In another sign of the times, a new survey done by The National Association of Independent Landlords shows that 69 percent of landlords are now willing to lower the rent for struggling tenants when asked.
With money tight many renters are having a tough time making their monthly payments. Some property owners who are also in difficult situations have a preference for working out deals with otherwise good tenants to avoid the trouble and expense of finding new renters.
Since landlords are equal victims of the recession, nearly 32% report that they have lowered rents over the past 18 months. They too are struggling to pay their mortgages and cover overhead and feel that as long as they have tenants who will pay on time, they are willing to work out arrangements to hold onto to them.
Of the landlords who are willing to negotiate, 61% have said they would drop their rents up to 5%. Anther 29% claim they would deduct up to 10% and the rest may even consider deeper discounts.
This information came from a poll conducted by the association's members from October 7 to October 10, 2009. From the survey, 496 landlords, mostly residential, responded from various parts of the country.
Often renters who cannot afford to pay all of their rent simply skip it entirely with the hopes that it will just go away. That approach only compounds their problems and ends up hurting their credit rating. From the side of the property owner - he does not want to run the risk of having an empty building when he can, instead, have rents coming in.
This is a time for everyone to be creative. Negotiating a lower monthly payment is one possible solution.
Another is to look among the many foreclosure properties on the market and perhaps pick up a deal with a monthly payment that may be the same or less than your current rent.
If your credit is intact you should speak to a foreclosure expert or a seasoned buyer broker who can help you find that diamond in the rough which may, indeed, be the perfect solution to the high cost of rent.
Do you have questions about buying a home in the Metrowest area? I would love to talk with you. Please feel free to call me at 508-881-6230 - any time or E-mail me.
Copyright 2009 - Claudette Millette, Broker, Owner, TheBuyersCounsel
Ashland, Holliston, Hopkinton, Natick, Newton, Northborough, Framingham, Shrewsbury, Sherborn, Southborough, Sudbury, Wayland, Westborough
We manage 100+ rentals and many of our Owners are lowering rents, especially when it is time for the tenants to renew (or not).
In the Atlanta area, even the big apartments are giving steep discounts.
Leslie:
I guess they are being forced to do so in the face of possibly losing their tenants.
Jim:
That is interesting.
Claudette,,.....And I hear people say we are not in a recession...This is a positive solution,better then not receiving any rent at all..or having tenents move out in the middle of the night...
Hi, Hannah:
Oh, I think we are still in one, unfortunately, particuarly with the unemployment figures.
You are right. Landlords who negotiate will at least be getting their mortgage paid rather than losing tenants.
I have some friends who are landlords who are also making deals just so that they don't have empty rentals.
We own a rental property in Florida and had to drop our rent over 20% to get a tenant. We would rather get something than nothing!
Claudette,
A 100% of NOTHING is ZERO. The landlords that reduce their rent to retain regular-paying tenants who are low maintenance are very smart.
The loss compounds when units sit vacant. Tax write-offs don't pay a mortgage payment so it is better to take less, preserve the investor's FICO and ride out this storm. This will pass.
~ Linda
its too bad that banks dont try harder to work with homeowners but most banks at least the big ones actually profit from foreclosing on most properties.
What do you think about voluntarily reducing rent (without request) as a proactive measure to keep good tenants?
Emily:
It is good to hear that they are least holding onto their tenants.
Sybil:
I hope you are getting enough to cover your expenses.
Linda:
You are right about that. It is better to get something just to keep it going.
"This will pass." - Hopefully, sooner rather than later...
Richard:
I think some landlords may do just that out of fear of losing their tenants.
What a concept!!? Landlords helping struggling tenants. It makes perfect sense. Some rent is better than no rent.
Douglas:
It does make sense. It's a difficult time for both renters and landlords.
Never going to happen here in Texas.
Claudette...I manage a mixed use property for a landlord 6 states away...and we have had many conversations about keeping paying tenants at less than facing vacancies with unknown occupancy dates. Renewal is better than new tenant anytime.
Kyle:
That's optimistic. I hope you are right.
Hi, Steve:
Absolutely. A new tenant means a new credit check and a lot of unknowns about what kind of tenant they will turn out to be.
This is a great article with the facts about our economy. Thanks for sharing.
Roch:
Your welcome.
Claudette...
It really is a sign of the times. Nice post and congrats on the feature!
Just picked up two listings where the owner's tenants moved out to take advantage of the $8,000 First Time Homebuyers Tax credit... Now he can't rent them out for what his payments are.
Proof positive that Inventory is a major factor in price reductions.
Richard:
It is, indeed. Thanks so much.
Paul:
That is a tough situation for him. Maybe he should think about refinancing.
Claudette...
I wish more land lords in Florida would do this. Instead they're not making mortgage payments and putting entire families in harms way. It's sad to see how selfish some people really are :(
TLW...ROAR!
