Tenant offering higher rent?

Question

Answer

My first listing I had a couple where they each had to see the house separately but I didn't realize they were applying together. Before they sent their applications in they started bidding against each other and didn't realize it until I got the application in that listed both their phone number. It was funny and they bid themselves up an extra 45/month which I happily took.

Answer

I second Colleen in if this is after the credit checks. People saying they’re going to stay two years is great, but you never know what’s going to happen so I wouldn’t rely too much on what they tell you know. The family could always leave in a year and the people paying more could always renew in a year since they love the unit so much that they’re bidding up for it. I would just go based off the most qualified tenant because really that’s where you’re going to save money in the long run

Answer

@Ty Goulding Is this after credit and background checks? Pick the best qualified tenant OR if your state requires the first qualified tenant. If a number of people are offering more then asking your rent is too low and you should relist. Charge more for pets if your market will bear the cost. In a residential lease I used to believe there was some value in a longer lease but I have had people who say they are going to make a house their home and never leave and they are gone in a few months. Life changes. What I do look at is how long they stayed in the last place. Also they get points off if they say I am looking to buy a house, those people always leave early. A lease locks you in for the term but you have almost no protection if someone breaks a lease so 1 year is all I will do, a year psychologically tells them they have to make a decision in a year. If they want to leave early they will.

Answer

Just to piggyback on the 2-year lease idea. It's hard to get rid of someone who is within the one-year lease period. After that one-year lease is up, I can simply not renew the lease. There are times within the first year that I want the tenants to move, but I don't have reasons to actually evict. Signing a 2-year lease is not an incentive to me. I agree with finding the most qualified applicants.

Answer

We all won this one. It was my first rental so my strategy was to list below market to attract more renters and even their offer was below market. I kinda felt bad after I realized they were bidding against each other but they offered to hold to their word without me asking and their credit checked out so we went with it.

Answer

@Adam MartinThat’s amazing. At least they both got to “win” the bidding war.

Answer

@Ty Goulding Good problem to have assuming they are equally qualified. Thought anyone can tell you whatever so they are offered the lease. Personally, I'm not a fan to do more than 2-year leases, but its entirely up to you. I have friends that have done it with great success. Truth is, if a prospect tenant tells you something and if is not in the lease, then nothing is guaranteed and you either trust them or go by the most qualified one. Most tenants move out by the 2-year mark, depending on what market, city, etc etc. I would look at your vacancy in the past and what time of the year the lease will end up for the one-year term. I've had one-year lease with great tenants and then after they leave I was able to rent the property within a week, mainly due to cleaning and prep the property for the new tenant. On the other hand, if vacancy is an issue, I would also take in consideration realty/advertisement expenses, maintenance stuff, and the overall risk of having the property empty.

Answer

Great perspectives on having the lease go longer than a year. It’s true you never know how long people will really stay. Have always liked them for the ability to renew or move on, and that is what we told them we would like to do is review after a year. We ended up finding out that the party offering higher rent had just been fired. Oops! Guess they didn’t want to mention that.. but we had another group actually pay the higher amount because of pet rents. This just caught us off guard we felt like we had priced it fair to the market, and thank goodness haven’t had a vacancy this year or even missed rent. So we were blown away by the amount of interest. But say you had candidates that were in every aspect equal. One offers higher rent, would you ever create a bidding situation? Or give them the chance to match the rate? I realize this is hypothetical but humor me! Say you like the one offering lower rents personality more or something.

Answer

There's no value in longer leases. In fact, it's more likely to bite you in the butt. Many renters will offer to sign a longer lease as a means of enticing you to pick them over other rentals. They know how easy it is to break a lease and walk away, which most of them will do. A one-year lease keeps it simple, reminds you to conduct inspections before renewing, gives you the option of terminating without going through the court system, and it's a great opportunity for a small rent increase. I have an automatic 3% increase built into my lease to help me stay close to market without thinking about it, and it's easier for the tenant to accept because they know a full year in advance.Stick with your process and choose the best-qualified applicant. If you have people offering more, that's evidence you're priced too low and you should seriously study the market and price it better next time. Offer it to a well-qualified renter at the rate you've marketed. Let them know there will likely be a rent increase after one year.