Thoughts on decreasing rent?

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Thoughts on decreasing rent?

Brittany Varen
Member since 2023 · 35 posts · 16 votes

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,

7Reply
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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
7mo
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.

[email protected]248-209-6824
Logical Property Management4.9459 Reviews
WebsiteView Page
6Reply
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  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    7mo

    I would first see if the tenant plans on staying. If they do then leave the rent alone. If they are thinking of leaving you could reduce rent (if market is truly under what they are paying). What market are you in where rent dropped $200+ per month? That is a decent drop

    3Reply
  • Kenneth GarrettPro Member
    Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
    7mo

    Whenever there is a new tenant search or the possibility of an existing tenant to renew, I rerun the rent numbers to see what the current market rent is. Most happy tenants don’t want to move unless they are moving out of the area. If your current rent is above your market, then that makes it difficult for a tenant to stay. Unless the difference is under 5-10% where it’s not worth the hassle. Hopefully the property is appreciating and if interest rates are falling you might want to think about refinancing if that’s possible. That will reduce your cost and provide more flexibility with rent in case the market has a down turn.

    You can’t control the market you have to work within the market. I would see if your tenants are interested in renewing after you do your research. The research will help you make an informed decision. Don’t forget about insurance and property tax increases.

    100% financing of a property puts strain on you when the market shifts downward. I would work on reducing my leverage with the property.

    1Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Kenneth Garrett:

      Whenever there is a new tenant search or the possibility of an existing tenant to renew, I rerun the rent numbers to see what the current market rent is. Most happy tenants don’t want to move unless they are moving out of the area. If your current rent is above your market, then that makes it difficult for a tenant to stay. Unless the difference is under 5-10% where it’s not worth the hassle. Hopefully the property is appreciating and if interest rates are falling you might want to think about refinancing if that’s possible. That will reduce your cost and provide more flexibility with rent in case the market has a down turn.

      You can’t control the market you have to work within the market. I would see if your tenants are interested in renewing after you do your research. The research will help you make an informed decision. Don’t forget about insurance and property tax increases.

      100% financing of a property puts strain on you when the market shifts downward. I would work on reducing my leverage with the property.


      Thank you Kenneth! These are all really great points. I'll keep checking the comparables to get a better idea of the discrepancy. I'm definitely worried about making a decision without metric support.

      And agree about the 100% financing - it seemed like a good idea at the time, and it's nice that the interest for the entire purchase has been tax deductible, but don't like the position it puts us in.

      0Reply
  • Brittany Varen
    OP
    Member since 2023 · 35 posts · 16 votes
    7mo

    Hi Caleb, thanks for responding so quickly. That's a very logical position. Sometimes need people to point out the obvious ones, right? :)

    Sorry I forgot to mention market - I'm in Halifax, NS (Canada). Halifax had a rental surge when we posted in 2024, and has come down considerably since. We did post somewhat at the high end, which is making our discrepancy more pronounced.

    0Reply
  • Peter MckernanBusiness Member
    Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
    7mo

    I would agree with others that have posted, re-pull comps in the area to see where those rents are at right now in today's market. If they are $25.00 higher then I would consider raising rents, but if they are all $100.00 lower then where you are at then I would really consider staying put. 

    The challenge I have is the experience with rents and how the slip away from you as you do not raise rents, and go backwards. I had a property a sold a little over a year ago. When the tenant moved out we were way behind on rents, due in part to a year during 2020 not raise rents, and not raising rents through the 10 years she lived there as much as the market increased. Keep in mind this can slip away and you could be in a large gap later with the people paying a lot less than market value. This is of course a bigger deal when you get into small and bigger multifamily. 

    The McKernan Group4.957 Reviews
    WebsiteView Page
    0Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Peter Mckernan:

      I would agree with others that have posted, re-pull comps in the area to see where those rents are at right now in today's market. If they are $25.00 higher then I would consider raising rents, but if they are all $100.00 lower then where you are at then I would really consider staying put. 

      The challenge I have is the experience with rents and how the slip away from you as you do not raise rents, and go backwards. I had a property a sold a little over a year ago. When the tenant moved out we were way behind on rents, due in part to a year during 2020 not raise rents, and not raising rents through the 10 years she lived there as much as the market increased. Keep in mind this can slip away and you could be in a large gap later with the people paying a lot less than market value. This is of course a bigger deal when you get into small and bigger multifamily. 


      Thanks Peter! Agree; I'll keep assessing the area to get a better idea of market.

      And I totally get what you're saying.. that's something I've been mindful of as well, falling into a habit of not raising rents. This was probably something I could have structured better from the beginning - leasing at just under market and then maintaining steady increases each year not only for performance, but also to set the precedent. Definitely something I'll be doing for our next.

      0Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    7mo
    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.

    [email protected]248-209-6824
    Logical Property Management4.9459 Reviews
    WebsiteView Page
    6Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @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.


       Hi Drew, I didn't voluntarily decrease rents. That's why I was posting - to see if that was something people did. It seems like the answer is no, and I know that now.

      Yes, I do intend for this to be an ethical business venture. With respect, I haven't done this before, so I'm figuring it out. Yes, I did a gift basket. I don't think that's completely unheard of, but I do like the idea of a property improvement. Thanks for your feedback!

      0Reply
    • Jon K.
      Rental Property Investor · Perry Hall, MD · Member since 2016 · 588 posts · 599 votes
      7mo
      Quote from @Brittany Varen:
      Quote from @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.


