Rental Agent's letter - Increase rent

F

Futurist

G'day all,

I got this letter last week, and I'm not sure what to make of it.
I received a letter in the mail from my real estate agent saying something along the lines

'Due to high demand and low vacancy rates in the rental market in <suburb>, your exisitng rental property @ <address> currently tenanted by <tenants name> at <current rate> should be increased to <new rate>.

If you do not respond to this letter by <date> notifiying us to lower the amount of increase, or to stop, we will send a notice of rental increase to <tenant> increasing weekly rent from <new rate>'

It sounds legit, and I will be doing my own research.

But I want to know if this is the agent's way to try an earn an extra 110% agent leasing comission? (by increating the amount enough to annoy the tenant, so they move out, and get a new tenant and earn their commission).

The proposed increase is $20 per week. which I think might be excessive enough for the tenant to feel they are being treated unfairly.

I had always considered increased by $10/wk tops each year.

All thoughts are welcomed :)
 
It sound like they are looking after your best interest and your property is under the market rate. Either just say no, or ask to see their reasoning in writing, eg a Comparative Market Analysis. This should tell you if you are charging too little.
 
wow, so they're trying to make you more money and you're worried about their commission? Sure, do your own DD on what the rent should be, but most people on this forum would kill for a property manager that is forward thinking like this and is trying to maximise your investment return.
 
lol, yes I know. Its a good thing they are proactive.

However, as an investor, I am worried about the worse case scenario. Having the property vacant for week/s is the big one! Hence my concern.. :)
 
It's called 'making YOU more money'. I also describe it as the sign of a good agent.

If you only want to increase the rent by $10, tell them. Remember, if the agent raises the rent too high, and you get vacancies, they lose out too.

What's made you so suspicious of the agent?

Let's say you only raise rents $10 every time while the market is $20. How long before you're losing 2k a year because you're being too conservative?
 
if you raise it $10, you're still liable for the re-letting fee anyway aren't you?

How long has the tenant been there, what is the rent currently? Is $20 per week a massive increase?

Just do yourself a search on RE.com.au and see if the increase is not warranted.
 
@alexlee

I've always been on the conservative side. Putting myself into the tenants shoes.. If I received a $20/week increase, that would put me off a bit..

If it was lower, such as $10, I would be reasonably ok with that.
It's all about their mind set and if they believe the $20 increase is hefty or not..

If they do, they'll be unhappy with the situation and would want to move wouldn't they? Which would cause me hassles of finding a new tenant.

./sigh.. hard decisions. If I increase by $10, they could stay.. but like you said.. I'll be losing out on the extra $10/wk.. price I pay for ease of mind? lol!
 
Futurist said:
@alexlee

I've always been on the conservative side. Putting myself into the tenants shoes.. If I received a $20/week increase, that would put me off a bit..

If it was lower, such as $10, I would be reasonably ok with that.
It's all about their mind set and if they believe the $20 increase is hefty or not..

If they do, they'll be unhappy with the situation and would want to move wouldn't they? Which would cause me hassles of finding a new tenant.

./sigh.. hard decisions. If I increase by $10, they could stay.. but like you said.. I'll be losing out on the extra $10/wk.. price I pay for ease of mind? lol!
Click to expand...

Your call. Sure, you run the risk of the tenant moving, but if the rental market is tight and you get a new tenant quickly (paying an extra $10), it's worth it. Long term, it makes more sense to rent at least close to the market rent.

You need tenants, sure, but not these particular tenants. Any tenant who pays on time will do.
 
What is the pain threshold? ie how much does it cost the tenant to relocate - removalist, packing, searching, days off work, outgoing inspection etc vs $20/wk.

it's alot to worry about this $1.50 extra.
 
How much is the current rent? If it's $400/wk then $20 is 5% which I would suggest is reasonable if the market is rising overall.

If it's $200/wk then a 10% increase may be a lot, but again not if the market is doing really well.

It's good to see your agent is pro-active about this.
 
There is nothing stopping the tenant from attempting to negotiate the proposed increase to a lower amount. They may try this. You may agree.

Nothing wrong with starting high - they may just shut-up and pay-up. Or you may be happy with just a $15pw increase. Then you don't come across as the greedy LL (if you care even what the tenant thinks).
 
Futurist said:
Current rent is $370/wk. proposed increase is $390/wk.
Click to expand...

I assume that is a slip of the keyboard. I'd be unhappy if my LL more than doubled the rent! :)

When, and by how much, was the last increase?

Put yourself in the place of the tenant. Search for something similar. Unless there are other underlying reasons, a tenants not going to move because of a ten buck increase.
 
Ed Barton said:
I assume that is a slip of the keyboard. I'd be unhappy if my LL more than doubled the rent! :)
Click to expand...

Lol, meant to say the proposed rent will increase from $370/wk to $390/wk.

Its coming up to 12 months in Apr. Which is why the agent sent the letter proposing the increase now, as we need to give 60days rental increase notice to the tenant.
 
Futurist said:
The proposed increase is $20 per week. which I think might be excessive enough for the tenant to feel they are being treated unfairly.

I had always considered increased by $10/wk tops each year.
Click to expand...
You always roll the dice with a rent increase. I had a tenant who was a PITA and moved out over a $5 per week increased. While I was repainting, the market moved and I put the house back on for $30 per week more... and picked up some lovely tenants that rented there for more than 3 years. After they bought a house they referred their friend, who was looking to rent, so I picked up another great tenant for another 2 years. 5 years of hassle free, good paying tenants is money in the bank in my books.
 
You must log in or register to reply here.

Similar threads

B
Rent increase letter invalid?
2
Replies
37
Views
5K
Perp
Perp
devank
Inefficiencies of PMs
Replies
7
Views
4K
Genia
Genia
K
Rent Increases Brisbane <10km Suburbs
Replies
17
Views
3K
Ed Barton
E
B
Tenant in arrears due to not paying increased rent
Replies
10
Views
2K
Salvatore1
S
A
Tenant breaking lease - increasing rent question
Replies
16
Views
3K
Lil Skater
Lil Skater
Back
Top