Rent Increases Brisbane <10km Suburbs

We own a 3/1/1 chamfer board/brick base home in Carina (actually has a self-contained bedroom downstairs with basic kitchen, shower and toilet with internal access to upstairs - what future potential I say!)

Has an older renovated kitchen, neat bathroom - new taps/glass screen over bath. A/C to lounge and master bedroom. We've done about $25,000 worth of work in 2 years (new gutters, sub-soil drain to control rising damp, some paving, new glass/timber front door, etc. etc.) Superior location in the sweet spot of the suburb, elevated block.

PM has come back with a $5/wk increase, smallest since 2009 with no explanation. Current rent is $435/wk which is the median for the suburb. Long-term tenant has been there more than 10 years. We'll ask how they came up with $5/wk. We did a comparison of the 20 properties available on www.realestate.com.au. A recently renovated 3/1/1 not built-in downstairs (too low) is available for $480/wk. Not much else below this compares to our property. Often original condition places in inferior locations e.g. on a main road

According to API vacancy rate is about 2% which to me is up say 0.4-0.5% over the longer term. I would say with the low interest rates a lot of people who have rented have now bought PPOPs, more people are sharing, kids are staying with their parents longer etc. so the rental market is a little weaker.

We'd like to achieve $15/wk increase. Anyone have any opinions on the strength of the rental market in these inner suburbs on the south? What kind of increase do you think a tenant would tolerate before considering moving on?
 
We own a 3/1/1 chamfer board/brick base home in Carina (actually has a self-contained bedroom downstairs with basic kitchen, shower and toilet with internal access to upstairs - what future potential I say!)

Has an older renovated kitchen, neat bathroom - new taps/glass screen over bath. A/C to lounge and master bedroom. We've done about $25,000 worth of work in 2 years (new gutters, sub-soil drain to control rising damp, some paving, new glass/timber front door, etc. etc.) Superior location in the sweet spot of the suburb, elevated block.

PM has come back with a $5/wk increase, smallest since 2009 with no explanation. Current rent is $435/wk which is the median for the suburb. Long-term tenant has been there more than 10 years. We'll ask how they came up with $5/wk. We did a comparison of the 20 properties available on www.realestate.com.au. A recently renovated 3/1/1 not built-in downstairs (too low) is available for $480/wk. Not much else below this compares to our property. Often original condition places in inferior locations e.g. on a main road

According to API vacancy rate is about 2% which to me is up say 0.4-0.5% over the longer term. I would say with the low interest rates a lot of people who have rented have now bought PPOPs, more people are sharing, kids are staying with their parents longer etc. so the rental market is a little weaker.

We'd like to achieve $15/wk increase. Anyone have any opinions on the strength of the rental market in these inner suburbs on the south? What kind of increase do you think a tenant would tolerate before considering moving on?

Hello,

From our experience and I wrote about it recently on here the rental market has softened the last 3-4 months. It was incredibly strong end of year and we did not have a vacancy in December. We are finding it much slower now and the time for finding a tenant has increased.

We believe seasonal factors are at play and also the increase in investor activity resulting in more stock available.

Good luck
 
I'm finding the same as NPB. Things are a bit slow.

However, if you are considerably under market rate, I would be showing the listings for comparable houses to justify why you are raising the rent.

I find this easy because I deal with the tenants direct and can gauge their reaction. I wouldn't risk losing a good tenant for the sake of $10 a week, but if your agent is suggesting asking an extra $5 to take rent to $440 and comparables are $480, I would be inclined to suggest you would like $460. Will they move for $25 per week? Will they look at other houses and realise even at $460 they are doing well?

Nobody can answer those questions but the tenant.

If they move, will it rent quickly for $480 and will you have it empty for two weeks?

Maybe put to the agent that you want $20 per week and if they say they will leave be prepared to make a quick decision to accept $15 or risk having it empty two to four weeks.
 
We've done about $25,000 worth of work in 2 years (new gutters, sub-soil drain to control rising damp, some paving, new glass/timber front door, etc. etc.)

I know nothing about the market rents etc for the area in question - but in terms of improvements there are a lot of things that cost a lot of money but mean nothing to tennants.

You denitely would not get any increases for gutters or drainage and perhaps also paving and doors. If you said I'll put in new taps, doors, paving and drainage for an extra $10 per week the most tenants would not want you to do it.

Always easier to do something between tenancies and then market it at a new rent level.

After 10 years it would probably take a lot to get the tenant to move - but also they were fine with the house in its previous state (I assume).
 
The rental market is slow. We've got IPs in Morningside and it's the first time one has been empty for over 7 years and it's been emtpy for 6 weeks now.

I'd be keeping hold of a a good long term tenant for sure.
 
We live brisbane southside.

Over the last 4-6 weeks there has been a definite increase in the "for lease" signs on houses.
Marg
 
We own a 3/1/1 chamfer board/brick base home in Carina (actually has a self-contained bedroom downstairs with basic kitchen, shower and toilet with internal access to upstairs - what future potential I say!)