       Hi Drew, I didn't voluntarily decrease rents. That's why I was posting - to see if that was something people did. It seems like the answer is no, and I know that now.

      Yes, I do intend for this to be an ethical business venture. With respect, I haven't done this before, so I'm figuring it out. Yes, I did a gift basket. I don't think that's completely unheard of, but I do like the idea of a property improvement. Thanks for your feedback!

      Food for thought: Run your business however you see fit. If that means giving a gift or improving the property each year at lease renewal, that's fine. But once you do that, especially if you tell them it's associated with their annual renewal, it becomes expected. Fail to do it in a subsequent year and it will lead to unhappy tenants.

      Came back to edit this with another thought: What is your monthly cash flow on this unit? After debt service, taxes, insurance, maintenance, capex, vacancies, legal, etc. Everything. What % of your annual cash flow is $400?

      1Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Jon K.:
      Quote from @Brittany Varen:
      Quote from @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.


       Hi Drew, I didn't voluntarily decrease rents. That's why I was posting - to see if that was something people did. It seems like the answer is no, and I know that now.

      Yes, I do intend for this to be an ethical business venture. With respect, I haven't done this before, so I'm figuring it out. Yes, I did a gift basket. I don't think that's completely unheard of, but I do like the idea of a property improvement. Thanks for your feedback!

      Food for thought: Run your business however you see fit. If that means giving a gift or improving the property each year at lease renewal, that's fine. But once you do that, especially if you tell them it's associated with their annual renewal, it becomes expected. Fail to do it in a subsequent year and it will lead to unhappy tenants.

      Came back to edit this with another thought: What is your monthly cash flow on this unit? After debt service, taxes, insurance, maintenance, capex, vacancies, legal, etc. Everything. What % of your annual cash flow is $400?


       Thanks Jon, appreciate that and absolutely agree. I didn't promote the gift basket as a renewal gift, but definitely recognize the 'danger' there. I do really like the property improvement idea, ideally with the optics of "attentive and proactive service provider" rather than "renewal reward", but know that is totally on me to execute.a

      $400 is not a small chunk, about 13% of our annual CF

      0Reply
    • Jon K.
      Rental Property Investor · Perry Hall, MD · Member since 2016 · 588 posts · 599 votes
      7mo
      Quote from @Brittany Varen:
      Quote from @Jon K.:
      Quote from @Brittany Varen:
      Quote from @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.


       Hi Drew, I didn't voluntarily decrease rents. That's why I was posting - to see if that was something people did. It seems like the answer is no, and I know that now.

      Yes, I do intend for this to be an ethical business venture. With respect, I haven't done this before, so I'm figuring it out. Yes, I did a gift basket. I don't think that's completely unheard of, but I do like the idea of a property improvement. Thanks for your feedback!

      Food for thought: Run your business however you see fit. If that means giving a gift or improving the property each year at lease renewal, that's fine. But once you do that, especially if you tell them it's associated with their annual renewal, it becomes expected. Fail to do it in a subsequent year and it will lead to unhappy tenants.

      Came back to edit this with another thought: What is your monthly cash flow on this unit? After debt service, taxes, insurance, maintenance, capex, vacancies, legal, etc. Everything. What % of your annual cash flow is $400?


       Thanks Jon, appreciate that and absolutely agree. I didn't promote the gift basket as a renewal gift, but definitely recognize the 'danger' there. I do really like the property improvement idea, ideally with the optics of "attentive and proactive service provider" rather than "renewal reward", but know that is totally on me to execute.a

      $400 is not a small chunk, about 13% of our annual CF


      I think being an attentive and proactive service provider is a great idea as a landlord. Working backwards from that goal, there are a number of ways to do it. How I handle it with my properties, that i've asked my property manager to do as I don't self manage, is have his handyman visit each of my properties once every six months (assuming a routine maintenance call does not get him out sooner). This is for a couple of reasons:

      1. We can proactively perform maintenance: replace hvac filters (tenant's responsibility but plenty don't do it), clear cellar walkout drains of debris, tighten handles on cabinets/doorknobs/etc, touch up paint, etc. We ask the tenants if there's anything they need done during these visits. This shows the tenant that we're committed to maintaining the property and also gives us the opportunity to knock out the kind of maintenance that we wouldn't necessarily want to send a handyman to perform in isolation due to how trivial it may be.

      2. It gets eyes on the properties to ensure the tenant is not causing damage through neglect or otherwise.

      13% of your annual cash flow is not trivial. I asked the % question because my advice to a business owner is to think in terms of numbers like this in all decisions. Would having a handyman visit your properties once every six months cost the same amount? Maybe, but you should be performing maintenance and inspecting your properties regularly regardless so I wouldn't consider it the same cost as an annual property improvement or gift.

      4Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Jon K.:
      Quote from @Brittany Varen:
      Quote from @Jon K.:
      Quote from @Brittany Varen:
      Quote from @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.


       Hi Drew, I didn't voluntarily decrease rents. That's why I was posting - to see if that was something people did. It seems like the answer is no, and I know that now.

      Yes, I do intend for this to be an ethical business venture. With respect, I haven't done this before, so I'm figuring it out. Yes, I did a gift basket. I don't think that's completely unheard of, but I do like the idea of a property improvement. Thanks for your feedback!

      Food for thought: Run your business however you see fit. If that means giving a gift or improving the property each year at lease renewal, that's fine. But once you do that, especially if you tell them it's associated with their annual renewal, it becomes expected. Fail to do it in a subsequent year and it will lead to unhappy tenants.

