Am I being excessive?

[Toon]

I've just asked my PM to advise my tenants of a rent increase from $340 to $375 at the end of the current lease agreement. Her suggestion was $345, but she almost always has suggested leaving rent unchanged on my other property & I have always increased it by $5-$10 a year with no issues. But I've felt that this property was rented under what I could have got from the start and let it go lower as it was newly constructed and had some finishing off to do. After it was rented at $340 I have spent over $6000 on blinds, side fencing and landscaping. It does still need some further landscaping too.

The house next door is rented for $450 and is similar in size, quality of finish & fittings and features. It has more established landscaping & air con, but that is all and is rented way higher. I have spent $400,000 in total on this property and don't think $375 seems excessive, but she rang me and said 'Are you prepared to lose your tenants over this increase?' so now I'm freaking out in case they do walk. They are a doctor & a financial planner & the doctor's employer makes the rent payments to the RE agent. I don't know if it comes out of his salary or if his employer covers it as part of a deal to attract doctors to regional areas. But I wouldn't think $35 would make much different to people who combined would be on at least $250,000 p.a.

 

[csc]

Can be difficult sometimes to weigh the value of good tenants with market prices..

If the tenant is a dream id tend to raise the rent minimally...

If the tenant is just average...up the rent to what you want..

By the sounds of it you like the tenant so for peace of mind i wouldnt get too carried away with it.

Just because two people maybe earning big money doesnt really mean anything..they maybe up to their necks in external debt and are struggling as well...

If you want long termers to stay i think you have to strike a happy medium......doesnt matter what next door is being rented for...perhaps next door has new tenants every six months because of the rent price i dont know..

Just be happy with your financials on the investment, if its working well all round dont stress too much and just up the price a little in my opinion...

Great tenants are not always easy to find!

Cheers

 

[Toon]

Thanks CSC

My PM has posted the increase notice to the tenants. I did tell her that if they weren't prepared to pay the $375 I was prepared to negotiate, but the notice she sent them tells them that if they think it is excessive they should contact Consumer Affairs Victoria. That sounds so 'official'. I thought they would just contact her & then she would negotiate a lower figure with me. I'd hate for it to end up a big deal.

Cheers

 

[AshleyS]

Toon - relax!!! As long as you are asking fair rent for your property, you will get tenants and fair rent.

I have had a tenant that has been with me for 4, going on 5 years now and I have increased the rent by 20, 50, 50 and about to be 40 dollars. The first year the PM managing the property did not increase the rent. Last time I do not manage the PM

On 1 of my properties, I put the rent up by $70PW to bring it inline with market rent. I don't expect anything more that fair market rent. If you ask fair rent, you will get it.

Once the renters work out how much it costs to move and what is out there for rent, you will be pleased to know that they will stay with you as long as you are fair.

For the guy who has been with me for 4 going on 5 years, I gave him $350 worth of free rent this year, hopefully he will be with me for another 5 years!!

Cheers

Ash

 

[Toon]

Thanks Ash - I feel a lot better about it now

 

[craigb]

Could the PM have worded that letter any worse , perhaps they should have said somthing like "if your not happy with the rent increase then leave"
Check out what is available in the area! see what they could get for the $375 wk, and adding the cost to move, to it as well.
PM 's can get too personal with tennants, and don't like increasing rents, if this is the case ask the PM if they would like to de_crease the % they are charging you?

 

[BayView]

If you've done some research and know the fair value of your property and rents based on similar nearby, stick to your guns.

The cost of moving and inconvenience for many tenants will decide for them.

And, they will know what rent they should be paying; they won't ark up and tell you it's too low - don't you worry about that!

 

[Toon]

Thanks craigb & BayView, I'll stick to my guns & if the tenants want to leave, they can leave & I'll use the opportunity to change PM's I think

 

[dave99]

The tenants may threaten to leave, but if you are charging below market rent, where will they go to? All the other similar places will be more expensive anyway. Your tenants don't sound dumb, they will see this and accept the increase I think.

 

[Jas]

You may want to consider changing PMs anyway. They don't sound like a proactive, on your side, kinda PM.

You don't need to have a vacant property to do it. If you signed a managment contract, check to see when it's up. If you didn't, move happily.