PM's letter to tenant re: rent increase

[Woodchipper]

Following is a paragraph from a letter that my PM sent to my tenant informing them of an increase in rent from $255 to $270 per week.

"We understand that implementing a rent increase can place pressure on some households. If you feel that this rental increase is excessive, please contact our office to discuss the matter in further detail. In some instances, we may be able to negotiate with the owner to ensure that we keep you as a happy and valued tenant. Please note however that the increase we have advised, is below the current market rent and generally our minimum review amount in this current market".

They are good tenants and i'm happy to keep the rent just below market value in order to retain them, so my point is, why would the PM invite them to negotiate if they feel the $15 increase is excessive and still below market rate?. I'm yet to discuss this with the PM and invite your comments.



GOD HAS STOPPED MAKING LAND BUT HAS NOT STOPPED MAKING PEOPLE.

 

[kegger]

We had advice just recently to put rent up from $300 week to $350 (same tennant at a 6 month review). They came back and said the tennant said it was excessive and they were happy to pay $330 (I think this is the 10% maximum anyway ?). We agreed because I thought that a $30 increase was about right for that area and the property is now +ve anyway.

Haven't seen the letter they used as the PM is generally useless and doesn't tell us much. Maybe I should ask....

I think the letter is a bit of a soft approach, saying the rent is already under market however there is still room to move to an amount that is even further below market value.

The wording should be:

We understand rent increase can cause hardship etc etc, however the rent is already below market value. If you intend to vacate the premises please advise asap, so that we can lease the property to someone willing to pay market rent.

I would be having a chat to the PM about who they are working for and why it is in their best interests to accept below market rent. If they relet they get a relet fee (at x times the higher market rent) and if they rent for market rent, their PM business stays on par with other PM businesses in the area from a profitablity point if view. Have a read of Somers books - I am pretty sure she makes a point of ensuring properties are kept at market rents no matter what. Are you sure the PM doesn not know the tennant ?

 

[ianvestor]

My guess is that they have it on file in a standard letter that they use regularly; To make the tenants feel that they are being looked after.

This of course could be complete BS, with the tenants getting the run-around if they actually attempt to negotiate.

 

[caterpillar]

I wouldn't put anything in there about negotiating a lower rent. I'd just put a comment in there stating that they should remember to contact the agent promptly if they have any issues with paying the rent on time so it can be sorted.

 

[Dis]

The wording should be:

We understand rent increase can cause hardship etc etc, however the rent is already below market value. If you intend to vacate the premises please advise asap, so that we can lease the property to someone willing to pay market rent.

The wording should be:

"The rent will be increased to $xxx on dd/mm/yy. We believe this is fair to all parties. Please contact us if you wish to discuss this matter or intend on finding alternative accomodation."

Negotiation and hardship should not be part of the vocabulary (at least in the first letter). Stuff about market rent can be left to follow up letters if required. The first letter almost invites he tenant to refuse.

 

[jaycee]

What Dis said in his last sentence in particular....

I , the PM, don;t want to be seen as the bad guy, even though it is the responsibility I have accepted when I accepted this paid position as a PM

I juist had a letter from my PM suggesting I up the rent in order to maximise my investment, should they no thear from me before 28th Feb, they will go ahed with the suggested increase by notifyin ghte tenant rent will go up in 60 days time (after 28th Feb)... All sounds good, except I have emails from this same PM (on which "I" instigated the rent review, not them), advising that this had been done on 23rd January, and the new rent ($5 / week more than on the 28th Feb letter!) would begin on 28th March.....

Mange the manager - oh well, I seem to ahve to do it in my day job, why not this as well

 

[skater]

Sheesh, that is a crappy letter. You would NEVER put it to the tenant that they are able to negotiate the increase. What were they thinking? If I was the tenant & I received a letter like that, the first thing I would do would be to ring the Agent & let them know I am in financial difficulty & would find it difficult to pay that. I'd be negotiating the SMALLEST increase possible.

 

[Jacque]

And a letter from my lender with whom I have the mortgage for the IP....

"We understand that implementing a rate rise increase can place pressure on some households. If you feel that this rate rise increase is excessive, please contact our branch to discuss the matter in further detail. In some instances, we may be able to negotiate with you as mortgagor to ensure that we keep you as a happy and valued client..."

In our dreams

 

[rossdc]

Who is your property manager in Perth? You should be getting a letter from them first stating what they recommend the rent increase should be before anything is given to the tentants.
I always do and check the REIWA site on the net to see current rent rates and number of properties for rent in area before i reply back.
I have just left my property manager after 10 years because the rent roll was bought by an investment company and the service just went down hill.