Potential tenant proposes a lower rent

[k88k]

Hi All,

Recently purchased a new property, it has been on the market for less than 1 week. The property is advertised for $520 per week.

House is 3min walk to train station, 2min to shops.

A potential tenant has already viewed the house but is only offering $500 per week and this is the first tenant.

As a landlord/investor, i want a tenant in the property asap. And for $500 per week i am able to manage. Obviously i want the $520 per week.

Should i accept this figure, or wait a few more weeks to see if a tenant is willing to pay $520 per week?
(obviously if no tenants in a few weeks, i will gradually reduce the figure)

Wat are your thoughts?

Regards,
k88k

 

[tess85]

What's the existing rental stock like where your property is? What area of Syd? Vacancy rates etc?
http://www.sqmresearch.com.au/graph_vacancy.php?t=1

$500 * 52 = $26,000
$520 * 50 = $26,000 (assuming it takes 2 weeks longer to get a tenant at the desired rate)

Maybe sign up the $500 pw tenant on a 12 month lease with a increase at the 6 month mark? (best of both worlds) Just some ideas to consider.

 

[wylie]

How many replies or visits to the open house did you get?

Is there any other interest?

You might want to hold another open house this weekend and tell the tenant offering $500 that you will wait and see who comes through at the advertised price. That might be enough for him to say he will take it at $520.

It all comes down to whether your house is worth $520, whether you can hold out another couple of days to get the $520 or if you need cash-flow immediately.

I guess he would be taking it from this weekend? If so, then the next prospective tenant may wish to take it from the week after or even may have to give two weeks' notice to leave where they are renting now.

No easy answer on this one. Do you take the $500 on offer but insist he takes it from today? Or wait and see what comes this weekend? You have to decide.

 

[macca446]

Hi,
Depends on a few factors such as how many other properties on the market at the moment and what you are asking is market rent if it is and rental demand is good for your area I would try and get your asking amount but if things are soft and a lot of stock on the market getting $500 a week would be better them paying and you not out of pocket yourself.
I had a property for lease where demand has softened and reduced it just to get tenant in .
Macca446

 

[BuildingBlocks]

That all depends on if $520/wk is reasonable and if there is demand in the area.

You could always get her to sign at $520 and give her the first week for free?

Effectively the same, however when it comes to upping the rent you are starting at the higher price point.

But if $520 is reasonable then just hang on, maybe this tenant is a complainer and this is just the start of it.

 

[wylie]

But if $520 is reasonable then just hang on, maybe this tenant is a complainer and this is just the start of it.

I forgot to say in my post that this is what I thought too... oh no... a whining tenant before they even move in...

 

[impala67]

What does your agent say?

 

[k88k]

It was advertised on Monday, received the Application on Tuesday. The agent is finalising the reference checks.

I see if the agent has a response tomorrow, other than that i told the agent to obviously keep advertising the house.

I know there will be open house tomorrow and saturday (hoping the wkened will attract a few more tenants).

Then wait and see.

 

[BuildingBlocks]

Ah, so you haven't even had an open house yet?

Don't fret too much about this, there are much worse things to look forward to in the future of being a landlord and this will seem like nothing!

 

[k88k]

Oh no no, there has been open house inspection since monday.

i guess this tenant was the most serious and lodge the application asap.

 

[impala67]

..Don't fret too much about this, there are much worse things to look forward to in the future of being a landlord and this will seem like nothing!

..like evictions

 

[SeafordSunshine]

What is the quality of the tenant?

What is market rent in your area?

Are they 'good tenants'
compared with the other applications?
how long do they want to rent for?
Do they have children and or pets?
Are they employed in 'secure jobs'
Will this influence your decision?
Its not just the money...

I hope this helps

 

[rabidz]

What's the existing rental stock like where your property is? What area of Syd? Vacancy rates etc?
http://www.sqmresearch.com.au/graph_vacancy.php?t=1

$500 * 52 = $26,000
$520 * 50 = $26,000 (assuming it takes 2 weeks longer to get a tenant at the desired rate)

Maybe sign up the $500 pw tenant on a 12 month lease with a increase at the 6 month mark? (best of both worlds) Just some ideas to consider.

I totally agree with this.
Unless a lot of people inspect the property, then I will accept $500 with a 6 mths increase..

 

[donkey]

how much did OP pay for the property?

A quality tenant might be worth this discount. A bad tenant with discounted rent is a disaster

 

[k88k]

Property was bought for $740k...

Rent for this area is about $500-$530 for 3bd room house.

Area is south west sydney..

 

[D.T.]

Nice yield

 

[pinkboy]

Nice yield

3.5% gross. Will be like -2.5% net after expenses. Hope the GC gravy train has a bit more of a run!

pinkboy

 

[skater]

Hope he's got a large, secure income.

 

[DaveM]

Did the ad say "ideal for astute investors"?

 

[Lil Skater]

... I'm surprised no one has suggested meeting half way, at $510pw.

Let us know how you went.

There's a lot of things to consider when leasing your property, and if they're a good tenant with references they may be the way to go. Also, negotiating on price doesn't necessarily mean they're whinging or will be whiners, perhaps they've looked at a lot of properties and like this one - but don't feel the price is fair compared to other properties they've seen.