All Forum Posts by: Joe Villeneuve

Quote from @Peter Mckernan:

Well, it depends on the market to be honest.. The market in certain areas are experiencing this a lot more frequently these days. I would check your market rents for that model/bed-bath etc. Also, how long have you been on the market? That is another challenge too, sometimes the markets adjusts and you sit on the market for longer too which gives people the impression they can ask for a lower rental amount.

Depending on what the market looks like, this might be an option to accept something lower in rent. I would run the scenario of siting on the market for longer and not getting these people as tenants, and what the market time is to rent out. How much will that cost in holding costs compared to getting one of those tenants in and getting $20, $50, or $75.00 cheaper. It might be a higher margin of income for the year if you take that renter verse waiting another 20-30 days to get a renter in the place. 

 Your last statement has bad math,...very bad math,...and illogical.

Here are the numbers:
1.  $20 cheaper, times 2 months is $120/year...but, you are establishing a lower rent base for that tenant, so if they stay, the next raise in rent (assuming you'll get it, which you won't if you've already given in at the start), is at least $120/year less every year after that.  20-30 days later to rent at full price, is only 1 month of no rent.  How does that compare to the cumulative losses when you establish a lower base at the start?

2.  Every number you gave at a lower rent in addition to the $20, is worse,...up to.

3....$75/month, or $900 for the year...in the first year alone.

Quote from @Bill B.:

21-24 month lease, so it ends in spring, not winter:

“Assuming ZERO late payments or lease violations the rent will be reduced $100 (or 5%, whichever is lower.) for the last 6 months of the lease.”

That’s a 1% discount for a “good tenant” I assume you would accept 1% less for zero late payments and violations. 

Here's the problem with discounting the rent, for any reason, upfront.  If it's based on the tenant having no late payments, isn't the discount already assuming the tenant will be late so you are incentivizing them to just pay on time?  I see this as admitting defeat.  You are agreeing to take less from the start.  On the other hand, if you kept the rent the same, no discount, and they were late, you would get more money the the base rent.
I don't give discounts for following the rules.  I find this just sets a precedent for the tenant to assume I'll be soft when there is a problem, since I've already been soft before there ever was a problem.  I just make sure the tenant knows what the policy is for late rent, repeated late rent, and I don't waver from it. 

Most of your list involves water problems, already noticed, and guaranteed hidden.  Water problems seen, in that many places, means you will forever be finding new water problems.  Water problems are expensive, sometimes very expensive.

When there are water problems like this list, you could give me the house for free, and I wouldn't take it.

What you are looking for, based on your list, isn't out of line.  Just because you haven't found it yet doesn't mean it doesn't exist.  the operative word is "yet".  What you may need to learn (notice I crossed out the word "may") are ho0w to use different strategies.  I have found many areas where traditional strategies don't come close to work, but using a different strategy turns out goldmines.

Quote from @Dan Marl:

Quote from @Joe Villeneuve:

Then they're not potential tenants, unless they are correct in what the rent should be, and your rent is too high.  When you have two interested tenants, and they both want lower rent, they may be correct. 
Are they just asking for a lower rent in general, or do they have a specific number?  If both have the same specific number, once again, they may be right. What are you basing your rent on?  Why do they want to lower the rent?

 My rent is a little lower than market.  They are not giving me a number, just asking me if I can lower my rent. I think it's just part of their negotiating practice as others don't ask.  

Then "just say no".  You don't need an explanation.  If they ask, tell them your rent is in line with the area.  Be prepared.  Have a list of similar rents in the area, so if they disagree with you, then show them the rental comps.  You should have rental comps in the area anyway, to set your rent by, so this shouldn't be an issue to provide.

Then they're not potential tenants, unless they are correct in what the rent should be, and your rent is too high.  When you have two interested tenants, and they both want lower rent, they may be correct. 
Are they just asking for a lower rent in general, or do they have a specific number?  If both have the same specific number, once again, they may be right. What are you basing your rent on?  Why do they want to lower the rent?

Quote from @Colin Tandy:

Quote from @Joe Villeneuve:

It's about math.  Good math will take care of the rest of the things you mentioned.  Bad math, will add to the anxiety towards all the other things you mentioned.

I see what you're saying—good math is absolutely the foundation, and when the numbers are solid, a lot of the anxiety and uncertainty can be reduced. But I think mindset plays a role in ensuring you're doing the right math in the first place. A strong mindset helps you approach deals with discipline, ask the right questions, and stay focused on long-term goals. It also helps you handle the inevitable curveballs that come up along the way. So while the numbers are key, the mindset keeps you grounded and ensures you're always looking at them through the right lens.

OK.  Let me add to the "it's all about math" statement I made, and have it interact with your statement.  Add this to what I said:  "...and you have to understand what the math means, so you can trust it.  Simply writing numbers in the formula you use, and then making decisions based on the results, without understanding what the numbers mean, is still bad math".  the rest is still "rationalization".  That rationalization comes from not understanding the math, and feeling you need to cover yourself just in case.

If you go into REI with the attitude there will be problems you need to be prepared for, that's fine,...and you should.  However, when you think you can avoid/prepare for these problems by saying you need to be ready for them, doesn't make you ready for them. The math will tell you what you want to know.  
Patience, emotions out, purpose, are all valid.  Calculating courage just means your not confident in your numbers.  Risk control is part of the deal you make, which is set forth in the numbers.

Quote from @Eric Gerakos:

Quote from @Joe Villeneuve:

It's about math.  Good math will take care of the rest of the things you mentioned.  Bad math, will add to the anxiety towards all the other things you mentioned.

 This. As a long time investor it's always about the math. When new investors get too touchy feely and go on about others things, it often detracts and makes them lose focus on what it really takes to be successful. 

It's called rationalization, and it's the most expensive word in a REI vocabulary.

It's about math.  Good math will take care of the rest of the things you mentioned.  Bad math, will add to the anxiety towards all the other things you mentioned.

Have separate bank accounts.