Rent Reduction vs. Renewal Bonus

[John Williams]

Hi all,

I have a family that is considering renewing their lease for another year. One of the family members was laid off, so they've also asked for a temporary reduction in rent of $200 for the remainder of the year. I am considering offering them a $1,000 gift card as a renewal bonus if they sign another year lease. ($1,000 = $200 x 5 months left in 2019). This makes sense to me as I would receive the same amount of rent, which shows consistency if I seek another mortgage. A few questions:

- Any thoughts on this approach?

- Could I write off the $1,000 gift card?

Thank you!

[Adam Martin]

For anyone asking for a temporary reduction I would not be looking to lock yourself into another year lease.  I would go one of 2 ways, if they were a great tenant who has been with you for a long time and you want to keep them stick with the 200 reduction in rent but stay month to month for an easier out in case they can't afford that either.  If you give them the 1k up front you are out a thousand dollars with no guarantee they will stay or pay rent and I see this coming back to bite you.  I'm not sure where you are but unless they were great long term tenants with a great track record I would just thank them for their time with me and give them 2 options.  1 Continue month to month at the current rate or 2 find a new place to live.  Where I am houses are renting pretty fast and rates are up so I would have no  problem finding a new tenant at market rates.  Nothing wrong with them asking on their part but that doesn't mean you have to agree to the reduction that will eat into your bottom line and possibly make it harder to qualify for additional mortgages down the line.