Rent Discount

[wylie]

There is a couple on the radar, I certainly do not have my heart set on a particular place, I just need somewhere that is under x amount to rent, is less than x distance from the amenities we want and will be large enough for our belongings. It's a rental, not a property I'm looking to buy and live in long term.

Then why not look at places within the price range you are prepared to pay?

Not specifically directed at just you wylie, but I find the animosity shown towards a tenant that is looking to make an offer as opposed to paying full price quite amusing. No doubt that many of you that bought your investment properties did so by making an offer under the price asked of the vendor/agent even during a market with lots of buyers, why should the same not be expected in the rental market?

Actually, I am not a lowballing type person. We have paid over the asking price on one place we really wanted badly, or generally offered slightly less than asking. If I want a place, the last thing I would risk is offending the vendor so that they refuse to deal with me. Believe me, it happens. My mother sold real estate for a long time, and I know perhaps a little more about some funny/strange/weird stories than others.

I would not think many sellers have gotten full asking price, except in very hot markets, when they can get over asking price, and it is like selling anything really..... you load the price a little KNOWING that the buyer will want something taken off. Then everyone feels like they have won.

What is the saying.... the seller needs to feel like they have sold too low, and the buyer needs to feel like they have paid too much..... or something like that.

In over 30 years of being a landlord, I have only ever once had someone ask me for a reduction in rent that I can recall. There are times when we have lowered the rent by $10 a week but very rarely, and only when the rental market has been so sluggish that we have needed to.

I just think you may make it hard on yourself, and I believe from the responses you have had, that you may see that your offer to pay less would not be welcome.

And I also don't aim this personally at you, but you did ask, and you have had a lot of answers, which you perhaps don't like, but I believe your answers are here on this thread.

 

[Hooray]

Not specifically directed at just you wylie, but I find the animosity shown towards a tenant that is looking to make an offer as opposed to paying full price quite amusing. No doubt that many of you that bought your investment properties did so by making an offer under the price asked of the vendor/agent even during a market with lots of buyers, why should the same not be expected in the rental market?

I find it even more amusing that your negotiation tactic is 'You give me what I want, and I'll give you something you don't care about'.

Nothing wrong with the tactic, but you have to look at it in light of the market. Lowball in a market with lots of buyers and most of the time you'll end up buying nothing. Lowball in a rental market that's tight, and you'll be waiting a long time too. If you're in a hurry to buy in a hot market, you can't afford to lowball.

Not NEEDING to do the transaction is a great advantage, but most renters are in a hurry, since the have a new job starting, their current lease is running out, whatever. In a tight market, most renters can't afford to bargain. By habit or otherwise, a degree of negotiation in buying is expected, and asking prices (and agent conditioning of sellers) reflects this.

 

[Joe D]

An offer of 6 months rent in advance would make me suspicious of the tenant and it certainly would not interest me in reducing the rent.

In a slow market, however, I have previously offered one or two weeks "free rent" at the end of a 12 month lease. From a tenant's perspective this equates to a 2% (one week) or a 4% (two week) discount.

The benefit for the LL from this arrangement is that the rental figure isn't reduced and therfore it makes it much easier to adjust it upwards at the end of the lease period. (ie. If you reduce the rent, it is harder to get it back up again above this level).

Hope this makes sense.

 

[Propertunity]

No doubt that many of you that bought your investment properties did so by making an offer under the price asked of the vendor/agent even during a market with lots of buyers, why should the same not be expected in the rental market?

Most (OK sweeping generalisation) IPs that people purchase are neg. geared in the beginning until after a few years pass and the rent over-takes the mortgage and other costs (unless you specifically set out to buy cf+ in the first instance). PIs don't usually start looking for cf+ IPs until they have 2 -3 neg. geared ones going and realise that they cannot service anymore like that.

So here we are as LL's in a cash loss position holding an IP just waiting for a person like hobo-jo to come along and want to negotiate the rent down, so that we are even more cash flow negative than we planned and hobo-jo does not see that the vast majority of the replies would be to reject his offer

Well you might find one LL prepared to do it. All the best hobo-jo

 

[hobo-jo]

So here we are as LL's in a cash loss position holding an IP just waiting for a person like hobo-jo to come along and want to negotiate the rent down, so that we are even more cash flow negative than we planned and hobo-jo does not see that the vast majority of the replies would be to reject his offer

IMO it's pretty nuts to be holding an asset that costs you money to hold considering the current global conditions (and low chance of short term CG), but each to their own.

You are making a big assumption saying that the LL is in a cash loss position. I know the particular place I'm looking at hasn't changed hands recently. Having a look at oldlistings.com.au and appears it has probably been with this landlord at least since early 2007.

