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What is reasonable here?

brergnat

Member
Me again. Long term renters (8 years in this house). Lease is up for renewal in July. Landlord likes to use Zillow Zestimates for price negotiations. She is absolutely unwilling to work with a realtor and get accurate market comps.

We are under market value, but have been doing multi year leases (3 yr/3yr/2yr) up to this point. Rental rates have been like this ($3250/3300/3700).

Home is a detached Jasmine condo in Cypress Village. Plan 2. 1907sq ft.

Current Zestimate is $4500. I will walk at that price. There is NO way I will entertain a renewal at a 20% increase, but she is gonna lead with the Zestimate, so I need to know what is considered a REASONABLE rate increase in our situation. We won't sign another multi year lease. What's reasonable? 5%? 10%? We are exceptional renters, have a record of outstanding care to the home and the home quite literally still looks brand new. I am a bit OCD about keeping a clean house. The carpets even still look new.

We will be in the market to buy within the next year. Not sooner than August though, so we are either renewing or moving to a larger home if she goes too high. We are wiling to pay up to $5000 for a rental, but not this particular home. We have outgrown it, although we will suck it up for another year rather than potentially needing to move twice within a year. The cost of moving is not part of the equation. We get a paid for move to anywhere of our choosing as a parting gift from the military after 24 years of active duty service.
 

hurijo

Active member
When do you think you/she will bring up lease renewal discussions? There's still a couple months until July and I think rents are trending down? (Wild guess) Also, how has she approached negotiations in the past (esp that last big increase 3300->3700)? Does she budge at all? Maybe she's reasonable enough to know a 20% increase is ridiculous for an existing tenant... Does she live nearby?
 

zubs

Well-known member
Zillow estimated rents are about 10%~ 20% inflated but does give a good reference on pricing.
With rents now coming down, I'd take your $4,500 zestimate and knock off a few hundred dollars ($600) for being a good renter.

Play into the fact that you are a good renter and she could get a shitty renter if she goes with someone else. During the pandemic lots of renters stopped paying rent and used the COVID rental assist program. You did not do this so you should remind this landlord of how awesome you were.
 

brergnat

Member
When do you think you/she will bring up lease renewal discussions? There's still a couple months until July and I think rents are trending down? (Wild guess) Also, how has she approached negotiations in the past (esp that last big increase 3300->3700)? Does she budge at all? Maybe she's reasonable enough to know a 20% increase is ridiculous for an existing tenant... Does she live nearby?

Yes, I am aware rents have been trending downwards, and hope this works in our favor.

Our lease goes through June. In the past, she contacts me around mid April to get my thoughts about renewal. Last time, she sent me a screenshot of the zillow page for the home with a $3800 Zestimate and offered the renewal at $3700 for 1 or 2 years locked in. I countered with some other Zillow listings of the same model for less and offered $3500. She wouldn't budge. She sent me back 3 screenshots of LARGER homes at higher prices to justify her price. I gave up at that point because we were not in a position to move that year.

She does not live nearby. She lives in Boston. She has a few rental properties in Irvine and in other states.
 

brergnat

Member
Zillow estimated rents are about 10%~ 20% inflated but does give a good reference on pricing.
With rents now coming down, I'd take your $4,500 zestimate and knock off a few hundred dollars ($600) for being a good renter.

Play into the fact that you are a good renter and she could get a shitty renter if she goes with someone else. During the pandemic lots of renters stopped paying rent and used the COVID rental assist program. You did not do this so you should remind this landlord of how awesome you were.

Good feedback, thank you. I was thinking of offering $3900 if her offer is higher than that.

The only way I would entertain $4500 is if we switched to a month to month agreement and we could bail whenever we are ready to move.

On that note, what is a typical premium for a month to month agreement?
 

Liar Loan

Well-known member
There is a site called www.rentometer.com that I used when I rented my condo out. You get five free reports. I found it to be more accurate than Zillow for determining market rent.
 
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potsticker

Active member
2 of those Plan 2 units were leased back in October for $4,300 and $4,600. At your current rate, you're definitely paying under market any way that you look at it. Even at $3,900 - you'd still be paying under. I think your counteroffer needs to start with a $4,xxx.

If you do decide to leave, the landlord will likely lose anywhere b/w 2-4 weeks of rent depending on the unit condition. The rental market in Irvine is still strong and it could be very competitive in July due to it being the summer. See if you can start the conversation now.
 

brergnat

Member
2 of those Plan 2 units were leased back in October for $4,300 and $4,600. At your current rate, you're definitely paying under market any way that you look at it. Even at $3,900 - you'd still be paying under. I think your counteroffer needs to start with a $4,xxx.

