Well, we seem to be coming into a bit of a purple patch when it comes to leasing out our properties at the moment....the purple mainly originating from the bruising.
It's my main job at the moment, juggling all of the Tenancies and trying to ;
a) Maintain the current Tenants
b) attract new Tenants
c) Roll over existing Tenants whose Lease is about to expire
Pretty normal stuff for most Landlords in this game of renting out boxes, but the lead times on our stuff seem to be a bit longer.
I say a mixed bag cos some of the stock has been vacant for over 18 months (not so good ), some 6 months, some 4 months.
Others still have 6 months to go on their current 7 Lease and have approached us about extending for another 10 years.....be good if that comes off. I've just put the finishing touches to a market review notice, offering them two rental levels, one if they simply exercise their 3 year option, and a slightly lower one if they enter into a fresh 10+5+5 year stretch.
Another just emailed me two days to say "I realise we have just over a year to go, but we would like to know if you are willing to offer another 10 year Lease over the Premises." All looks rosey, but I don't want to answer them too quickly just in case they get the wrong impression. Might leave that one 'til March next year before replying
As both are coming to an end, we finally get to hook in with market rent reviews (the CIP Landlord's birthday present). We've only had two of these in our life, the first one allowing us to retire from work....so we like these alot.
I suppose it all comes out in the wash, and it's the compound result in your portfolio that counts, rather than the individual property performance....but I'm taking heart from something I learnt off Kerry Packer, and that is 'it's OK to have a few losses, just make sure your big gains outweigh the losses'.
Fortunately, the empty stuff is on the smaller end of things, and the two Tenancies chomping at the bit to renew are the biggies. I am wary of treading carefully with these, usually requiring a little more tact than I display here on the forum, as with a 10 year Lease, one wrong move at the start has long lasting implications.
The 4 month vacancy is a normal 4x2 brick and tile house 5km from the CBD. It's got immaculate gardens, but for some reason is always hard to let. The previous Tenant was in there for 4 years straight paying $ 820 pw, but eventually left to purchase their own house. It took 6 months to let it before they moved in. We've had no less than 4 agents try and secure a Tenant since early January - supposedly the peak of the season.....but alas not even one application submitted. Leasing agents are at a loss. We've dropped the rent to $ 700 pw and still not a nibble. For an asset worth 1.4m, how low do you need to go to secure a Tenant. At $ 700 pw, that's a gross yield of 2.6% and a nett yield after outgoings of 2.0%......and yes, this poxy house is currently on my mental chopping block. My customers for this asset simply won't / don't / can't pay a decent return and so by my investing definitions it must go.
I'd be interested to hear your thoughts on how your leasing efforts are travelling.
It's my main job at the moment, juggling all of the Tenancies and trying to ;
a) Maintain the current Tenants
b) attract new Tenants
c) Roll over existing Tenants whose Lease is about to expire
Pretty normal stuff for most Landlords in this game of renting out boxes, but the lead times on our stuff seem to be a bit longer.
I say a mixed bag cos some of the stock has been vacant for over 18 months (not so good ), some 6 months, some 4 months.
Others still have 6 months to go on their current 7 Lease and have approached us about extending for another 10 years.....be good if that comes off. I've just put the finishing touches to a market review notice, offering them two rental levels, one if they simply exercise their 3 year option, and a slightly lower one if they enter into a fresh 10+5+5 year stretch.
Another just emailed me two days to say "I realise we have just over a year to go, but we would like to know if you are willing to offer another 10 year Lease over the Premises." All looks rosey, but I don't want to answer them too quickly just in case they get the wrong impression. Might leave that one 'til March next year before replying
As both are coming to an end, we finally get to hook in with market rent reviews (the CIP Landlord's birthday present). We've only had two of these in our life, the first one allowing us to retire from work....so we like these alot.
I suppose it all comes out in the wash, and it's the compound result in your portfolio that counts, rather than the individual property performance....but I'm taking heart from something I learnt off Kerry Packer, and that is 'it's OK to have a few losses, just make sure your big gains outweigh the losses'.
Fortunately, the empty stuff is on the smaller end of things, and the two Tenancies chomping at the bit to renew are the biggies. I am wary of treading carefully with these, usually requiring a little more tact than I display here on the forum, as with a 10 year Lease, one wrong move at the start has long lasting implications.
The 4 month vacancy is a normal 4x2 brick and tile house 5km from the CBD. It's got immaculate gardens, but for some reason is always hard to let. The previous Tenant was in there for 4 years straight paying $ 820 pw, but eventually left to purchase their own house. It took 6 months to let it before they moved in. We've had no less than 4 agents try and secure a Tenant since early January - supposedly the peak of the season.....but alas not even one application submitted. Leasing agents are at a loss. We've dropped the rent to $ 700 pw and still not a nibble. For an asset worth 1.4m, how low do you need to go to secure a Tenant. At $ 700 pw, that's a gross yield of 2.6% and a nett yield after outgoings of 2.0%......and yes, this poxy house is currently on my mental chopping block. My customers for this asset simply won't / don't / can't pay a decent return and so by my investing definitions it must go.
I'd be interested to hear your thoughts on how your leasing efforts are travelling.