 

[wylie]

Whether the landlord is in cash negative position has no bearing on the subject of you wanting to haggle for the rent. Why not just pay what he/she is asking if you think it is worth it?

It you don't think it is worth it, move on to the next place. I don't understand your issue with it if it is fair market value.

My parents own houses outright and still would only ever negotiate the rent down in a hard market to save it sitting empty. Because they own it outright, should they maybe rent it for $100 per week?

And it has nothing to do with the cost of the house, but all to do with whether it is fair rent. If it is, and if you haggle, you will more than likely miss out, but someone else will rent it at market rates.

 

[Hooray]

IMO it's pretty nuts to be holding an asset that costs you money to hold considering the current global conditions (and low chance of short term CG), but each to their own.

Be thankful for these nuts. If they weren't there, you wouldn't be able to find a place to rent.

You are making a big assumption saying that the LL is in a cash loss position. I know the particular place I'm looking at hasn't changed hands recently. Having a look at oldlistings.com.au and appears it has probably been with this landlord at least since early 2007.

CF+ landlords still wouldn't care about rent in advance. Another k or two against the offset for a month or two at 6%..... it's nothing.

Go into a negotiation having the incorrect idea of what the other party wants, and you're going to fail.

 

[skater]

There is no way at all that I would be looking at a tenant that wants to haggle my income down in this market. I am in the process of maximising the rent from all of my properties regardless of the length of time of ownership. This is my retirement income, in the same vein as you would have Super, and the more I can squeeze from each property the sooner I can retire.

On the other hand, if you were to offer me $20 more per week, well, I'm all ears.

 

[Gools]

Hobo-Jo, can I ask what area you are looking to rent in?
We just signed up a new tennant last week for a unit of ours that is close in to the CBD and increased the rent from $210 to $240 per week. That's a sign of strong rental demand in Adelaide I believe.

I agree with most posters here too, rent up front has no appeal to me and wouldn't put you any higher on the list of persepctive tennants versus the amount per week they wish to pay.

Gools

 

[hobo-jo]

Hobo-Jo, can I ask what area you are looking to rent in?

Coastal/western suburbs. Found a place, $5 off asking price, nice little place, paid bond today.
Privately rented instead of through an agent. Love it, hate dealing with agents.

Would have been interesting to get some real lowballs in before I got this place just to see what the response was...maybe next time

 

[Hooray]

Coastal/western suburbs. Found a place, $5 off asking price, nice little place, paid bond today.
Privately rented instead of through an agent. Love it, hate dealing with agents.

Would have been interesting to get some real lowballs in before I got this place just to see what the response was...maybe next time

Just one of the many reasons why I use PMs. Hate dealing with tenants.

 

[kathryn d]

Coastal/western suburbs. Found a place, $5 off asking price, nice little place, paid bond today.
Privately rented instead of through an agent. Love it, hate dealing with agents.

Would have been interesting to get some real lowballs in before I got this place just to see what the response was...maybe next time

Do it now when you don't need it.
Chances are you won't be accepted, but if you are, just say you found alternate accommodation.

 

[hobo-jo]

Chances are you won't be accepted, but if you are, just say you found alternate accommodation.

What I found on two real estate agents contracts was a clause that essentially said, what you are signing is legally binding and if you are accepted and then not prepared to go through with the agreement that the agency may charge you with costs to re-let/advertise...next page they had a comment saying that the agency may not contact you if unsuccessful.

So they expect you to sign the line, wait for acceptance and call them to check...with the potential that if you don't & you are accepted at a later time then you may be up for costs.

If I had to go through an agent I was going to cross out that clause before signing and handing back.

What a bloody joke, any wonder tenants hate dealing with agencies. Leeches.

 

[kathryn d]

What I found on two real estate agents contracts was a clause that essentially said, what you are signing is legally binding and if you are accepted and then not prepared to go through with the agreement that the agency may charge you with costs to re-let/advertise...next page they had a comment saying that the agency may not contact you if unsuccessful.

So they expect you to sign the line, wait for acceptance and call them to check...with the potential that if you don't & you are accepted at a later time then you may be up for costs.

If I had to go through an agent I was going to cross out that clause before signing and handing back.

What a bloody joke, any wonder tenants hate dealing with agencies. Leeches.

How would someone looking for accommodation ever get a place?
There may be 20 people putting an application in, and if you are not picked and you only have a short while to move. A applicant wouldn't dare apply for more than one place at a time, and that wouldn't be logical.

I agree, you would need to cross that clause out in a contract, but would they bypass you because of it?