All Forum Posts by: James Kim

Hey James,

That’s a solid question, and I’ve seen this scenario come up quite a bit. I actually worked with a client in Phoenix not too long ago who was in a similar boat...trying to transfer their loan to a buyer looking to use the property as a primary residence. In their case, the loan wasn’t assumable, but it opened up a lot of interesting conversations with the lender.

Assuming your loan is assumable (and I’d definitely get that confirmed), the buyer’s intended use of the property usually doesn’t affect the transfer. Whether it’s for primary, secondary, or investment use, the buyer still has to qualify with the lender based on their own financials, and that’s where the real hurdle can in. If the buyer meets the lender’s criteria, you should be good to go. I’ve seen buyers in situations like this secure terms for primary residence use compared to investors.. so it might actually work out in your favor if your buyer wants to live in the home.

Funny enough, a friend of mine ran into a similar situation in Austin last year. They had this investment loan on a property, but the buyer ended up wanting to live in it as a secondary home. The loan was assumable, and after a bit of back and forth with the lender, they worked it out. The buyer even managed to snag a better rate because it was a secondary residence. Sometimes these things can surprise you!

From what I’ve read recently in the Wall Street Journal, some lenders have been more flexible with assumptions. If you get that confirmation, it’s still a good idea to touch base with your lender.. every lender has their own nuances with assumable loans, and you don’t want any surprises down the road. From what I’ve heard, a lot of lenders are starting to offer similar options.

If you need help navigating it, let me know. I’ve seen enough of these to know that getting the details right can save everyone a lot of headaches later.

All the best with the transfer

- Jasper / Pat Aboukhaled

Turning investment visions into REALITY in Phoenix, AZ - Ranked #1 for residential real estate growth and opportunity by PwC

UPDATE: Case settled, tenant won $115,000 without producing any evidence or ailments. Our lease was old and had attorney fee's provisions clause which made the case too risky to go to court regardless if we were in the right. Plaintiff attorney capitalized on that and insurance settled. Insane to me that they were able to get away with that. 

Make sure your leases are updated and attorney proof. We have updated all our rental agreements now. 

If good tenant keep same

Common for tenants to ask for rate reduction, rare owners give it.

I suggest you do everything you can to keep the tenants if you can.  Lots of rentals on the market right now in DFW, so you don't want them moving.  1-2-3 months of vacancy, releasing fees, and make ready are very tough to make up, so best to keep your current tenants.

A couple of strategies you can try...

#1.  No immediate rent increase, maybe $25-$50-$100 six months from now.  Insurance and taxes seem to be going up and you want to cover those costs.

#2.  Add some kind of upgrade that benefits both of you.  More ceiling fans, new appliances, new flooring, mow their lawn this summer, new fencing, bathroom makeover.

Very tough for people to move.  Can't tell you how many have expressed interest in moving, but then when they check the market they understand they can't move.  I would say many owners getting tougher on background checks, so when they learn their new credit score, they understand they can't qualify at the new place.  If $50/month makes a difference, they can't pay a new deposit and next month's rent to really move to save $50/month.

Good luck and best wishes.

@James Kim hi James, yes I have actually been in an apartment building where my personal rent went down slightly. I’ve also managed units where on our renewal rate we did reduce the rent from the prior year, but for other reasons, such as the prior year of the tenant having a washer and dryer, and a major plumbing issue with the building, preventing us from offering it the following year so we did a reduction. If I were you and I see the specific rental market is on a decline, I would simply ask the tenants, so would you like to renew? if they simply say yes, I would just say great. Let me send you over the lease and call it a day if they ask how much would the renewal be or if they specifically ask will the rate be going down because I see the market is going down then I would open that door for the communication and negotiation. If they simply just say something like my rent isn’t going up is it? I’d just say no.

 so long story short, I would go in with the plan to leave the rent the same but the willingness to reduce if they ask. The next part of this thought process is how are they as tenants if they are great tenants do what you have to do to keep them as long as it doesn’t affect your numbers and you don’t end up below market rents. I have seen situations where landlords and tenants are both very firm on their requested rent price and it was a minimal difference and the landlord let them move out and the money it cost the landlord to clean fix paint and rent the unit out to a new tenant outweighed the difference they would have made the tenant after moving expenses and paying first class and Security again probably outweighed what they would’ve paid had they just stayed so sometimes it’s better to just negotiate and flex a little to renew a tenant than to keep swapping tenants.

In markets with rental rate fluctuations like Dallas, deciding whether to offer a rent reduction or maintain current rates for your single-family home (SFH) can be challenging. To tackle this, start by gathering data on average rents for similar SFHs in your area through local listings or realtor consultations. Then, weigh the options: sticking with the current rent ensures ongoing income but might risk tenant dissatisfaction, while offering a reduction can incentivize renewal and save on vacancy costs. Many landlords opt for modest rent decreases or propose multi-year leases with slight increases over the extended term to provide stability for both parties.

I would just renew at the same rate if you have concerns. Let them bring up moving. If you offer a discount, they may ask for a bigger one. Not raising rent makes it look like you are a great landlord. Many expect a rent increase, not decrease.

Sure we have done that on occasion, once or twice.