Reducing Rent for Current Tenants Due to Market Slow Down

[Tyrell Peters]

Hello,

Does anyone have any experience for reducing rent when a lease is coming to an end? In our area the last 3 years rent has increased immensely, like a lot of areas. However there is a huge flood of new Apartments now and there no way I could re-rent our duplex for the same price we did a year ago. Should I reduce the rent to current market prices with the new lease?

[Bill B.]

If rents are decreasing it’s probably time to sell. I’m sure insurance and taxes are going up. Don’t let it become your money pit. Pass it on while your income statement still looks good.  I’d be worry if rents were increasing less than 5%, much less decreasing. 

If you insist on staying I’d probably offer same rent for 2 years, plus $50/mo for 1 year and plus $100/mtm. That gives them the no cost good deal of renewing at the same price. Avoid the cost and hassle of moving. Win win. But a year in if rents are still dropping sell and escape while your numbers still look good. Finding a house hacker will get harder and harder as numbers decrease.