Difficulty finding a tenant while GF is in progress

[kennyboi]

Hi,

Wondering those of you who has GF, did you find it difficult renting the front house while GF planning/construction was in progress?

Mine still in planning phase, but feedbacks I got are worries about GF being built. It is advertised about $10 below market, with further discount offered when construction starts.

Wondering how long should I put it on market before it gets stale.

Thanks

 

[neK]

Once the frame and cladding is up, its less of a concern (If you've managed to segregate it properly to begin with).

 

[Biz]

$10 off isn't enough. if you are 100% you are going ahead with it just knock $50 off now and review it once the GF is complete. If you know exactly where the GF is gonig it would be a good idea to put the dividing fence up right away too especially if it is colourbond. The builder can just remove a panel or two when they need to do connections.

 

[kennyboi]

Feedback so far seems to concern about being living on a construction site and dangerous to their kids.

Can't put the fence up now, as it needs approval for demolition of a separate garage (which will be rebuilt).

 

[nhg]

I haven't offered a discount throughout any of the constructions. I simply stated I wouldn't put the rent up for a year and once built the price would include water.

Also I said I would pay for the electricity bill in the meantime (actually we only paid half the electricity bill).

Have had no trouble finding tenants. Neat, clean, pay on time, etc.

Each place is well divided before construction commences, try to minimize any disturbance to the main residence.

 

[kennyboi]

$10 off isn't enough. if you are 100% you are going ahead with it just knock $50 off now and review it once the GF is complete.

My PM told me $10 off now when still at drawing stage, then another $100-150 during construction stage plus services cost. Currently advertised at $450, Investar median quoted $475 for same no. of beds in my suburb.

 

[C-mac]

Perhaps look at other deal sweeteners for the tenant? I.e. say if it isn't air conditioned (the main house not the Grammy flat), perhaps you could offer to install one? You'd then of course update your depreciation schedule on the air conditioner; plus negotiate possibly a better deal if your bought two (one for the GF too), plus add value and future rentability to both properties.

 

[neK]

I had a tenant in mine during construction, dropped the rent by $20 and they happily stayed until the end.

They lost half their backyard during the construction process. That said, they were off lease and as far as I was concerned, it was going to be "let me build or get out".

I guess in your case you would need to pre-warn them which would result in the negative sentiment.

How far away are you from starting anyway?

 

[Lil Skater]

$10 isn't a lot.. What's in the ad?

I would do say, $10 off market for advertising and clearly state in the ad that when construction starts you'll give a discount off the rent for x months.

You also need to let your PM know approximately where the new fence line will lie - that way the prospective tenants know exactly how much they will lose.

Also something to consider, you've said there's a double garage that will be demolished. Is this included with the ad? If so, you've basically advertised and will generally attract people looking for a double garage, and then said "actually, that's going... But it will be rebuilt!". The question then asked is, when?

If you had an existing tenant, it's generally easier to negotiate construction, but when you've got to advertise for brand new tenants it makes it difficult and sometimes you need to get creative.

 

[kennyboi]

How far away are you from starting anyway?

Still hasn't signed off the design yet. Still in design stage.

 

[kennyboi]

$10 isn't a lot.. What's in the ad?

I would do say, $10 off market for advertising and clearly state in the ad that when construction starts you'll give a discount off the rent for x months.

You also need to let your PM know approximately where the new fence line will lie - that way the prospective tenants know exactly how much they will lose.

Also something to consider, you've said there's a double garage that will be demolished. Is this included with the ad? If so, you've basically advertised and will generally attract people looking for a double garage, and then said "actually, that's going... But it will be rebuilt!". The question then asked is, when?

Good idea on approx. fence location. I'll see what I can do on this.

Ad didn't mention the garage gets rebuilt. I explained to agent what will happen and they still advertised as 1 space without further details.

Do you think there are any negative implications from listing getting stale if it doesn't move?

 

[neK]

Then the GF is hardly in progress.

Fence off the yard now and have the builder work around it
If you use colorbond, then the panels can be removed and put back with ease.

The tenant won't miss what they don't have.
For the power disruption, deal with it when it comes. Have the agent communicate with the tenant closer to the actual date that the landlord will give them $200 or so to use the power.

The main source of power usage is to charge their power drill or power their dropsaw. Hardly power sucking.

I had a new meter installed when i building a granny and extending an existing house, total consumption over the period of 6 months was 66kw or so.

 

[Lil Skater]

Yeah, if it's still drawing it's a long way off.

I like the suggestion of fencing off, if possible.

The property can go "stale" if it sits there a while, and you'll lose more $$ by trying to achieve a higher rent than you would by dropping a further $20 or so. Of course this depends on the rent, and when a tenant can move in.

I think you need to read the ad that has been put up, and make changes if needed. Make the house seem amazing, and then have a section at the bottom that details what is going to be done, when and what will change for the tenants (backyard, garage etc)

 

[kennyboi]

The property can go "stale" if it sits there a while, and you'll lose more $$ by trying to achieve a higher rent than you would by dropping a further $20 or so. Of course this depends on the rent, and when a tenant can move in.

I guess my next question is if I increase the discount, will it be higher risk to attract the wrong type of tenant?

 

[Lil Skater]

I guess my next question is if I increase the discount, will it be higher risk to attract the wrong type of tenant?

Providing the house is well presented/maintained a lower rent doesn't always mean a lower caliber of tenant. Of course the cheaper the property the more likelihood you'll have more tenants who are on benefits, but generally speaking the good tenants will look for something that's well maintained.

You have good and bad tenants no matter the price, this is where DD and reference checks come into play.

 

[kennyboi]

Thanks for the feedback. I have dropped to $400/wk now. However agent did say concerns with prospective tenants are due to GF. So, fingers cross!

 

[Lil Skater]

Keep us all in the loop!