Feel a bit sick

[Toon]

Just browsing the latest listings for my area & saw the house nextdoor to the one I've just signed tenants up with - it's listed for $150 more p/wk

I had told my PM that I had heard this place was being rented for $110 p/wk more than she had listed mine for a few weeks ago & she basically didn't believe me. But now I see with my own eyes & it's now listed with an extra $40 on top of what the current tenants have been paying.

Mine still has a few things to complete, but it is leased with the proviso I will get these things done. And there's only a few extras than mine doesn't have: airconditioning, ducted vacuum and garden taken care of. I don't think that could account for $150 p/wk

To top it all off, my as yet unmoved in tenants, are continually making more demands or demanding things be done in an unrealistic time frame.

Feeling very stressed now

 

[wylie]

How long have you signed up for? Is the gardening covered by the lease, or could you remove this service?

Does the one next door have an extra bedroom? Better kitchen and/or bathroom? Better in other ways?

I would think that air-con would be $15 or $20 per week and gardening would be minimum $20 per week averaged over the year. (At least that is what ours is but we have a 36 perch block.)

If you have signed up at that price, and cannot remove the mowing component, then you will have to wait until the lease finishes and then I would be moving it to the other agent. I also would not be spending any money doing anything extra for these tenants, as they sound like they are getting a bargain already.

 

[Toon]

Thanks Wylie,

It's the other house that has the gardening included, the aircon and the ducted vacuum. I just can't see that being worth an extra $150 p/wk. Other than those three things, I can't see any stand out features that mine doesn't have. It even had the exact same spa in it! Same number of bedrooms, bathrooms, car spaces. From the photos, some of their fittings actually appear to be a cheaper standard.

 

[wylie]

Then, if the lease is signed, there is nothing you can do. If these tenants are wanting extras, tell the PM that you are happy to release them from the lease with no penalty if they are not happy, and then keep your fingers crossed that they might go.

If they have not moved in, is it possible to ask the other PM to look through the house with the view to taking over the rental as soon as possible and certainly at the end of the lease. Not sure how ethical this is, but worth considering.

We are in a similar situation with one house, but kept the rent low for a friend of my mothers who helped us out of a fix by taking over from an evicted tenant. We didn't lose any rent, nor pay for any advertising, so were happy to keep it low for the lease. However, when this lease finishes, we have to hike it to market rates. However, we went into this arrangement knowing we were under market, whereas your PM sounds like she has no idea of values.

Ditch the agent and change to the other one (assuming it DOES rent at the higher amount). Asking $150 more than yours doesn't always mean they will get that much.

 

[The Y-man]

Don't stress. We just had a similar thing. Our PM recommended we advertise at $250 per week - similar propoerties in the area asking $300+

Cheers,

The Y-man

 

[lizzie]

is the one next door leased at the $150/wk more?

the extra's they are providing are worth around $50/wk ... so it is currently around $100/wk more than yours ... and they may yet have to drop their asking price to get it rented.

same as with selling - it's not the listing price but the accepted price that is the indicator.

 

[tobe]

Its an awful feeling. If its any consolation, the upside is you now know what the market rent is for next rent review. The glass is half full. You have budgeted for x, and now you know it will be x+ for next time. You cant get out of the lease, but you can lose your manager. Have you called the next doors manager to suss them out? At least the ''losses'' are only for a short term. Its not like a one off mistake like you sold the property for less than it was worth.

 

[Xenia]

Wait till the one next door actually leases for $150 more, then you have a comparable to increase your rent by.

Use whatever the tenants are asking for as a negotiation to up the rent.

I hope your pm does regular rent reviews? They need to be done every 6 months and with such a strong precidence as the one next door there is no reason to not up your rent asap!

 

[evand]

What is your feel for market rent? You must have some idea. If the next door house is rented at $150 more then yours and you think thats about market rent, i'd be blowing up....that's outrageous. I see it as your pm is doing you out of major dollars and i wouldn't stand for that.

I would get out of your agreement if you havn't already have the lease signed etc.

Tell them unfortunately you don't have the money to complete the things required to let the house or something. Or ask/tell your pm to get you out of it.

I would then sack your useless pm and use the one that is managing the house next door.

If you have signed the lease and have to rent the house at the lower rent i would be looking at options to recover the money from the pm or some other sort of remedy.

edit: Its interesting how so many posters say on the forum they treat property investing like a business. If a similar situation occurred in business, the pm would be pursued for some remedy, most likely financial. Funny, no one has mentioned that.

 

[Toon]

Wait till the one next door actually leases for $150 more, then you have a comparable to increase your rent by.

Use whatever the tenants are asking for as a negotiation to up the rent.

I hope your pm does regular rent reviews? They need to be done every 6 months and with such a strong precidence as the one next door there is no reason to not up your rent asap!

