How should i go about it?

D

Dbz_Vic

Hey everyone, i had a brand new property tenanted for $400pw couple of months ago which is well below market rent in the area (median $420-$430pw). I advertised for more than $430pw but after 8 weeks sitting empty i took an offer of $400pw. The market has had an increase in supply and it was near the end of winter. However there are comparables renting between $430pw to $500pw in the area.

It's now on a 12month lease with no provision to up the rent, even though i wanted a 6 mth rent review but agent advised against it which i am not happy about. I was frustrated and wanted a tenant in asap so went with recommendation.

So i have been thinking if i could change agents / agencies since i am not too happy with them over a few things and have a new lease presented to tenants with increased rent and terms? Of course i will have to give them the necessary notice (2 months?) and also risk having tenants vacate. Or am i not allowed to touch the rent regardless?

Or i could just hang out till lease is 2 months from expiring and hike the rent then with or without the current agent.

Thoughts?
 
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You entered into a 12 months agreement and now want to give 2 months notice ?
You have a lot of questions. Did you think about any of these basic aspects of investing in property before acting?

Bit late now, you are locked in unless it's been 10 months already.
 
The Fence said:
You entered into a 12 months agreement and now want to give 2 months notice ?

Not necessarily, as per my post.

You have a lot of questions.
Click to expand...

A lot of questions? All i am asking is if i could change agents and have a new lease presented to tenants with increased rent and new terms. Or wait out the lease which i think you answered.

The Fence said:
Did you think about any of these basic aspects of investing in property before acting?
Click to expand...

What basic aspects are you exactly referring to? Reading the lease documents? I started investing in early 2013, so have much to learn still, please enlighten me.
 
Moyston said:
doesnt sound like the agent was at fault from what your saying...
Click to expand...

I don't think i said the agent was at fault or did it imply that when i said i was unhappy with a few things? I clearly said i was frustrated over a number of things and wanted the property rented asap at the time.
 
The lease is between you and the tenant. Changing agents wont change that. You could present them with a new 12 month lease, but unlikely they would agree to that and then you will just have to wait it out.

Just something to learn from. And shows how important timing the end of your leases are. I am suprised you let it sit empty for 8 weeks before taking a lower rent. When you look at it, Thats $3440 thrown away to try and get an extra $1560 pa. I can see why you want to make that back up as fast as possible.

My advice is to wait it out and and see where the market is at and how the tenants are closer to the end of the lease and slowly build it back to market rent with built in increases in the lease.

The market decides the rent, not the landlord.

Hope this helps.
 
HD_ACE said:
The lease is between you and the tenant. Changing agents wont change that. You could present them with a new 12 month lease, but unlikely they would agree to that and then you will just have to wait it out.

Just something to learn from. And shows how important timing the end of your leases are. I am suprised you let it sit empty for 8 weeks before taking a lower rent. When you look at it, Thats $3440 thrown away to try and get an extra $1560 pa. I can see why you want to make that back up as fast as possible.

My advice is to wait it out and and see where the market is at and how the tenants are closer to the end of the lease and slowly build it back to market rent with built in increases in the lease.

The market decides the rent, not the landlord.

Hope this helps.
Click to expand...

Thanks for the advice. Rental was initially advertised at $500pw, then the original agent quit after a week, with the new agent lowering rent to $480pw, then 2 weeks later another agent from the same agency took over at $450pw, and finally $430pw before I got an applicant asking $400pw which I agreed reluctantly having waited 8 weeks plus I was in the process of purchasing another property.
 
I don't want to be too harsh here but have you genuinely thought about what you're asking?

Your tenants signed a lease giving them 12 months at 400 a week and you now wish to arbitrarily increase it to 430? Why not 500 pr 600 while you're at it?

Would you agree to dropping it to 370 if they came back to you and say that they felt 400 was too high?
 
Yes you are in a binding contract with the tenant. You cannot just break this contract because you want to put the rent up.
 
Even though i wanted it but agent advised against it which i am not happy about. I was also frustrated and wanted a tenant in asap.So i have been thinking if i could change agents / agencies since i am not too happy with them over a few things may have been implied....but understand now as you have elaborted...yes sounds like id change to...

however...as stated the market decides the rent....another thing to think about...sometimes you can take a smaller amount of rent than market and you get a great tenant...who doesnt complain about every single thing and wants fixed...ask me , i know! on both fronts..
 
