Negotiating Rents -Do I keep a good tenant at lower market rate?

[Justin Dragon]

Hi all,

Hoping to get some advice/insight on my situation.

Purchased my first property last November (Triplex in the Hampton Roads, VA area) and one of my inherited tenants is about to complete her lease.

She’s paying $1350 for a 3/1 which is below expected rent for the area by about $100, plus, I pay the ~$75/month water bill. Sadly, that’s just how the lease was structured. She’s an excellent tenant (been there 2 years, good credit, etc) and I don’t want to lose her. She’s offered to pay 6 months in advance if she can keep the current conditions and extend her lease one year.

Right now, I’m cash flowing $500/month so I don’t need the increased rent. The apartment does need work so if she left,I’d have to spend some money to get it fixed up a bit.

What are your thoughts on keeping a good tenant at a lower price point versus taking the risk in finding a new tenant with higher rent and utilities being paid by tenant. Rental market remains relatively strong.

Thanks,

Justin