      Came back to edit this with another thought: What is your monthly cash flow on this unit? After debt service, taxes, insurance, maintenance, capex, vacancies, legal, etc. Everything. What % of your annual cash flow is $400?


       Thanks Jon, appreciate that and absolutely agree. I didn't promote the gift basket as a renewal gift, but definitely recognize the 'danger' there. I do really like the property improvement idea, ideally with the optics of "attentive and proactive service provider" rather than "renewal reward", but know that is totally on me to execute.a

      $400 is not a small chunk, about 13% of our annual CF


      I think being an attentive and proactive service provider is a great idea as a landlord. Working backwards from that goal, there are a number of ways to do it. How I handle it with my properties, that i've asked my property manager to do as I don't self manage, is have his handyman visit each of my properties once every six months (assuming a routine maintenance call does not get him out sooner). This is for a couple of reasons:

      1. We can proactively perform maintenance: replace hvac filters (tenant's responsibility but plenty don't do it), clear cellar walkout drains of debris, tighten handles on cabinets/doorknobs/etc, touch up paint, etc. We ask the tenants if there's anything they need done during these visits. This shows the tenant that we're committed to maintaining the property and also gives us the opportunity to knock out the kind of maintenance that we wouldn't necessarily want to send a handyman to perform in isolation due to how trivial it may be.

      2. It gets eyes on the properties to ensure the tenant is not causing damage through neglect or otherwise.

      13% of your annual cash flow is not trivial. I asked the % question because my advice to a business owner is to think in terms of numbers like this in all decisions. Would having a handyman visit your properties once every six months cost the same amount? Maybe, but you should be performing maintenance and inspecting your properties regularly regardless so I wouldn't consider it the same cost as an annual property improvement or gift.


       That's a phenomenal tip. And yes you're totally right, 13% is not nothing, sounds like I've just got it going to the wrong place. Thanks so much for this. Know I'm taking notes!

      1Reply
    • Drew SygitBusiness Member
      Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
      7mo
      Quote from @Brittany Varen:
      Quote from @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.


       Hi Drew, I didn't voluntarily decrease rents. That's why I was posting - to see if that was something people did. It seems like the answer is no, and I know that now.

      Yes, I do intend for this to be an ethical business venture. With respect, I haven't done this before, so I'm figuring it out. Yes, I did a gift basket. I don't think that's completely unheard of, but I do like the idea of a property improvement. Thanks for your feedback!


       My apologies if I offended you.

      Was walking thru the logic to make sure I understood the issue:)

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      0Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Drew Sygit:
      Quote from @Brittany Varen:
      Quote from @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.


       Hi Drew, I didn't voluntarily decrease rents. That's why I was posting - to see if that was something people did. It seems like the answer is no, and I know that now.

      Yes, I do intend for this to be an ethical business venture. With respect, I haven't done this before, so I'm figuring it out. Yes, I did a gift basket. I don't think that's completely unheard of, but I do like the idea of a property improvement. Thanks for your feedback!


       My apologies if I offended you.

      Was walking thru the logic to make sure I understood the issue:)


       Not at all! I'm sorry, I just reread my response and that was definitely more blunt than I intended, I really apologize. I really appreciate you taking your own time to think this through, and love the idea of redirecting those funds to a property improvement. It seems like such an obvious solution but sometimes need people to point those out :) thank you again!

      0Reply
  • David PeschioBusiness Member
    Richmond, VA · Member since 2019 · 358 posts · 181 votes
    7mo

    Instead of giving tenants a simple yes/no on renewing at a higher rate or none, offer two renewal options. A one‑year term with the full market increase and a two‑year term with a slightly reduced increase. Giving them a choice creates buy‑in, reduces pushback, and still protects you from rising costs. With expenses climbing across the board, even a modest annual increase is reasonable and easy to justify.

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    0Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @David Peschio:

      Instead of giving tenants a simple yes/no on renewing at a higher rate or none, offer two renewal options. A one‑year term with the full market increase and a two‑year term with a slightly reduced increase. Giving them a choice creates buy‑in, reduces pushback, and still protects you from rising costs. With expenses climbing across the board, even a modest annual increase is reasonable and easy to justify.


       Great advice, I really like the 2 different options. Thank you David!

      0Reply
  • Janice Carter
    Real Estate Broker · Atlanta · Member since 2024 · 1k+ posts · 606 votes
    7mo

    Brittany, it is clear you genuinely care about your tenants which is a great quality in a landlord. That said, I would not proactively lower the rent. If they are happy, paying early, and not shopping around that suggests the current rent still reflects the value they are receiving. If you are concerned about being slightly above market, you could offer a two year renewal at the existing rate to create stability for both sides. 

    This is also a good time to ask for feedback on their experience and whether there are any reasonable improvements you could make. If they ask for a rent reduction, that is when you review the current market data and negotiate accordingly. I also agree with Drew that instead of spending $400 on a renewal gift basket, consider applying those funds toward property improvement or keeping them in reserves.

    3Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Janice Carter:

      Brittany, it is clear you genuinely care about your tenants which is a great quality in a landlord. That said, I would not proactively lower the rent. If they are happy, paying early, and not shopping around that suggests the current rent still reflects the value they are receiving. If you are concerned about being slightly above market, you could offer a two year renewal at the existing rate to create stability for both sides. 