Terry W - Now, I did not say the below market rent was the sole reason I am contemplating changing agencies did I? Even though a higher rent would be something I would like to achieve as I believe it's currently well below market rent, but only if I do go down the path of using a different agency.

My question was what's stopping me sacking my current agent and taking my business to a different agency while there are still tenants on a lease and if allowed increase the rent while at it? I have done it on another property while tenant was on month to month but this one is on a fixed term.
 
Dbz_Vic said:
Terry W - Now, I did not say the below market rent was the sole reason I am contemplating changing agencies did I? Even though a higher rent would be something I would like to achieve as I believe it's currently well below market rent, but only if I do go down the path of using a different agency.

My question was what's stopping me sacking my current agent and taking my business to a different agency while there are still tenants on a lease and if allowed increase the rent while at it? I have done it on another property while tenant was on month to month but this one is on a fixed term. And if I do switch would we then have to start over on a new contract or do we carry on with the old lease and just change the agent's details?
Click to expand...

What does your contract with your pm say? Thats what will tell you.

Usually a months notice or 50% penalty payment etc. maybe theyl let you out fee free.
 
Dbz_Vic said:
My question was what's stopping me sacking my current agent and taking my business to a different agency while there are still tenants on a lease and if allowed increase the rent while at it? I have done it on another property while tenant was on month to month but this one is on a fixed term.
Click to expand...

You can certainly change agents, but you must sit out the lease. When it comes due, (a couple of months before it runs out) check to see what you might get at that time and raise it then. Be aware if they leave due to you asking too much as a "catch up" you may have an empty house again. Put it up enough to catch up without pushing them into looking elsewhere.

I have friends right now trying to find a tenant. I've suggested they offer one week free rent rather than drop the rent again so that they can raise the rent when the next lease is due and are not starting from such a low figure.
 
I suggest you read the booklet for Renters and Landlords that should have been given to you by the RE Agent.

You can't ditch the contract with the tenant because it is a legal document .

The tenant pays $400 per week for 12 months .If the property is in Victoria ,they then go onto a month to month lease and prior to that is when you can notify them of any rental increase as per the rules. The terms of your agreement with the Agent will be stated in your contract.

Good luck with it .
 
Thanks for the entertaining read everyone.

Sorry Dbz_Vic but I agree learning rules of managing your property (Residential Tenancy Act) will really help you understand your tenants (and maybe your agent) point of view as well.

Happy to help. PM if you want.
 
sanj said:
I don't want to be too harsh here but have you genuinely thought about what you're asking?

Your tenants signed a lease giving them 12 months at 400 a week and you now wish to arbitrarily increase it to 430? Why not 500 pr 600 while you're at it?

Would you agree to dropping it to 370 if they came back to you and say that they felt 400 was too high?
Click to expand...

Sanj I don't think your being too harsh at all. The proposition by the op is a ridiculous one at best.

Leo
 
You will just have to suck it up that you get $400pw for the 12 months. A couple of months before it's due, you can put in a rent rise, and you can increase it every six months BUT you can only do this if they are on a six month lease OR you have an increase input into your 12 month lease.

You are also not allowed to give them an increase that is unreasonable. Say from $400 to $600.
 
LeoT said:
Sanj I don't think your being too harsh at all. The proposition by the op is a ridiculous one at best.

Leo
Click to expand...

I don't think that's called for. I think the OP now knows the best thing to do. I don't see how your comment is helping.

I don't think the proposition is ridiculous. Better to ask the question than do something the wrong way.
 
Thanks everyone for advice and opinions ;) As I said I am still learning so everything helps. Without answering everyone individually and theres no need to, I admit I was rash and accepted what the property manager presented to me at the time while I was at work. I wanted it leased asap and didn't think how much I was losing out. But the rent is not everything, I am not happy with other stuff which I have already mentioned.

I will explore the opportunity to change PM and agencies and if I am able to set new terms and put up the rent I will. I am not running a charity, it's business and if the tenants want to leave over me upping the rent to what people next door are paying which is $40 more per week than they can go look somewhere else.
 
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