How do banks look at weekly rent ?

[7DD4]

Just about to sign my tenant up for another year do the banks look only at the weekly rent or take management fees into consideration when applying for a loan ?

Tenant pays $620 a week now.

Increases the rent to $660 with the worry of loosing a good tenant and having to get a property manager in to screen for a tenant then pay them 20% to manage.

What do the bank look at the $660 or $660-20% for income ?

 

[Peter_Tersteeg]

When determining affordability lender will take into account the rent you receive. Various lenders have different policies about how much rent they'll take into account, but with most it's about 80% of the actual rent charged. The other 20% goes to holding costs such as management fees, maintenance, rates, etc.

To demonstrate how much rent is received, they'll use the agents monthly statement, a copy of a current lease agreement, an agents estimate or direct debits into a bank account.

Your broker or lender automatically takes all this into account when determining how much you can borrow.

 

[7DD4]

So in the eyes of most banks they take 80% of the weekly rent.

If I can save about 23% by doing this myself the bank will still only use the original 80% of the rent

What if the savings of managing the properties myself puts an extra $420 a week in my pocket. Will this not increase my borrowing power ?

 

[Aaron_C]

In the eyes of banks it makes no difference if you self manage or use an agent. 80% only

 

[Rolf Latham]

So in the eyes of most banks they take 80% of the weekly rent.

If I can save about 23% by doing this myself the bank will still only use the original 80% of the rent

What if the savings of managing the properties myself puts an extra $420 a week in my pocket. Will this not increase my borrowing power ?

what agent charges 23 %


time for me to get a new shingle ?


there are roundabout ways to get a lender to accept the higher self managed income


ta

rolf


ta
rolf

 

[7DD4]

WA agent's

Says 10% but once i added up all the expenses over the year comes out closer to 23%

2 of my properties I manage are due for an rent increase just weighing up the pros and cons of self managing and was looking for an excuse to keep on managing.

I just hope my hard working broker who never sleeps can get me over the line for my next Dundaff property in kinross Perth

 

[Rolf Latham]

WA agent's

Says 10% but once i added up all the expenses over the year comes out closer to 23%

Time to change agents then I reckon,thats huge

t
arolf

 

[fullylucky]

Increases the rent to $660 with the worry of loosing a good tenant and having to get a property manager in to screen for a tenant then pay them 20% to manage.

Banks just want a letter from a real estate agent saying how much the property can be rented out for.

If the agent gives a range eg. $600-$650 pwk the bank will take the lowest of the range. i.e. $600.

I wouldn't increase the rent if they are good tenants. A bird in the hand is worth 2 in the bush.