Thanks Xenia,

If I've signed a 12mth lease, can I still review/raise the rent at the 6mth stage, or do I have to wait for the lease to expire?

 

[Toon]

What is your feel for market rent? You must have some idea. If the next door house is rented at $150 more then yours and you think thats about market rent, i'd be blowing up....that's outrageous. I see it as your pm is doing you out of major dollars and i wouldn't stand for that.

I would get out of your agreement if you havn't already have the lease signed etc.

Tell them unfortunately you don't have the money to complete the things required to let the house or something. Or ask/tell your pm to get you out of it.

I would then sack your useless pm and use the one that is managing the house next door.

If you have signed the lease and have to rent the house at the lower rent i would be looking at options to recover the money from the pm or some other sort of remedy.

edit: Its interesting how so many posters say on the forum they treat property investing like a business. If a similar situation occurred in business, the pm would be pursued for some remedy, most likely financial. Funny, no one has mentioned that.

Thanks Evand.

Sadly I have signed the lease but who knows. The tenants may try and pull out anyway, as I have refused to pay their phone connection fees. I won't fight them if they want out.

I, along with the PM, had been sceptical that the house next door was being let for $450, when a friend of the landlord told me a few weeks ago. But now that it's advertised at $490, I have to believe it was true. It may not get relet at that amount, but I will keep an eye out and see if it goes off the market or the amount is reduced.

I know I can't expect to get the full amount, when I still haven't had the yard or front fences completed yet, but all the prospective tenants were still expecting this would all be done without the rent increasing in return.

 

[softmonkey]

toon, there are many reasons for differences in rents

some landlords are happy to let a property sit vacant for weeks until they get the perfect robot tenants at top dollar

some landlords prefer 0 day vacancy

and some landlords just get lucky

have a chat to the PM of the other house. but otherwise, don't worry too much about it ... 1 year will fly by

 

[twobobsworth]

I also think some PMs are struggling to keep up with the pace of rental increases. Looking at their past rentals and tacking on an extra 10% seems to be typical, but in some places and some properties it can easily go beyond.

We just increased the rent on one place from $240 to $260. I've just seen on RE.com.au another townhouse in the complex list for $300!

 

[Toon]

I also think some PMs are struggling to keep up with the pace of rental increases. Looking at their past rentals and tacking on an extra 10% seems to be typical, but in some places and some properties it can easily go beyond.

We just increased the rent on one place from $240 to $260. I've just seen on RE.com.au another townhouse in the complex list for $300!

I think that's true. My PM has only ever suggested I put my rent up once on my other IP in 5yrs, and her suggestion was $5 ! I always put it up by that much anyway & this time I put it up $10. Then saw the unit next door advertised at another $10 on top of that. Seems to have been rented out quickly enough at that too. That kind of difference doesn't bother me much though. Not like $150!

 

[granev]

Toon
I take it that you were happy with the rent you were asking before you found out what the other place was asking.
I would personally rather a leased IP to a good tenant at a lower price than an empty one asking (waiting for someone desperate enough) to rent for a higher price

I know of an IP down the road from one of mine that is renting for $60 more than mine - similar house , but I wouldnt swap my tenant for the pigs in that one.

 

[Toon]

Toon
I take it that you were happy with the rent you were asking before you found out what the other place was asking.
I would personally rather a leased IP to a good tenant at a lower price than an empty one asking (waiting for someone desperate enough) to rent for a higher price

I know of an IP down the road from one of mine that is renting for $60 more than mine - similar house , but I wouldnt swap my tenant for the pigs in that one.

Unfortunately, I don't think I have got a good tenant either Not even moved in yet and making demands and complaints. And I had already held out for several weeks and turned 4 others down before I said yes to this one.

 

[wylie]

Insist that your PM tell them that their demands and complaints will not be tolerated (except legitimate repairs, of course) and that if they wish to move on, you will release them without penalty.

That would be great, because you can then try to rent it for the higher amount and get the other PM to take over at the earliest available time.

 

[Toon]

Insist that your PM tell them that their demands and complaints will not be tolerated (except legitimate repairs, of course) and that if they wish to move on, you will release them without penalty.

That would be great, because you can then try to rent it for the higher amount and get the other PM to take over at the earliest available time.

A very tempting proposition Wylie.

 

[poordeveloper]

We have been looking to rent a property in inner Melbourne for the past few months. Something I've noticed more of recently is that quite a few places are being advertised at prices well above others in the market place. They inevitably sit for a few weeks and then sometimes disappear or sometimes get re-advertised at lower rent. Speaking to a few agents at inspections, they've indicated that they're open to offers - even without me inquiring. So I think some LL's are just taking the approach of starting high and reducing rather than renting at too low a price.