This is one of the reasons I DON'T self-manage. I'm a softy and any hard luck story would prevent me acting professionally.
Renewing lease with no rent increase
- Thread starter firstmillion
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This is one of the reasons I DON'T self-manage. I'm a softy and any hard luck story would prevent me acting professionally.
Very true - although when we add up the savings on the 4 property's were not paying %7-8 percent of all earnings too, its quite a nice trade off. Then again if that's all small change then there's no worry's of course
Very true - although when we add up the savings on the 4 property's were not paying %7-8 percent of all earnings too, its quite a nice trade off. Then again if that's all small change then there's no worry's of course
Yeah, it's not really small change, but as only 1 of our IPs is within reasonable distance, that's also a big driver!
You've hit the nail on the head! For me, I recognise that I can't do it myself; I don't WANT to have to keep up to date with all the tenancy law changes and deal directly with maintenance requests. Each to their own - and I'm willing to pay specialists to do their jobs - PM, accountant, solicitor - where there is risk I'll muck it up.
From what you say it sounds like you don't want to do it, not that you can't. Their is a difference.
PMs cost more
Valid point Nikolina. The agents actually cost approx 15%-18% of the rent if you include the letting fees, maintenance cost, courier charges etc. It's a lot of money in my pocket. My maintenance cost while I am self managing is only 3% of the rent as compared to 7% when a PM was managing my IP.
Valid point Nikolina. The agents actually cost approx 15%-18% of the rent if you include the letting fees, maintenance cost, courier charges etc. It's a lot of money in my pocket
. My maintenance cost while I am self managing is only 3% of the rent as compared to 7% when a PM was managing my IP.
To those saying maintenance is higher when using a PM - sorry, but that just doesn't cut it. If you're worried about it, simply don't authorise any $ spend on maintenance without first contacting you with the issue first. If you really feel the need, you can then reject the request out of hand, go and do the repair yourself, or find a cheaper tradie if you think the PM's charges too much.
I also don't agree with the whole "but if this lovely person moved out I'd have to repaint 4 rooms, fix some cracks and replace the letter box etc." Many of our properties would need some of this work if they were vacant next week, but in the mean time the rents increase with the market. When/if they become vacant I'll have the work carried out.I don't see that as a reason to keep the rent too low.
I also don't agree with the whole "but if this lovely person moved out I'd have to repaint 4 rooms, fix some cracks and replace the letter box etc." Many of our properties would need some of this work if they were vacant next week, but in the mean time the rents increase with the market. When/if they become vacant I'll have the work carried out.I don't see that as a reason to keep the rent too low.
Our PM's all call us with maintenance requests. I spend hardly anything on maintenance, and they are all well maintained. We do most of the maintenance on the local ones ourselves. In the last year I would have replaced 3 stoves and an additional, maybe, $200 on average on all properties, and I am talking about 30-40 year old properties.
Now, one might complain about 3 stoves, but we have more than a few properties, so this is no big deal and they will last for quite a while, with the exception of the one property that is probably the most costly (cause we will demolish the home in a few years). The stove we put in this place was a second hand one (from ebay). Only a few years old & paid around $200 for. BTW, Hubby is an electrician by trade, so no installation costs.
My costs using a PM are 5.5% management fees, 1st weeks rent letting costs and maintenance, which would be less than 3%. How can you say that this is not value for money. I don't want or need the hassell of doing the management. I'm a softy and would find that I would actually lose much more than this on lost rent, cause I know I would not keep in line with market. Using a manager I can be as hard as nails (if required) because I don't have that personal relationship.
Firstmillion, did you not say that you were willing to let your property for $15 under market to "good tenants". Well, assuming the rent is $300pw, your lost rent is 5% of the potential income. How does this make ecconomic sence? You might as well have a PM and let them deal with all the messy bits.
Hi Skater,
I would gladly give to a PM if he / she costs only 5%. Unfortunately, they cost approx 15%. Or i might hv to look around for a better PM
.A PM appraised my IP for $235 rent. I could get $270 rent and save 15% on the management bit, i thought it's better to self manage and the IPs are at a walking distance as well.
Hi Skater,
I would gladly give to a PM if he / she costs only 5%. Unfortunately, they cost approx 15%. Or i might hv to look around for a better PM
A PM appraised my IP for $235 rent. I could get $270 rent and save 15% on the management bit, i thought it's better to self manage and the IPs are at a walking distance as well.
To be paying 15% on management is rediculous. I am sure you could negotiate a cheaper management agreement. Also, just because one PM appraised your unit at $235 does not mean that it is market price. It could just be a PM that does not keep up to date/not much good/lazy etc. Not all PM's are the same.
How many do you have under management? The more you have, the greater discount you can negotiate.
But by doing this, your upgrade is depreciable, and at the end of the day, you will achieve a higher rent.