      This is also a good time to ask for feedback on their experience and whether there are any reasonable improvements you could make. If they ask for a rent reduction, that is when you review the current market data and negotiate accordingly. I also agree with Drew that instead of spending $400 on a renewal gift basket, consider applying those funds toward property improvement or keeping them in reserves.


       Thank you, Janice! I agree with Drew as well, I prefer the idea of putting this money toward a property improvement that the tenants ultimately still get to enjoy.

      Really appreciate the feedback, very great points. I love the idea of the 2 year renewal as a back up. Thank you!

      0Reply
  • Richard F.
    Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
    7mo
    My standard practice at renewal time is to FIRST schedule an appointment to meet with the Tenants and inspect the property, room by room. You must check for any signs of leaks, safety issues, pests, extra people, housekeeping, and any repairs that might be unreported. Take photos of every space, being respectful by primarily imaging ceilings, walking surfaces, fixtures, and inside sink bases, as well as obvious damages. 

    Now you can inquire of the Tenants what THEIR intentions are...let them tell you of their plans or concerns, don't offer any specifics at this point. Advise them that you need to "study the market" after evaluating the actual condition of the unit, and will send out a Renewal Notice within X days. Of course, be sure to casually mention that you are dealing with higher insurance costs, higher taxes, etc. but that you just want to be fair to both of you.

    If they have had any change in employment status or family make up, or if you did not properly investigate them prior to move in, you should provide them a Rental Application form to complete, and request current Pay Stub showing YTD earnings, and, depending on their overall situation, you may want an updated Bank Savings Statement as well, to "update your records".

    After a thorough visual inspection; discussion with Tenants regarding their wishes/plans; and the review of market, you can now determine what you want to offer. Maybe the Tenants advised they were planning on moving in the summer (in which case you might offer a shorter term and adjust the rate in order to keep the unit occupied until a better season for marketing), or yes, maybe they informed they were aware of prices dropping, and request consideration (maybe you offer to reduce the rate in four or six month "steps", or maybe they just "love it here" and you don't need to make a change (or offer them a longer term with pre-determined "step ups" in the rate). 

    You can still include two or three options on your one page Renewal document, typically "I accept these terms", " request a change of these terms to ___", or "I plan to vacate by _____". They sign and return for your approval of requested changes or acceptance. 
    3Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Richard F.:
      My standard practice at renewal time is to FIRST schedule an appointment to meet with the Tenants and inspect the property, room by room. You must check for any signs of leaks, safety issues, pests, extra people, housekeeping, and any repairs that might be unreported. Take photos of every space, being respectful by primarily imaging ceilings, walking surfaces, fixtures, and inside sink bases, as well as obvious damages. 

      Now you can inquire of the Tenants what THEIR intentions are...let them tell you of their plans or concerns, don't offer any specifics at this point. Advise them that you need to "study the market" after evaluating the actual condition of the unit, and will send out a Renewal Notice within X days. Of course, be sure to casually mention that you are dealing with higher insurance costs, higher taxes, etc. but that you just want to be fair to both of you.

      If they have had any change in employment status or family make up, or if you did not properly investigate them prior to move in, you should provide them a Rental Application form to complete, and request current Pay Stub showing YTD earnings, and, depending on their overall situation, you may want an updated Bank Savings Statement as well, to "update your records".

      After a thorough visual inspection; discussion with Tenants regarding their wishes/plans; and the review of market, you can now determine what you want to offer. Maybe the Tenants advised they were planning on moving in the summer (in which case you might offer a shorter term and adjust the rate in order to keep the unit occupied until a better season for marketing), or yes, maybe they informed they were aware of prices dropping, and request consideration (maybe you offer to reduce the rate in four or six month "steps", or maybe they just "love it here" and you don't need to make a change (or offer them a longer term with pre-determined "step ups" in the rate). 

      You can still include two or three options on your one page Renewal document, typically "I accept these terms", " request a change of these terms to ___", or "I plan to vacate by _____". They sign and return for your approval of requested changes or acceptance. 

       This is incredibly helpful. I'll be planning for this walkthrough soon so the timing is perfect. Thanks for laying this out so clearly, Richard. You've almost given me a script here!

      0Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    7mo

    Don't decrease rent.

    See if they're staying, if so offer flat or ideally tiny increase. Cost to move needs to be taken into consideration.

    The family gift basket and decrease renewal thoughts make me really believe you're not fit to run a business. Let your husband or ideally a PM run this. You're mindset will have you agreeing to the first tenant that causes a liability concern in the most grave way.

    0Reply
  • Jules Aton
    MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
    7mo

    I think there can be a happy medium. I run a business but also feel appreciative for tenants who take care of my property and give me thousands of dollars per year. That said I wouldn't lower rent unless they ask and then consider pros:cons.  As for the gift I never did it on renewal but on a few occasions like when there was an annoying plumbing issue or contractor caused unnecessary inconvenience I have given $100 gift card to Home Depot or Lowes as a way to show my appreciation and figuring it would likely end up spent on house something anyway. Not sure how $100 translates in to CA dollars worth of goods. 

    0Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Jules Aton:

      I think there can be a happy medium. I run a business but also feel appreciative for tenants who take care of my property and give me thousands of dollars per year. That said I wouldn't lower rent unless they ask and then consider pros:cons.  As for the gift I never did it on renewal but on a few occasions like when there was an annoying plumbing issue or contractor caused unnecessary inconvenience I have given $100 gift card to Home Depot or Lowes as a way to show my appreciation and figuring it would likely end up spent on house something anyway. Not sure how $100 translates in to CA dollars worth of goods. 


