Rent negotiation during a granny flat being built

I have an IP (3 bedroom house) with 570/w rental. The tenants have been staying for a year and they are quite good.

I'm planning to build a granny flat at the backyard of the IP. In the contract the tenants have agreed that I can build a granny flat but the rental will be re-negotiated.

Certainly the construction will disturb the tentants. I'm wondering how much I should drop the rental during the construction of the granny flat, 30%, 50% or even more? I want to be fair. Has anyone here done this before and what are your suggestions?:confused:

Many thanks for your insight!
 
Where abouts is your IP located in?

At the time I was building I was renting the house for $430. Dropped it by $20.
Temp fence was about 1m away from the back door (this was about 4 years ago).

Also, do you have a property manager or do you self manage?
 
Where abouts is your IP located in?

At the time I was building I was renting the house for $430. Dropped it by $20.
Temp fence was about 1m away from the back door (this was about 4 years ago).

Also, do you have a property manager or do you self manage?

My IP is at Hornsby. I have a property manager on it. Thanks for your advice! Probably I will drop more to keep my tenants happy. They are so good as they never requested anything.
 
I initially wanted to drop the rent by around 30-40%.

My PM told me I was nuts and said a $20 drop would suffice.... and he was right. Tenant moved out 2 weeks just building was scheduled to be finished - because her kids kept crawling under the temp fence and playing in the dirt - this was after 2.5 months of on/off construction work. GF only took 3 months to complete.

Worked out well because i just rented it back up at the original price prior to granny flat build to someone else :)

Also, you will need power for the tradies to plug in their power tools. Might be better to offer something like a $20-$50 drop and cover their electricity for the period.

I think my personal electricity bill is rather high @ $600 p/q, but even if you work it out, its $46 per week.

A 30% drop @ $570 = $171.

$50 drop + $46 equivalent in electricity = $96. Much cheaper and sounds more appealing in my opinion :)
(though giving away that much is quite generous).
 
Hornsby

My IP is at Hornsby. I have a property manager on it. Thanks for your advice! Probably I will drop more to keep my tenants happy. They are so good as they never requested anything.

Hiya

A little bird told me the council is discussing dropping the Hornsby S94 contributions by half.........you might want to hold off a little later....

good luck!
 
I self manage and am almost at the point of telling my tenants I am building a GF next door, I have been wondering whether to reduce the rent and not sure whether to or not, the rent is quite cheap for the house and the area, but I know they will not be happy at all, anyone had similar experiences?
 
I dropped 20 for the inconvenience. It was enough. In both cases my tenants moved on just as the gf was tenanted. Re tenanted for the same amounts prior to the gf builds.

Don't expect your tenant to stay.
 
Thanks for that. I do expect them to say they will move out but they won't find anything comparable for what they are paying, which is why I am not sure about offering a rent deduction for the inconvenience, I would not expect them to pay for the power etc during the build.
 
Hiya

A little bird told me the council is discussing dropping the Hornsby S94 contributions by half.........you might want to hold off a little later....

good luck!


Thanks and I will wait. Actually I've seen the proposal on the Council website. The current contribution of 18k is not reasonable as it's the same amount contribution regardless you build a house or granny flat.
 
I initially wanted to drop the rent by around 30-40%.

My PM told me I was nuts and said a $20 drop would suffice.... and he was right. Tenant moved out 2 weeks just building was scheduled to be finished - because her kids kept crawling under the temp fence and playing in the dirt - this was after 2.5 months of on/off construction work. GF only took 3 months to complete.

Worked out well because i just rented it back up at the original price prior to granny flat build to someone else :)

Also, you will need power for the tradies to plug in their power tools. Might be better to offer something like a $20-$50 drop and cover their electricity for the period.

I think my personal electricity bill is rather high @ $600 p/q, but even if you work it out, its $46 per week.

A 30% drop @ $570 = $171.

$50 drop + $46 equivalent in electricity = $96. Much cheaper and sounds more appealing in my opinion :)
(though giving away that much is quite generous).


Thanks for your advice. Your case sounds perfect and I hope I have the same good luck as you. :D
 
I initially wanted to drop the rent by around 30-40%.

My PM told me I was nuts and said a $20 drop would suffice.... and he was right. Tenant moved out 2 weeks just building was scheduled to be finished - because her kids kept crawling under the temp fence and playing in the dirt - this was after 2.5 months of on/off construction work. GF only took 3 months to complete.

Worked out well because i just rented it back up at the original price prior to granny flat build to someone else :)

Also, you will need power for the tradies to plug in their power tools. Might be better to offer something like a $20-$50 drop and cover their electricity for the period.

I think my personal electricity bill is rather high @ $600 p/q, but even if you work it out, its $46 per week.

A 30% drop @ $570 = $171.

$50 drop + $46 equivalent in electricity = $96. Much cheaper and sounds more appealing in my opinion :)
(though giving away that much is quite generous).

Great post. I agree with a lower rental drop & also contributing to the electricity. If you're only doing the construction works during working hours in the week and you have easy access down the side of the property, it shouldn't be a great inconvenience to the tenant.

If they are reasonable tenants they will be happy to get compensation & should be accomodating throughout the process.

Good luck with it! Would be interested to hear how the negotiations pan out with the tenants.
 
$570 seems a bit cheap for a house in Hornsby , My townhouse complex
for 2 bedders is around the $590 mark now , so sure possibly reduce during construction
but after completion leave it at $570 or Im sure you could increase slightly.
 
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