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The Skinny on Negotiating Rent


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When you’re an investment property landlord, there are times when it makes sense to work with a new tenant who is attempting to negotiate a lower rental rate.  That said, there are also times when you should not do this.  Here is an overview of the do’s and don’ts.

First, if a potential new tenant is attempting to negotiate with you before they even look at the property, run away!  This typically means that he or she is a tire kicker, or is trying to squeeze into an apartment that he or she cannot afford.  Either way, the most likely outcome of this is aggravation and wasted time.  The only time you should negotiate is after the potential tenant has viewed the property and has demonstrated a real interest in living there.

You also want to make sure that rental rate negotiations do not become slippery slopes.  For example, if you easily meet the tenant’s request on the rental rate, there’s not much stopping him or her from trying to squeeze you on other things like the security deposit,


utility expenses, or even the term of the lease.  So, if you do decide to negotiate with a tenant, negotiate hard and make the tenant work for any concession you offer.  Ask the tenant to justify his or her request, and bring some rental comps or other researched information into the conversation to justify your position.

Finally, even if you refuse to reduce your rental rate, if you want the tenant to move in you could offer substitute benefits to make him or her feel like they got a “win,” albeit less than what they had originally hoped for.  For example, instead of a reduced rental rate you could counter with a slightly reduced security deposit, an enhancement to the apartment itself to make it nicer, a reduced late fee, or even a free week upon move-in.  All of these are better options than outright rental rate reductions, because they are not ongoing.  Conversely, whenever the rental rate is reduced, you’re basically stuck with the reduced rate for 12 months (or longer, since this will become the new baseline rental rate for the renewal).

The bottom line is that it is definitely worthwhile to engage in tenant negotiations, as long as the tenant, timing, and nature of the negotiations are to your liking.  Never negotiate with a tire-kicker, always make the tenant work hard for any concession you ultimately agree to so that you can avoid a slippery slope scenario, and always try to offer something else of value to the tenant instead of a flat out rental rate reduction.  Good luck!



One Response to The Skinny on Negotiating Rent

  1. Adelaide says:

    I agree with you. Sometimes it’s hard to deal with tenants but I guess with good communication and negotiations, we are able to reach an agreement.

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