       Hi Jules, thanks for your thoughts, this definitely makes sense for some kind of inconvenience. Agree - no proactive rent-lowering discussions.

      1Reply
  • Kevin Sobilo
    Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
    7mo

    @Brittany Varen, a couple thoughts:

    1. I agree with some others that I would not jump to offer lower rent to them. 

    2. I would start by simply asking if they wish to stay and renew? If they say yes, I would simply tell them the new lease price will stay the same. 

    3. If they bring the issue up, I would probably listen to their rationale and how aware they are of rent prices and if they indicate they might potentially move if no rent decrease is given. 

    4. If they make it clear they will leave, I might give a lower rent, if they don't sound like they will leave, I might offer a very token decrease so they will feel like they win on principle even though they gained very little. 

    5. I personally would not give a substantial gift basket like that. This is not a service like a hotel or restaurant or even like a short term rental. If you give them gifts, they should be giving you gifts the same way but I'm guessing they do not. 

    6. Does your husband realize that if you don't retain these tenants you may have to lower the price AND also endure a period of vacancy with no incoming rent AND also put time and money into prepping the place for the next tenant?

    3Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Kevin Sobilo:

      @Brittany Varen, a couple thoughts:

      1. I agree with some others that I would not jump to offer lower rent to them. 

      2. I would start by simply asking if they wish to stay and renew? If they say yes, I would simply tell them the new lease price will stay the same. 

      3. If they bring the issue up, I would probably listen to their rationale and how aware they are of rent prices and if they indicate they might potentially move if no rent decrease is given. 

      4. If they make it clear they will leave, I might give a lower rent, if they don't sound like they will leave, I might offer a very token decrease so they will feel like they win on principle even though they gained very little. 

      5. I personally would not give a substantial gift basket like that. This is not a service like a hotel or restaurant or even like a short term rental. If you give them gifts, they should be giving you gifts the same way but I'm guessing they do not. 

      6. Does your husband realize that if you don't retain these tenants you may have to lower the price AND also endure a period of vacancy with no incoming rent AND also put time and money into prepping the place for the next tenant?


       Hi Kevin, thanks very much for the guidance here. Looks like my initial thoughts were misguided, and that's fine, I had to learn somehow..! We've had the vacancy talk, so we're on the same page there now.

      0Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    7mo

    Did you lock in your mortgage or it is variable?  When is it up for renewal (I'm also in Canada, so I know mortgages work differently than in the US)?  You'd be in the red because you did 100% financing (not sure how you managed that). How much above market value is your rent?  Does NS have caps on rent increases? It is balancing the amount they are above market with is that enough for them to move which is expensive and a hassle.  Also if you had a vacancy not only would the new rent likely be lower, but you'd probably also lose a few weeks of rent between when they move out and the new tenant moves in.

    I wouldn't do a gift basket-they'd probably appreciate that amount off the rent (eg instead of a $400 gift basket which is pricey, reduce rent by $25 a month (you'd still come out ahead).

    1Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Theresa Harris:

      Did you lock in your mortgage or it is variable?  When is it up for renewal (I'm also in Canada, so I know mortgages work differently than in the US)?  You'd be in the red because you did 100% financing (not sure how you managed that). How much above market value is your rent?  Does NS have caps on rent increases? It is balancing the amount they are above market with is that enough for them to move which is expensive and a hassle.  Also if you had a vacancy not only would the new rent likely be lower, but you'd probably also lose a few weeks of rent between when they move out and the new tenant moves in.

      I wouldn't do a gift basket-they'd probably appreciate that amount off the rent (eg instead of a $400 gift basket which is pricey, reduce rent by $25 a month (you'd still come out ahead).


       Hi Theresa, thanks for the feedback. After this thread I'm feeling pretty confident with no rent decrease. I like the option you posted here, too. You're right, they would probably just prefer the $ off.

      Our loan is variable at the moment, we're in the process of locking in. We purchased with a combination of conventional & HELOC. NS does have a rent cap in place until the end of next year. I'd say the rent is around $200 higher than market, but I'll assess that further if they pursue.

      1Reply
  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    7mo

    I just reduced rent $50/month with one of my struggling tenants with her lease renewal this month. She was about to move and I didn’t want to deal with a vacancy right now. Market rent in my area has decreased $100-$200/month.

    1Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @John Morgan:

      I just reduced rent $50/month with one of my struggling tenants with her lease renewal this month. She was about to move and I didn’t want to deal with a vacancy right now. Market rent in my area has decreased $100-$200/month.


       Hi John, thanks for messaging. I know all situations are unique and the answer will always be "it depends". It sounds like it's a hard no in most cases, but I appreciate you giving an example of the alternative. It's helpful to hear that they aren't entirely black swan events.

      0Reply
  • David PeschioBusiness Member
    Richmond, VA · Member since 2019 · 358 posts · 181 votes
    7mo

    @Brittany Varen  no problem and good luck - got lots of great advice on your post.

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    0Reply
  • Jeera Gina James Levioni
    Member since 2026 · 1 post · 1 vote
    7mo
    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,

    Retaining reliable tenants often outweighs the short-term gain of sticking strictly to market rent. A small adjustment or a meaningful renewal gesture, like a gift or partial rent reduction can improve tenant satisfaction and reduce turnover costs, which are often higher than a few hundred dollars in lost rent.

    Technically, you can model the impact by comparing potential vacancy loss, marketing, and repair costs versus a minor rent decrease

    If the numbers show that keeping your current tenants saves more than the reduction, it can be a smart financial decision while maintaining goodwill.

