When looking for a new tenant for your rental property, you may find a potential renter who seems like an excellent fit—they have plenty of income to cover the rent, their references checked out, and their credit score is good.

But they’ve asked about negotiating your asking rent price. So what can you do?

The following tips will help you successfully negotiate rent with a new tenant so you can end up with an amount you will both be happy with.

When to Consider Negotiating

Your first instinct may be to not negotiate on the rent at all. After all, you may feel you’ve listed the property at a fair price, and anything lower than that would be eating into your profits. So when should you consider negotiating, and when should you not?

Negotiate when:

• You’ve been trying to fill the vacant property for over a month.
• The property is listed above market value based on comps in the area.
• You’ve had trouble finding qualified renters.

Pass on negotiating if:

• The unit is listed below market value.
• You’ve been searching for renters for less than a month.
• There are other qualified renters whose applications you’ve received.
• You cannot afford to lower the rent and still cover the property’s expenses.

There’s no one rule about when to negotiate, and it doesn’t hurt to speak to the potential tenant and find out how much they want to lower the rent.

How to Negotiate With a New Tenant

If the tenant has passed your screening and wants to negotiate on the rent, schedule a meeting with them to discuss the rental price in person, if possible. Then, follow the tips below to try and reach a successful agreement.

Have Information on Nearby Properties

When you have the unit listed at or below market value, collect data on comps in the area to show them that you have the unit listed at a fair price. If the property is listed at or above market value and you are willing to negotiate, decide how much you will negotiate before you speak with the potential tenant.

Offer Alternative Deals

Be prepared with alternatives in exchange for getting the full amount of rent. For example, if you and the tenant cannot agree on the rental amount, consider giving them free parking, waiving pet fees, lowering the security deposit, or partially covering their utilities in exchange for the full rent.

Ask for Something in Exchange

If a tenant asks you to lower the rent, ask them for something in exchange. For example, you can ask them to pay three months’ rent in advance for a lower rate during the lease term. Or, you can ask them to sign a two-year lease instead of a one-year lease. This way, you will both be getting something out of the deal.

Red Flags to Look for When Negotiating Rent

If you’re negotiating rent with a potential tenant and they get rude or aggressive, this is a sign that the tenant may cause problems and not be a good fit for your property. A potential renter should always be polite when negotiating and accept no as an answer. 

Look out for tenants who want you to lower the rent without compromising. For example, if you offer to lower the rent in exchange for two months’ rent upfront and they refuse, this isn’t an attempt to negotiate but rather more of a request or demand.

Let FAS Handle Your Rental Property

Negotiating with tenants can be stressful, especially if you have multiple rental properties. If you need support with your DC rental and negotiating with tenants, contact FAS Management today at (202) 337-5080. We’ve been helping property owners in the nation’s capital keep successful rentals since 1946.