If you do decide to leave, the landlord will likely lose anywhere b/w 2-4 weeks of rent depending on the unit condition. The rental market in Irvine is still strong and it could be very competitive in July due to it being the summer. See if you can start the conversation now.
I'm wiling to pay $4000. No more. I know prices are higher but those are for incoming tenants, and those will always command a higher price than a renewal. I lived in apartment complexes long enough to know that's how it works. You get to raise the price to market rate when you have a vacancy to fill. You don't gouge a long term renter. That's unethical.
 

usctrojancpa

Well-known member
I ran rental comps in the past 6 months and they range from $4,300 to $4,800 per month ($2.25 to $2.50 per SF) for a CV detached condo around your size.
 

brergnat

Member
So I have to ask, does $4300 to $4800/mo *buy* you anything in Irvine with 20% down?
Of course not. That's why we are still renters. Renting is currently 50% cheaper than buying a comparable home.

If you can find a 3br/2ba condo within IUSD boundaries, for under $600,000, I'd like to see it.
 
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brergnat

Member
I ran rental comps in the past 6 months and they range from $4,300 to $4,800 per month ($2.25 to $2.50 per SF) for a CV detached condo around your size.

Ok, but what would YOU find acceptable as a long term tenant renewing?

I mean, I'm sure our landlord could get those prices if we vacate and she finds a new tenant. And if that's what she wants to do, that's fine. But I'll take my $4800 and find one of those 3 story condos over at Great Park to rent. And I'll probably get another bedroom for that price too.

$4800 for this condo is laughable.
 

woodburyowner

Well-known member
I would say $4100 is reasonable. The headlines that rent is going down doesn't mean much since you locked in your rate 2 years ago. Between 2 years ago and now, the rent has gone up substantially. So 5-8% off the peak is still much higher than your current rate.
 

irvinehomeowner

Well-known member
Of course not. That's why we are still renters. Renting is currently 50% cheaper than buying a comparable home.

If you can find a 3br/2ba condo within IUSD boundaries, for under $600,000, I'd like to see it.
So based on your previous ask, $1m 4/3 seems to be what you are looking for.

A 3/2 seems like you can find more... but still looking in the $800k range.

Seems like a $5k+ mortgage might be within budget if you take into account any tax savings you might get from ownership.

Not really sure if there is a simple rule where $x/mo rent is equal to about $y/mo mortgage.

But this is where I question where future prices are going to go... do we really think 3/2s in Irvine will go below $600k? Cheapest in Irvine is $740k and that's a stacked unit (someone on top). You need a 20% drop to get to under $600k for undesirable units.

I don't even think @Liar Loan is predicting that large a drop in Irvine.
 

CalBears96

Well-known member
So based on your previous ask, $1m 4/3 seems to be what you are looking for.

A 3/2 seems like you can find more... but still looking in the $800k range.

Seems like a $5k+ mortgage might be within budget if you take into account any tax savings you might get from ownership.

Not really sure if there is a simple rule where $x/mo rent is equal to about $y/mo mortgage.

But this is where I question where future prices are going to go... do we really think 3/2s in Irvine will go below $600k? Cheapest in Irvine is $740k and that's a stacked unit (someone on top). You need a 20% drop to get to under $600k for undesirable units.

I don't even think @Liar Loan is predicting that large a drop in Irvine.
Unfortunately, for GP (which is where she wants to buy at), you would need to factor in another $1.5k-$1.8k/mo for property taxes.
 

The Motor Court Company

Well-known member
I think the dilemma is to get the price you want, you would have to commit to multi-year lease but you are also looking to buy within the next year so need some kind of flexibility like MoM for more $ or having a rock solid break lease penalty that you are ok with.
 

brergnat

Member
So based on your previous ask, $1m 4/3 seems to be what you are looking for.

A 3/2 seems like you can find more... but still looking in the $800k range.

Seems like a $5k+ mortgage might be within budget if you take into account any tax savings you might get from ownership.

Not really sure if there is a simple rule where $x/mo rent is equal to about $y/mo mortgage.

But this is where I question where future prices are going to go... do we really think 3/2s in Irvine will go below $600k? Cheapest in Irvine is $740k and that's a stacked unit (someone on top). You need a 20% drop to get to under $600k for undesirable units.

I don't even think @Liar Loan is predicting that large a drop in Irvine.
We would take a 3/2 with a sizeable loft or bonus space. We only actually need 3 bedrooms, but my family has a sizable collection of Lego that we want to have space to display in one area, rather than having it take over literally every room in the house, like it does now. 😆

This is why those 3 story condos in GP with the third floor bonus rooms are so appealing. All the Lego and Star Wars/Superhero action figures can have a home and I don't need to look at them unless I want to. It's an investment into my mental health.
 
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