    1Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Jeera Gina James Levioni:
      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,

      Retaining reliable tenants often outweighs the short-term gain of sticking strictly to market rent. A small adjustment or a meaningful renewal gesture, like a gift or partial rent reduction can improve tenant satisfaction and reduce turnover costs, which are often higher than a few hundred dollars in lost rent.

      Technically, you can model the impact by comparing potential vacancy loss, marketing, and repair costs versus a minor rent decrease

      If the numbers show that keeping your current tenants saves more than the reduction, it can be a smart financial decision while maintaining goodwill.


       Thanks, Jeera! I agree, that was the catalyst for this thought, exactly. I think I just need to better quantify each option.

      0Reply
  • Kimberly Kirkman
    Real Estate Agent · Cincinnati OH, Dayton OH · Member since 2026 · 4 posts · 3 votes
    7mo

    In situations like this, I usually look at two things:

    True current market rent based on similar-condition comps (not just online estimates).

    1. The cost of turnover if they leave — vacancy, leasing time, cleaning, touch-ups, possible concessions.

    In SW Ohio, I’m seeing landlords benefit from small proactive adjustments rather than risking a 30–45 day vacancy trying to hold above-market pricing.


    A $150–$200 strategic reduction can sometimes outperform a full market “reset” if retention is strong and the tenants are paying early and taking care of the home.Good tenants have measurable financial value — not just emotional value.

    The math usually answers the question.

    3Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Kimberly Kirkman:

      In situations like this, I usually look at two things:

      True current market rent based on similar-condition comps (not just online estimates).

      1. The cost of turnover if they leave — vacancy, leasing time, cleaning, touch-ups, possible concessions.

      In SW Ohio, I’m seeing landlords benefit from small proactive adjustments rather than risking a 30–45 day vacancy trying to hold above-market pricing.


      A $150–$200 strategic reduction can sometimes outperform a full market “reset” if retention is strong and the tenants are paying early and taking care of the home.Good tenants have measurable financial value — not just emotional value.

      The math usually answers the question.


       Agree, and I think this was the catalyst for this thought - options to mitigate the potential risk of a vacancy (since I'm not actually sure yet if they want to leave). My biggest takeaway from this thread so far is to not be the initiator! Which is very valid, but wanted to ask the pros :) thanks very much for your comment here!

      0Reply
  • Pierre Guirguis
    Lender · Marlboro, NJ · Member since 2025 · 243 posts · 150 votes
    7mo

    I wouldn’t proactively reduce rent.

    If they’re truly $200–$300 above market, the market will correct it. They’ll either renew because they value stability, or they’ll push back. Lowering it before they even ask gives up leverage you can’t get back.

    Also remember turnover is expensive. One month vacant plus cleaning and leasing can easily cost more than the “above market” difference.

    I’d offer renewal at current rent and see how they respond. If they raise concerns, you can adjust then.

    The bigger issue is margin. If a $200 swing puts you in the red, that tells you the deal is thin. That’s something to think about long term.

    You can absolutely value good tenants and still run it like a business.

    3Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Pierre Guirguis:

      I wouldn’t proactively reduce rent.

      If they’re truly $200–$300 above market, the market will correct it. They’ll either renew because they value stability, or they’ll push back. Lowering it before they even ask gives up leverage you can’t get back.

      Also remember turnover is expensive. One month vacant plus cleaning and leasing can easily cost more than the “above market” difference.

      I’d offer renewal at current rent and see how they respond. If they raise concerns, you can adjust then.

      The bigger issue is margin. If a $200 swing puts you in the red, that tells you the deal is thin. That’s something to think about long term.

      You can absolutely value good tenants and still run it like a business.


      Thanks Pierre, I agree, I definitely won't be offering to reduce proactively.

      Also, "Lowering rent before they even ask gives up leverage you can't get back." is a perfect summary for this, that stuck, thank you!

      1Reply
  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    7mo

    Atleast here on north side of Chicago rent never falls haha. Been 3% to 10% every year for last decade or so, even during GFC they did not fall. Seems strange for you to see rent drop, are you sure you are running your comps correctly? I advise clients to never keep rent the same and forsure to never lower it, even if rent growth slow that year and tenants great always raise it at a minimum 2-3%. It costs tenants thousands to move, most people will not care about a few percent increase. 

    0Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Henry Lazerow:

      Atleast here on north side of Chicago rent never falls haha. Been 3% to 10% every year for last decade or so, even during GFC they did not fall. Seems strange for you to see rent drop, are you sure you are running your comps correctly? I advise clients to never keep rent the same and forsure to never lower it, even if rent growth slow that year and tenants great always raise it at a minimum 2-3%. It costs tenants thousands to move, most people will not care about a few percent increase. 


       Hi Henry, fair question - I'm still new so it's entirely possible I'm missing something in the comps, but in discussions with PMs & other investors in my area, much higher vacancy and lots of concessions being made for new leases. Agree with what you're saying though - setting the precedent for consistent increases just makes for less headaches later on.

      0Reply
  • Divin KanyamaBusiness Member
    Accountant · Seattle, WA · Member since 2025 · 351 posts · 131 votes
    7mo

    That's quite an interesting situation, @Brittany Varen. When deciding whether to keep the rent as it is or increase it, it's important to consider that you have reliable tenants who always pay on time, which is not always the case. You might also want to talk with your lender to see if there are options to reduce your current monthly mortgage payments.

