The rent you charge must be based on market rents for similar properties. If you feel you need a competitive edge in order to attract a tenant quickly, do not offer discounted rent. There are two reasons for this. Almost any investor who wants to buy your house and keep the tenants in place will base his or her purchase price on the rent you actually charge, not on what you should charge if you charged market rates.
Second, if your strategy changes and you decide to keep the house as an investment, you will have a hard time raising the rent to market rates when the lease expires. As an example, suppose the market for similar properties is $1,200 per month. You charge only $1,000, thinking this is a short-term relationship. Your plans change, and at the end of the first year the tenant asks to renew the lease. By that time, market rents are at $1,300 per month, but your tenant has been paying only $1,000 per month. You will almost never be able to raise their rent by $300 per month. You will either lose the tenant, or you will have to raise the rent by only $100 a month.
Instead of discounting rent, offer some other incentive. The typical incentive is the first month’s rent free. In the example above, if market rents are at $1,200, but you agree to only $1,000, your tenant saves $2,400 over the course of a year. If you give the first month free, the tenant saves only $1,200 but it all occurs at movein, when they most need to save money.
Rent control issues are not widespread and are beyond the scope of this book. If you operate in an environment with such restrictions, be sure to obtain local advice so you do not violate the law.