Has an older renovated kitchen, neat bathroom - new taps/glass screen over bath. A/C to lounge and master bedroom. We've done about $25,000 worth of work in 2 years (new gutters, sub-soil drain to control rising damp, some paving, new glass/timber front door, etc. etc.) Superior location in the sweet spot of the suburb, elevated block.

PM has come back with a $5/wk increase, smallest since 2009 with no explanation. Current rent is $435/wk which is the median for the suburb. Long-term tenant has been there more than 10 years. We'll ask how they came up with $5/wk. We did a comparison of the 20 properties available on www.realestate.com.au. A recently renovated 3/1/1 not built-in downstairs (too low) is available for $480/wk. Not much else below this compares to our property. Often original condition places in inferior locations e.g. on a main road

According to API vacancy rate is about 2% which to me is up say 0.4-0.5% over the longer term. I would say with the low interest rates a lot of people who have rented have now bought PPOPs, more people are sharing, kids are staying with their parents longer etc. so the rental market is a little weaker.

We'd like to achieve $15/wk increase. Anyone have any opinions on the strength of the rental market in these inner suburbs on the south? What kind of increase do you think a tenant would tolerate before considering moving on?
Unfortunately tenants are not interested in how much you have spent on gutters and drainage only tangible things. I agree there is not a lot of stock to compare with, I have a 4bd 2 bathroom place renovated rented for $490 per week in Carina and I'm not looking to increase it at the end of the lease, if I was it would only be for $5 per week. In this price backet I think many people are buying with rates so low, it depends on if you value keeping tenants IMO
 
We own a 3/1/1 chamfer board/brick base home in Carina (actually has a self-contained bedroom downstairs with basic kitchen, shower and toilet with internal access to upstairs - what future potential I say!)

We'd like to achieve $15/wk increase. Anyone have any opinions on the strength of the rental market in these inner suburbs on the south? What kind of increase do you think a tenant would tolerate before considering moving on?

I have a property in Carina and other places in QLD, and the market has been soft. Agents tell me lots of tenants are deciding to buy as the rent versus paying off the loan doesn't differ much, so some are taking the advantage of the conditions.
I have 3 Bed, 1 Study, 2 Baths, 2 Garage, about 15 years old and rents for $470/week. But a new tenant moved in so we increased the rent by $10.00.
It may be hard increasing rents for existing tenants that resided for the last 10years if you did not do it each year?
The rent is dictated by the market conditions rather than what we would like or what we spent on the property, right?
I suppose it is up to you wether you let go of the current tenant and seek more rent or whether you can live with the $5 increase and increase more when markets are more favourable?
It is a hard balancing act that only you can answer yourself!
Some rents I fix for two years but then I may ask for $15 rent increase rather than $10 for the year... It really depends how you manage your cash flow and what is the priority in scheme of things. Unless you are struggling the $10 rent may not seem so important in the greater picture but may so in the more detailed picture. I tend to concentrate on the greater picture, if that helps?
 
with the current economic shock that is developing I would be looking to lock down a quality tenant for as long as possible. $5 is here nor there
 
Thanks for all the detailed/informative responses - gold stars to everyone!

Yes, it's a decision only WE can make.

Someone said to me recently "It's hard work making some money for your retirement". This was after I'd told them my wife and I had just spent three weeks straight, 9-11 hours per day, on a working interstate holiday painting, gardening, washing the exterior of two double story townhouses etc. etc. Aint that the truth. I felt like I was on The Block. The only days we had off were when were flying between capital cities. Anyway it's nice to have "problems" like ours (IPs and the tenants, maintenance/repairs, PMs, leases etc.). Small stuff really. The alternative would be a real problem.

I find it really helpful to pull out that 20 year model we have that shows how our equity is expected to grow (and has since 2000) and our 4 year plan to upgrade our IPs and increase capital value and yield as we head to the big retirement. When you have a big picture plan on paper that really paints a positive future it offsets the short-term/immediate dramas you face.

Cheers
Noel
 
Thanks for all the detailed/informative responses - gold stars to everyone!

Yes, it's a decision only WE can make.

Someone said to me recently "It's hard work making some money for your retirement". This was after I'd told them my wife and I had just spent three weeks straight, 9-11 hours per day, on a working interstate holiday painting, gardening, washing the exterior of two double story townhouses etc. etc. Aint that the truth. I felt like I was on The Block. The only days we had off were when were flying between capital cities. Anyway it's nice to have "problems" like ours (IPs and the tenants, maintenance/repairs, PMs, leases etc.). Small stuff really. The alternative would be a real problem.

I find it really helpful to pull out that 20 year model we have that shows how our equity is expected to grow (and has since 2000) and our 4 year plan to upgrade our IPs and increase capital value and yield as we head to the big retirement. When you have a big picture plan on paper that really paints a positive future it offsets the short-term/immediate dramas you face.