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    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Divin Kanyama:

      That's quite an interesting situation, @Brittany Varen. When deciding whether to keep the rent as it is or increase it, it's important to consider that you have reliable tenants who always pay on time, which is not always the case. You might also want to talk with your lender to see if there are options to reduce your current monthly mortgage payments.


       Absolutely - we consider ourselves pretty lucky to have happy tenants that pay early every month. Also working with our lending on that financing. Thanks, Divin!

      0Reply
  • Jim Johnson
    Real Estate Agent · Memphis · Member since 2026 · 568 posts · 330 votes
    7mo

    This is a thoughtful question — and you’re thinking about the right things.

    First, separate market rent from your financing situation. The market doesn’t adjust because you’re highly leveraged. If reducing rent puts you negative, that’s not really a rent decision — that’s a capital structure decision.

    A few angles to consider:

    1. Are they actually overpaying?
    Being $200–$300 above “market” depends on comps. Are those true like-for-like properties? Same condition? Same location? Same lease terms? Sometimes online estimates skew low.

    2. Retention value is real — but so is math.
    A vacancy can easily cost:

    • 1 month of rent
    • Turn costs
    • Leasing time

    If that risk is higher than a modest adjustment, a small reduction might make sense. But going intentionally negative every month is a bigger strategic decision.

    3. There’s a middle ground.
    Instead of dropping $300:

    • Hold rent flat again
    • Offer a small concession (renewal credit, minor upgrade, etc.)
    • Or reduce partially (e.g., $100)

    4. Don’t pre-negotiate against yourself.
    They haven’t asked for a reduction. If they’re happy and paying early, the relationship may be stronger than you think.

    One important question: If they moved out, could you re-rent quickly at the current rate? If yes, that tells you something. If no, that’s data too.

    Given you’re highly leveraged, I’d be cautious about voluntarily going negative unless there’s a clear retention risk. Long term, stable tenants are valuable — but stability also requires the property to be financially sustainable for you.

    This doesn’t have to be philosophical. It’s really a risk-adjusted math decision.

    1Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Jim Johnson:

      This is a thoughtful question — and you’re thinking about the right things.

      First, separate market rent from your financing situation. The market doesn’t adjust because you’re highly leveraged. If reducing rent puts you negative, that’s not really a rent decision — that’s a capital structure decision.

      A few angles to consider:

      1. Are they actually overpaying?
      Being $200–$300 above “market” depends on comps. Are those true like-for-like properties? Same condition? Same location? Same lease terms? Sometimes online estimates skew low.

      2. Retention value is real — but so is math.
      A vacancy can easily cost:

      • 1 month of rent
      • Turn costs
      • Leasing time

      If that risk is higher than a modest adjustment, a small reduction might make sense. But going intentionally negative every month is a bigger strategic decision.

      3. There’s a middle ground.
      Instead of dropping $300:

      • Hold rent flat again
      • Offer a small concession (renewal credit, minor upgrade, etc.)
      • Or reduce partially (e.g., $100)

      4. Don’t pre-negotiate against yourself.
      They haven’t asked for a reduction. If they’re happy and paying early, the relationship may be stronger than you think.

      One important question: If they moved out, could you re-rent quickly at the current rate? If yes, that tells you something. If no, that’s data too.

      Given you’re highly leveraged, I’d be cautious about voluntarily going negative unless there’s a clear retention risk. Long term, stable tenants are valuable — but stability also requires the property to be financially sustainable for you.

      This doesn’t have to be philosophical. It’s really a risk-adjusted math decision.


      These are great points. I need to better quantify my decisions. Thank you Jim!

      0Reply
  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    7mo
    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,

    Hey Brittany, welcome to BiggerPockets and congrats on having great tenants—that’s honestly half the battle. Personally, I wouldn’t rush to proactively reduce rent unless they bring it up or give notice, especially since lowering it would put you negative each month. Good tenants are valuable, but so is running your property like a business, and you bought based on numbers that already sound tight with 100% financing. What I’d probably do is start the renewal conversation early, let them know you’d love to have them stay, and see where their head is at. If they mention market rents, you could offer a small concession, maybe a slight reduction or keep rent flat and skip increases again, instead of a big drop. The gift basket is thoughtful, but cash flow stability usually matters more long term than a one-time gesture. Also, markets move in cycles. I invest in Columbus and we’ve seen shifts too, but strong fundamentals like job and population growth from companies like Intel expanding here help keep demand steady. Even here, I wouldn’t voluntarily cut rent unless vacancy risk was real. I’d frame it as: protect the relationship, but protect your numbers too. Happy to connect and answer any questions you have!



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    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Jimmy Lieu:
      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,

      Hey Brittany, welcome to BiggerPockets and congrats on having great tenants—that’s honestly half the battle. Personally, I wouldn’t rush to proactively reduce rent unless they bring it up or give notice, especially since lowering it would put you negative each month. Good tenants are valuable, but so is running your property like a business, and you bought based on numbers that already sound tight with 100% financing. What I’d probably do is start the renewal conversation early, let them know you’d love to have them stay, and see where their head is at. If they mention market rents, you could offer a small concession, maybe a slight reduction or keep rent flat and skip increases again, instead of a big drop. The gift basket is thoughtful, but cash flow stability usually matters more long term than a one-time gesture. Also, markets move in cycles. I invest in Columbus and we’ve seen shifts too, but strong fundamentals like job and population growth from companies like Intel expanding here help keep demand steady. Even here, I wouldn’t voluntarily cut rent unless vacancy risk was real. I’d frame it as: protect the relationship, but protect your numbers too. Happy to connect and answer any questions you have!