Make sense to do
F
If you are using the services of your PM to fully manage your property, I would sack him and look for another one.
He is working for you, and he should be the one proposing to increase rents at relet times. An appraisal should be undertaken 2 months before the lease expires, in order to give tenant the appropriate notices to increase rent, so that on renewal date, it moves to new figure automatically.
($40/w.................wow...............I recently purchased property that was being rented out for $45/w under market rent ....and this was 2 dwellings each (duplex). When searching for the property, it is good to know market rents, as this aids in higher yields and make the deal more attractive.)
Cheers,
F
Look at all the organisations you pay money to as part of your resi IP expenses; banks, councils, utility companies, insurance companies, real estate agent, maintenance companies, owner's corporation management companies, state government (eg land tax) to mention a few. None of them give you a discount for paying on time. (Well they may spin that they do, but you don't get anything for nothing).
Why would you then treat the only income source for your property any differently?
well said. Great way of thinking about it.
F
Hi Skater,
I would gladly give to a PM if he / she costs only 5%. Unfortunately, they cost approx 15%. Or i might hv to look around for a better PM
A PM appraised my IP for $235 rent. I could get $270 rent and save 15% on the management bit, i thought it's better to self manage and the IPs are at a walking distance as well.
Sounds like total PM % for managing a property in the Pilbara, except that the rents are 4 times as much.
F
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I'm also a believer in not undercutting yourself by charging below the market rent. It is with this belief my property is currently renting for $280/wk while most of the appraisals I got from the other PMs were around the $240 mark, and this is a year ago. The lease is up for renewal on 9th Feb and I just found out from the PM today she is refusing to sign the new lease citing the new rent ($290) is way above the market rate. She has only promised to keep paying the rent for now. I assume she means $280.
This is a brand new house but as luck would have it I've had a fair share of problems. The original PM was also grossly incompetent so the problems weren't fixed at a timely manner. The problems are now fixed and I also have a new PM. The tenant however is still holding a grudge for her past inconveniences.
I would like to keep the tenant as she keeps the house very clean despite having two dogs and a cat, and the two dogs just gave birth to two puppies. Tenant's daughter said they would give the puppies away. I sincerely hope they keep their words.
PM rang the tenant today on my request to chase up on the lease renewal and said the tenant was very rude and raised all the issues she had with the house again (which are now fixed). I'm not liking the sound of my PM and tenant fighting.
I suggested to my PM to keep the rent at $280 for the first six months and then increase it to $290. I'll get a new lease drawn up if she agrees.
The rent I'm charging is probably slightly above the market rate, but a quick search on RE.com.au showed very few new properties for let in my area. If she wants a new property like mine she'll either have to move two suburbs out to save $20-30 bucks and the area is slightly less desirable or move to a new estate where she would be paying at least $300.
I hope she agrees to my concession and signs the lease. Can she keep living in the property indefinitely without signing a new lease?
Her father passed away recently and she's been away which doesn't help moving things along at a timely manner.
This is a brand new house but as luck would have it I've had a fair share of problems. The original PM was also grossly incompetent so the problems weren't fixed at a timely manner. The problems are now fixed and I also have a new PM. The tenant however is still holding a grudge for her past inconveniences.
I would like to keep the tenant as she keeps the house very clean despite having two dogs and a cat, and the two dogs just gave birth to two puppies.
Tenant's daughter said they would give the puppies away. I sincerely hope they keep their words.PM rang the tenant today on my request to chase up on the lease renewal and said the tenant was very rude and raised all the issues she had with the house again (which are now fixed). I'm not liking the sound of my PM and tenant fighting.
I suggested to my PM to keep the rent at $280 for the first six months and then increase it to $290. I'll get a new lease drawn up if she agrees.
The rent I'm charging is probably slightly above the market rate, but a quick search on RE.com.au showed very few new properties for let in my area. If she wants a new property like mine she'll either have to move two suburbs out to save $20-30 bucks and the area is slightly less desirable or move to a new estate where she would be paying at least $300.
I hope she agrees to my concession and signs the lease. Can she keep living in the property indefinitely without signing a new lease?
Her father passed away recently and she's been away which doesn't help moving things along at a timely manner.
She can live there without a lease, paying rent, for as long as you let her. Once a tenant is on a periodical rent, rather than a fixed term lease, you should be able to give 60 days notice to vacate.
Yep, ditto.
In Qld, this is the law anyway.
In a market where rents are rising quickly, it might be considered better to have a periodic agreement (or no real agreement, but as the fixed term has expired, it reverts itself to a periodic lease). This way you can give tenants 60 days for increasing rent, whereas in a fixed term agreement, you have to wait until the end of the lease (generally 12 months) before you can up the rent. (Unless you have a clause in the special conditions of the tenancy agreement that you will beef the rent up after 6 months, etc, etc)
6 months is the min term for a rent rise to a pre existing tenant.
Cheers,
F
