Tenant's income is decreasing by $1k a month

[Ryan Ahlgrim]

I have a scenario going on right now and I'm curious how other landlords would respond. I have a pair of inherited tenants who's income will be decreasing by $1k a month. They're a nice older couple. They've never been a problem, always pay rent on time, and talk about one day wanting to buy the house since they'd like to stay put for a long time. They called me yesterday to explain their situation and asked if I could give them a break on their rent. After reviewing their current lease I figured I could drop the rent $75/mo if they'd be willing to renew their lease for an additional 36 months. The $75 would basically be coming out of what I hold back each month for vacancy. If someone leases for 12 months I hold back 8% of the rent, if they do 36 months I'm comfortable holding back 2%. How would you have handled the situation?

[Colleen F.]

 A lot depends on whether you are talking about a temporary dip or permanent. A long term tenant with a temporary change in circumstance is worth working with.  A permanent change they can't afford this rental, work with them temporarily while they find a new place.  A 36 month lease is in my opinion crazy,  people do what they have to do in terms of moving. A longer lease won't keep them there. A one year lease helps you control time of move but it doesn't guarantee people won't leave before the lease is up.  And if their income goes up are they going to pay you $75 more?  Are you doing anything for them like lawn or snow that they can take on for this cost decrease? That is an option. Also, is the property at market rent?  If it is below market, you decrease the rent,  and this is a permanent decrease in income you are leading them to believe they can afford the rental when they can't.  nIn the end if they are making $12,000 less a year are they going to be able to afford the place  long term?