       Hi Jimmy, thanks so much for the insight. I agree with everything you said here^. The consensus is certainly not to proactively lower rents but I appreciate you weighing in on when you think that could ever be an option. I want a client-centric approach in our operation but am still working to find a balance. Would definitely take you up on some question support!

      0Reply
  • Mike PaolucciBusiness Member
    Realtor · Columbus Cleveland Dayton, OH · Member since 2022 · 498 posts · 553 votes
    7mo
    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,


    Great way to maintain good relationships with your tenants but not really a necessary move on your end. 

    Personally I wouldn't recommend reducing unless they bring it up and provide factual evidence to justify it. To put it simply, don't ask don't get and it's up to them to do their DD. 

    Instead, I'd focus more on making some sort of improvements to keep them happy and willing to stay as long as humanly possible. You want them to realize that both the property and you as a landlord are worth staying for. Seems like they've already done that based on what they've communicated to you. 

    If you offered a multi-year lease then I'd maybe consider reducing to entice them into a longer lease but if you & them want to stay year to year, then there's no reason to lower rent. 

    [email protected]614-892-9184
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    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Mike Paolucci:
      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,


      Great way to maintain good relationships with your tenants but not really a necessary move on your end. 

      Personally I wouldn't recommend reducing unless they bring it up and provide factual evidence to justify it. To put it simply, don't ask don't get and it's up to them to do their DD. 

      Instead, I'd focus more on making some sort of improvements to keep them happy and willing to stay as long as humanly possible. You want them to realize that both the property and you as a landlord are worth staying for. Seems like they've already done that based on what they've communicated to you. 

      If you offered a multi-year lease then I'd maybe consider reducing to entice them into a longer lease but if you & them want to stay year to year, then there's no reason to lower rent. 


       Yes that makes sense. Landlords have a very poor reputation in my area and I do feel like I'm trying a little hard to combat that, but I like the idea of a property improvement; I think that achieves the same goal. Definitely something we'll be looking to do. I'll be reaching out to them shortly to discuss their plans for next year, and I'll be keeping the multi-year lease in mind, I like that idea, too. Thanks Mike!

      0Reply
  • Marc RiceBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
    7mo
    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,


    If you're looking for cash flow when you rented it out, do it whenever possible. I own 50+ units here in Columbus, happy to share my experience. Let's connect!

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  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    7mo

    @Brittany Varen  I am with the wait for them to ask group.  I would also comment that if you want to do something for a tenant pick improvements you would do anyway and give them the choice of what they want. fans or a room paint. When people pick they are willing to live with a little inconvenience. I have one tenant for 12 years and I manage to get in there every year or so to fix some bigger things because I ask what she wants. 

    0Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Colleen F.:

      @Brittany Varen  I am with the wait for them to ask group.  I would also comment that if you want to do something for a tenant pick improvements you would do anyway and give them the choice of what they want. fans or a room paint. When people pick they are willing to live with a little inconvenience. I have one tenant for 12 years and I manage to get in there every year or so to fix some bigger things because I ask what she wants. 


       I agree, I like the improvement idea much better, especially having something the tenants weigh in on. Thanks Colleen!

      0Reply
  • Michael S.
    Huntsville, AL · Member since 2018 · 577 posts · 864 votes
    7mo

    @Brittany Varen - you got some solid answers in this thread.  I personally would recommend looking at @John Morgan post again, because it is a solid example of how important good tenant selection is versus an extra $50/month.  Many people on BP lose their minds over $50 to $100 difference in cash flow per month, which I find really odd.  One month vacancy would more than wipe out that cash flow difference right off the bat.  Then add in turnover expenses (paint, carpet, minor fixes only if it was a good tenant) and paying utilities while it is vacant.  Prioritize a good tenant everytime over a little extra money per month.  Now, I do agree with the others that the first step is finding out the tenants intentions - if they want to renew, then I'd leave the rent the same.  If they say specifically without prompting "we'd love to stay but we found other options that are comparable but slightly less", then offer a small rent reduction at that time.  Good luck.  

    2Reply
    • Brittany Varen
      OP
      Member since 2023 · 35 posts · 16 votes
      7mo
      Quote from @Michael S.:

      @Brittany Varen - you got some solid answers in this thread.  I personally would recommend looking at @John Morgan post again, because it is a solid example of how important good tenant selection is versus an extra $50/month.  Many people on BP lose their minds over $50 to $100 difference in cash flow per month, which I find really odd.  One month vacancy would more than wipe out that cash flow difference right off the bat.  Then add in turnover expenses (paint, carpet, minor fixes only if it was a good tenant) and paying utilities while it is vacant.  Prioritize a good tenant everytime over a little extra money per month.  Now, I do agree with the others that the first step is finding out the tenants intentions - if they want to renew, then I'd leave the rent the same.  If they say specifically without prompting "we'd love to stay but we found other options that are comparable but slightly less", then offer a small rent reduction at that time.  Good luck.  


       Hi Michael, really appreciate this response. Fully appreciating that I'm new and still have a whole world worth of learning to do, it was surprising to me how few responses prioritized the good tenants in this scenario. That said, I think everyone was responding to the 'proactive' reduction (vs just a reduction), and I completely agree with that now. I'll be speaking with our tenants soon to find out their plans. Thanks so much for you comment!

      1Reply
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