extra rent for furniture
- Thread starter superman
- Start date
Superman,
In NZ some of us use a "wish list" concept whereby we list out the available items (i.e. fridge, dryer etc) and put a weekly price next to each one (relative to our Payback time). We provide this to ALL prospective applicants to rent the property so they can advise at the time of their application which items they want. It also pays to give them a discount if they want 3 or more items as usually they will identify 1 or 2 items they want but a discount offer for 3 or more can sometimes entice them to take another item they didn't really need or want. We then will buy those items second hand.
Payback time
We tend to work on a preference of a 12 month payback but with a maximum of an 18 month payback in total.
To equate this into your $1,000 of furniture:
12 month payback = @$20/week
18 month payback = @$13/week
This means a relatively rapid payback to minimise the obvious downside risks and wear and tear etc. Also it helps if you can sign up the tenant on a 12 month fixed term so you know you will recover the large majority of the items cost whilst they are a tenant. If they do not renew after 12 months you can simply sell the item/s or offer it to your next tenant (maybe at a lower weekly amount).
Hope this helps.
In NZ some of us use a "wish list" concept whereby we list out the available items (i.e. fridge, dryer etc) and put a weekly price next to each one (relative to our Payback time). We provide this to ALL prospective applicants to rent the property so they can advise at the time of their application which items they want. It also pays to give them a discount if they want 3 or more items as usually they will identify 1 or 2 items they want but a discount offer for 3 or more can sometimes entice them to take another item they didn't really need or want. We then will buy those items second hand.
Payback time
We tend to work on a preference of a 12 month payback but with a maximum of an 18 month payback in total.
To equate this into your $1,000 of furniture:
12 month payback = @$20/week
18 month payback = @$13/week
This means a relatively rapid payback to minimise the obvious downside risks and wear and tear etc. Also it helps if you can sign up the tenant on a 12 month fixed term so you know you will recover the large majority of the items cost whilst they are a tenant. If they do not renew after 12 months you can simply sell the item/s or offer it to your next tenant (maybe at a lower weekly amount).
Hope this helps.
Hi Superman
The suggestions made by Kieran seemed to me to be a little strong, but you do have to get your invested furniture money back and protect your assets.
If you purchase goods from say Harvey Norman or Office Works, they offer a rental system (separate company) which seems to be something like the cost of the goods plus one third and paid off over three years or for some, paid off over two years.
I have used the first formula successfully myself. So for a unit, home etc., where the unit is worth say $200,000 and rents for $200 per week, add $10,000 of furniture, and repay in three years.
Rent is then the base of $200 plus $10,000 plus $3,333 = $13,333 / 156 = $85 added to the base of $200 = $285 per week
Original yield is 5.2% and increases to 7.0% after furnishing. I would think that this is the most generous you would need to be.
If you were to require repayment in two years, the rent increase from $200 per week to $328 per week total or a yield of 8.1%
Casual leasing as in holiday rentals may have to be shortened to one year. Its a guide
Regards
Ross
The suggestions made by Kieran seemed to me to be a little strong, but you do have to get your invested furniture money back and protect your assets.
If you purchase goods from say Harvey Norman or Office Works, they offer a rental system (separate company) which seems to be something like the cost of the goods plus one third and paid off over three years or for some, paid off over two years.
I have used the first formula successfully myself. So for a unit, home etc., where the unit is worth say $200,000 and rents for $200 per week, add $10,000 of furniture, and repay in three years.
Rent is then the base of $200 plus $10,000 plus $3,333 = $13,333 / 156 = $85 added to the base of $200 = $285 per week
Original yield is 5.2% and increases to 7.0% after furnishing. I would think that this is the most generous you would need to be.
If you were to require repayment in two years, the rent increase from $200 per week to $328 per week total or a yield of 8.1%
Casual leasing as in holiday rentals may have to be shortened to one year. Its a guide
Regards
Ross
Hi all,
Dont forget that the furniture can be depreciated over its effective life, meaning that it might not take as long to get your money back as you might think.
I agree with Kieran that a "Wish List" is a great way to go. That way you arent furnishing a property only to have prospective tenants forgo your property simply because they dont like the furnishings.
Jamie.
Dont forget that the furniture can be depreciated over its effective life, meaning that it might not take as long to get your money back as you might think.
I agree with Kieran that a "Wish List" is a great way to go. That way you arent furnishing a property only to have prospective tenants forgo your property simply because they dont like the furnishings.
Jamie.
Hi Jamie
You are correct. The furniture can be depreciated over the life of the goods, if you buy it or are buying it in the long term in one of several ways. Talk to the accountants.
The other point is that the vendor can "rent" the furniture from a rental company, for nil deposit, claim 100% of the rental as a tax deduction, return it at the end of the period or purchase it for a song, usually about 10% or 15% of the original value, and then depreciate that figure.
If you are short of the readies and are trying to make a dollar go as far as possible, this can be an alternative thought.
Regards
Ross
You are correct. The furniture can be depreciated over the life of the goods, if you buy it or are buying it in the long term in one of several ways. Talk to the accountants.
The other point is that the vendor can "rent" the furniture from a rental company, for nil deposit, claim 100% of the rental as a tax deduction, return it at the end of the period or purchase it for a song, usually about 10% or 15% of the original value, and then depreciate that figure.
If you are short of the readies and are trying to make a dollar go as far as possible, this can be an alternative thought.
Regards
Ross
Maybe a young son or daughter could start a furniture rental business with funds borrowed/gifted from yourself, rent it to you for anything upto $6000 (tax free threshold for individuals) per year and allow you to claim the full amount as a deduction.
Please seek your own professional accounting advice.....
Glenn
Please seek your own professional accounting advice.....
Glenn
Hmm, Yes Glenn
The basics of renting from your children is, I think, in itself legal. The ATO doesn't prohibit a minor from receiving an income, providing it is declared in full as a taxable income and the appropriate tax paid.
Looks OK but I think you may consider a chat with the beancounters
Regards
Ross
The basics of renting from your children is, I think, in itself legal. The ATO doesn't prohibit a minor from receiving an income, providing it is declared in full as a taxable income and the appropriate tax paid.
Looks OK but I think you may consider a chat with the beancounters
Regards
Ross
Glenn
I suppose most Dads with a one year old daughter will admit to being wholly engaged by their daughter from time to time, even often, and even doing some of the most amazing things to satisfy their every whim.
And it only gets worse as they grow older. I speak from experience.
But an engaging one year old. I wonder if the ATO would agree that this engaging daughter, engaged you to set up, run and manage her future empire of furniture renting.
Let me know how your discussions with Mr Carmody turn out.
Regards
Ross
I suppose most Dads with a one year old daughter will admit to being wholly engaged by their daughter from time to time, even often, and even doing some of the most amazing things to satisfy their every whim.
And it only gets worse as they grow older. I speak from experience.
But an engaging one year old. I wonder if the ATO would agree that this engaging daughter, engaged you to set up, run and manage her future empire of furniture renting.
Let me know how your discussions with Mr Carmody turn out.
Regards
Ross
