Have you negotiated with tenants? Tenant negotiations, especially regarding rental rates, can be a highly beneficial skill as a landlord and can promote a feeling of cooperation and willingness to compromise with your tenants.
Small landlords are often known for being able to negotiate rules and prices for their rental properties, and being willing to discuss these rules can be an excellent way to work with your tenants. Determining whether you should negotiate with your tenants is an important step in operating as a landlord, especially one who is personally involved with their rentals. Some openness to negotiation can allow you to attract more tenants, especially if you can build a reputation for being flexible and communicative. Additionally, this can allow you to get to know your tenants a bit better before they move into the property, meaning that you can have a better understanding of who you’re renting to.
However, not everyone should negotiate with their tenants. Some landlords can struggle with negotiation and feel as though it will cause them to lose some of their footing or open them up to being manipulated and taken advantage of. As such, it is important to consider this decision thoroughly before choosing to go for or prohibit negotiations.
Benefits and Drawbacks of Negotiation
Negotiating lease terms and rental rates can be an extremely valuable option, as it makes you more flexible as a landlord. However, if you are someone who struggles to set boundaries or aren’t sure how willing you are to be firm in your negotiations, this can cause trouble for you. Some tenants can push your boundaries and push you into an agreement you aren’t comfortable with. If you are going to negotiate with your tenants or prospective tenants, be sure you go into this negotiation with a firm idea of what you are and are not willing to concede and compromise on.
While negotiation can make you appear more flexible and reasonable than someone whose rules are firm, it can also open you up to being pushed around. Pushy prospective tenants can be a red flag, as it shows a lack of respect for you and your rules, so consider the tenant’s behavior carefully during this process.
When to Negotiate Rental Rates
If you do choose to negotiate your rental rates and lease agreements, you should know when to negotiate and when to remain firm. Pets, for example, can be a good reason to negotiate rental rates. Pet owners will often be willing to pay an additional pet rent to cover potential damage as a result of the pet living in a property.
Market changes can also be a reason to negotiate rental rates. Some areas have consistently falling or rising rental rates, which might promote a desire for negotiation in many renters. Allowing these negotiations upon lease renewals might be an effective way to give your tenant a feeling of cooperation with you and ensure that they feel their rent is fair for the area.
Finally, rental rates can be negotiated as a rental concession. This negotiability can make you more appealing to prospective renters and can help your properties stand out from other options on the market.
Learn more: What Are Rent Concessions and When Should You Offer Them?
How to Negotiate Rental Rates
If you choose to negotiate rental rates and lease rules, you should go into these negotiations very sure of what you are and aren’t willing to negotiate. Keep discussions polite, civil, and focused on the topics you can reach a common ground on. If something pushes your boundaries, hold firm. Do not let someone push you into an allowance or agreement that you are not comfortable with. Ensure that your agreements still allow you to make money, support yourself, and run your business effectively.
If at any time you feel a tenant is pushing you too hard or being aggressive in their negotiations, you have the right and power to end the discussion. Balancing firmness with a willingness to compromise is essential as a negotiator. Follow the typical negotiation rule of starting with a rate higher than your goal and keeping a solid minimum.
Learn more: Top Tips for Negotiating Leases with Your Tenants
Final Thoughts
Negotiating with your tenants can be an excellent way to work closely with the people who live on your property. A willingness to negotiate, cooperate, and compromise with tenants can go a long way towards building goodwill with your tenants and can promote a feeling that your tenants have agency over their homes. As long as you know how to negotiate, when to stand firm, and how to protect yourself from being taken advantage of, negotiating rental rates and lease rules with tenants can improve your relationship and reputation among your tenants.