any and all input.

Thanks,

[Drew Sygit]

Quote from @Brittany Varen:

Hi all, I'm a newer investor. My husband and I bought our first LTR 2 years ago and are coming up to the end of our 2nd year with the same tenants. They're a great family, we have great communication, always pay rent on time (a few days early, actually).

The market was very different when we signed our first lease in June 2024. We did not change rent last year. We're coming up to lease signing soon, and I'm very mindful that what they're paying is $200 - $300 higher than market.

While this all still feels very new to me, I completely understand the value of good tenants and maintaining good relationships. I'm wondering if I should be proactively reducing rent for the upcoming year?

A few quick notes:

- Our tenants have always expressed they're very happy with the property, but I haven't spoken with them about renewing yet. They may not even plan to.

- I'm acting property manager, but my husband is vehemently against reducing rent (he doesn't share the property management philosophies I do, hence me managing). Our compromise last year was a small gift basket to the family @ renewal - about $400 value

- Right now our plan was to do a similar renewal gift, but that doesn't feel great either

- We purchased the property with 100% financing (combination of HELOC & conventional mortgage), which means our cashflow is negligible. A reduction would technically put us in the red, but we can also make a larger ump sum payment to reduce our financing payments.

This was longer than intended. If you've read this far, thanks very much! Would really love any and all input.

Thanks,

Are you running a business or a hobby?

If a business, what is you goal?
- Most of us want to maximize our income.

If that's also your goal, it is SMART BUSINESS to balance max rent vs max occupancy to get max income over time.

But,why would you voluntarily reduce rent w/o a request from the tenant?

Also, a gift basket renewal gift?

Most landlords would recommend spending that $400 on a property improvement the tenant wants. A ceiling fan, new blinds, etc.