Just last week we had a tenant ask for a rent reduction because they had lost hours at work. I encouraged the owner to lower the rent at least until spring when it will be easier to find a tenant but the owner didn't want to "lose any money". I explained to the owner that we would likely have at least a month of vacancy and would rent it for less than the current rent (but more than the tenant was asking for) but the owner didn't budge. We'll see how that plays out.
Just last week we had a tenant ask for a rent reduction because they had lost hours at work. I encouraged the owner to lower the rent at least until spring when it will be easier to find a tenant but the owner didn't want to "lose any money". I explained to the owner that we would likely have at least a month of vacancy and would rent it for less than the current rent (but more than the tenant was asking for) but the owner didn't budge. We'll see how that plays out.
@ Claudette -- He is over $100K underwater on both properties and is retired with a minimal income. Re-Financing is out of the question. He applied for Loan Modifications already and the reductions offered still do not cover what he can bring in with current rents.
Rents are dropping... partially due to tenants being paid to buy. The $8K first time homebuyers tax credit has more consequences then people realize.
TLW:
That is yet another topic. It is a shame what is happening to renters when owners are just letting their properties go into foreclosure. This is hurting a lot of people, particularly families.
Robert:
That owner may be in denial about what is actually happening right now in this economy. He could possibly lose a tenant when he should be trying to keep his place rented out.
Paul:
I am sorry to hear that. He did the right thing at the time by investing in real estate and now it is turning on him. That is so unfortunate. I certainly hope he finds a reasonable solution to his problem.
Good info...coincidentally we have tenants that asked to lower their rent, as well as lost tenants because of job loss. Unemployment has affected even those who are employed... :(
First I've heard about this. I wonder how it is playing out here in CT?
This isn't happening here in NY. It's bad enough people on public assistance can't get decent apartments because landlords do not want them. Sad :(
Pete:
It certainly has. I hope you are able to find some new tenants.
William:
I don't really know if this has happened in Connecticut yet, but I know that your casinos are feeling the impact of the recession.
Jackie:
That is a sad situation. Where do they end up going?
I am witnessing landlords definitly working with good tenants. This to me is amazing because I thought I would NEVER see this day. But it is happening. Even in rental communities.
Terri:
I think there are a few things happening now that we probably never thought we would see.
I have been paying the water/sewer and garbage on one and lowered the rate fifty dollars a month. That translates in to a couple hundred less than I used to get. In my duplex I haven't raised rents in two years. I have long time tenants an little turn over. So far I don't have a positive or negative cash flow. I veiw it as, They are buying the buildings for me.
Claudette,
In our area, rents are steady due to being a university town...but this is a great strategy....thanks for sharing..
Rob:
Considering the fact that you have had to lower your rents, you have a great attitude about this situation.
Lori:
I'm glad to hear that the problem has not affected your area.
Great post...I live in the Foreclosure capital...lee county fl and rents seem the same because people need a place to live...but that will change since the homes are being bought for pennies on the dollar and being rented instead of vacant.
Tim:
You certainly do live a high foreclosure area. It sounds as though there will soon be more rental properties than the market can handle.
We manage over 350 single family homes in Ocala, FL and have been lowering rents at the tenants request for well over a year now. It works out well for both the tenant and the owner. We also have many tenants on "very creative" payment plans. Communication with them as well as the owners is the key.
I would be nervous about lowering rents. If the tenant is struggling with the current rent payment, are they going to be able to afford a slightly lower one? Are landlords just delaying the inevitable? I guess if the landlord is lowering rents on a vacant property that is one thing. But it sounds like it would have similar results as the loan modifications that have re-defaulted. But it isn't fair for me to paint a broad brush and say all renters will skip out on a rent payment.
Judi:
It sounds as though you have some very understanding property owners. It must be difficult for them but they are probably convinced that they would otherwise lose their tenants.
Kevin:
It seems to be working in a number of areas. I think the prevailing wisdom is that it is better to try to lower the rent than to have to look for a new tenant.
Claudette - I remember when I helped manage 197 rental units in Ft. Worth, Tx. We always worked with the tenants and it worked most of the times. Just have to be careful not being taken advantage of. We did not lower the rent, we were already low in our rent charges when compared to the local market, we worked out a payment schedule and waived late fees instead. Lowering the rent seems a great idea but must be the absolute last resort and it must be a good tenant (house keeping).
I had lowered the rent to help out my tenant. In my market it seemed that the rental rates dropped right behind the drop in resale prices.
I am actually seeing that decent sfh are renting HIGHER than 6 months ago. Inventory controls price, and our inventory is down price rise.
I think that depending on the market rental rates are a good leading indicator of home values.
I had lowered the rent to help out my tenant. In my market it seemed that the rental rates dropped right behind the drop in resale prices.
I am actually seeing that decent sfh are renting HIGHER than 6 months ago. Inventory controls price, and our inventory is down price rise.
I think that depending on the market rental rates are a good leading indicator of home values.