Hello, currently renting out my 3+1 bedroom updated bungalow with fenced yard and double garage in Fort Saskatchewan, rent has been stable for nearly 2 years at $1700/month + utilities. Current lease expires at the end of June. My property management company advises that the current tenants have contacted them and indicated that they have been watching the rental market closely and are willing to sign a new 1-year lease upon expiry of this term, but at $1400/month.
When I asked my PM if this type of reduction was reasonable given the change in the market they indicated that if they were to advertise today it would go in the paper at $1300-1400. Both previous times it rented within a week at $1700. Based on this, an offer to renew for one year at $1400 seems reasonable/logical, but I wanted to see if others are seeing similar rent decreases. I asked a question about rent decreases about 2 months ago and the concensus seemed to be that rents were holding and in some cases even still climbing, so the prospect of an 18% rent decrease is a little concerning. However, perphaps $1700 was high and I have simply benefited over the past 2 years from what was a hot market.
Of course if I decline their offer and they move out at the end of June, even simply a one month vacancy to find new tenants will mean I need to get at least $1525/month simply to gross the same revenue for the year.... ($1400 x 12mos. vs. $1525 X 11mos.)
My inclination is to respond to the PM indicating that I would like to get $1550/month, and perhaps we settle at $1500/month.
Does that seem like a good approach or should I be happy to accept the lease renewal at $1400? By all accounts, these tenants have been excellent and have taken very good care of the house, so I do not want to play hardball to the point of alienating them, as a good tenant is worth their weight in gold.
Thoughts?
When I asked my PM if this type of reduction was reasonable given the change in the market they indicated that if they were to advertise today it would go in the paper at $1300-1400. Both previous times it rented within a week at $1700. Based on this, an offer to renew for one year at $1400 seems reasonable/logical, but I wanted to see if others are seeing similar rent decreases. I asked a question about rent decreases about 2 months ago and the concensus seemed to be that rents were holding and in some cases even still climbing, so the prospect of an 18% rent decrease is a little concerning. However, perphaps $1700 was high and I have simply benefited over the past 2 years from what was a hot market.
Of course if I decline their offer and they move out at the end of June, even simply a one month vacancy to find new tenants will mean I need to get at least $1525/month simply to gross the same revenue for the year.... ($1400 x 12mos. vs. $1525 X 11mos.)
My inclination is to respond to the PM indicating that I would like to get $1550/month, and perhaps we settle at $1500/month.
Does that seem like a good approach or should I be happy to accept the lease renewal at $1400? By all accounts, these tenants have been excellent and have taken very good care of the house, so I do not want to play hardball to the point of alienating them, as a good tenant is worth their weight in gold.
Thoughts?