Cheers
Noel

Hi I have a property in Bulimba, did a quick reno and we wanted a rent increase of $25/week for all the upgrades, our PM at that time (3months ago) advised us against it but we did it anyway, long story short tenant left, it was vacant for 3 weeks while we actually had other 3 PMs fighting for our management, property now is rented at $50/week more, I guess what I'm trying to say is sometimes seeking alternatives routes like other PMs in the area might give you an idea of what your property could be rented out in today's market.
 
I've noted a softer south-side Brisbane market too. I have a place in Mount Gravatt area that was sluggish to find a new tenant recently, but got one in at asking price after a 4-week search.

Also in between tenants in Logan right now which is frustrating. In these times though I just funnel my savings into the offset against this loan to try and minimize/mitigate the loan repayment shock of vacancy as much as possible.

If cba would kindly hurry along and pass down any variable rate cuts from yesterday's RBA announcement, I'd be ever so grateful ;)
 
Has definitely softened.

Our mr gravatt place had had a three week vacancy now, and we've dropped the rent $35 a week.

Vacancy is low on paper, but too good a time to buy per the PM.
 
Investors are their own worst enemies. http://www.rpmonline.com.au/blogs/13686-why-brisbane-s-rental-market-is-down

Tenants have lifted their expectations in line with what the new developments are offering, the developers are offering better facilities making these properties better than older buildings, increasing supply and offering rental guarantees (read over pricing and offering cash back to make the deal sink less/smell sweeter).

With all the additional choices available & low interest rates, why would tenants want to open their wallets any further?
 
as a tenant I'd be thinking that with 0.50% interest rate reduction over the last 4 months, rents should be staying the same or even going down. (When interest rates were going up, you were probably using that as justification to raise your rents..)

any significant rent rise would see a tenant looking to move elsewhere or buy.

with borrowing rates around the 4% mark, your rental yield is going to struggle to be more than this.
 
as a tenant I'd be thinking that with 0.50% interest rate reduction over the last 4 months, rents should be staying the same or even going down. (When interest rates were going up, you were probably using that as justification to raise your rents..)

any significant rent rise would see a tenant looking to move elsewhere or buy.

with borrowing rates around the 4% mark, your rental yield is going to struggle to be more than this.
That's not my experience, I have properties achieving yields between 4.9 and 8.3% based on present value, but I do agree that rents in some suburbs and especially CBD apartments are likely to fall. How much will depend on supply.
 
Some great responses there. There is a balance between pushing your tenant to their limits whilst treating them with respect but in the end, whilst there are things you can do to make sure you are minimising vacancy, the market dictates the rental amount.

Don't forget, in a market that is softening the actual marketing of your property can make a big difference too. We only use highlight advertisements as a matter of policy on re.com.au and although we can't mandate professional photography, the effect it can have on enquiries is massive. The small relative cost ($110-$180) can be more than offset if even a weeks' less vacancy occurs as a result of good marketing. Ensure your property manager is willing to host private inspections as well as opens and outside of normal business hours on week days.

Just make sure you don't try and stick to the rental amount you were getting for too long in a softening market as being stubborn can cost you more over the lease period.
 
what future potential I say!)
It almost sounds like you expect the tenant to pay more rent for future potential capital gains.

We've done about $25,000 worth of work in 2 years (new gutters, sub-soil drain to control rising damp, some paving, new glass/timber front door, etc. etc.) Superior location in the sweet spot of the suburb, elevated block.
A tenant doesn't care how much you've spent on the place just how it compares to other rentals in the area. Tenants couldn't give a crap about gutters and sub soil drains.

PM has come back with a $5/wk increase, smallest since 2009 with no explanation. Current rent is $435/wk which is the median for the suburb. Long-term tenant has been there more than 10 years. We'll ask how they came up with $5/wk. We did a comparison of the 20 properties available on www.realestate.com.au. A recently renovated 3/1/1 not built-in downstairs (too low) is available for $480/wk. Not much else below this compares to our property. Often original condition places in inferior locations e.g. on a main road
Rents don't go up (or down) in a linear fashion.

Is your house better or worse than the median?

Just because a comparable is available for $480 doesn't mean it will rent for 480. When doing rent reviews I rule out places that have been available for rent for more than a couple of weeks as overpriced. You can do that by checking listings every week for a month or more or get a rough idea by searching by age of listing.


According to API vacancy rate is about 2% which to me is up say 0.4-0.5% over the longer term.
Thats still a fairly tight market.

We'd like to achieve $15/wk increase. Anyone have any opinions on the strength of the rental market in these inner suburbs on the south? What kind of increase do you think a tenant would tolerate before considering moving on?
No idea about the area... but IME a tenant will only move if you jack up the rent by a huge amount and/or it's significantly overpriced. If comparables are $480 then that's what you should be charging. But to put up the rent $45 in one go might ***** off the tenant and cause them to leave. I'd put up the rent by $25.
 
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