Rental value coming down?
- Thread starter giraffez
- Start date
Numbers should work without the deposit. Opportunity cost..etc..
But these days theres no upside buying shares, property or even sticking it in measely TDs so what do you do with your cash?? Spend it!
Are you serious? I'd hope to see a 10% return on my investments at current market value. I've been averaging 10% market increase in my rents to try and achieve this, I'd have to say I think rents are going to go higher....
Rents have absolutely NOTHING to do with interest rates. It's all about supply and demand. If there is a high demand for rental properties, the only way the prices are going to go is UP.
A landlord purchases a property in the expectation of making a profit from it. They are not the Housing Department, nor are they a Charity. The sooner the general public wake up to that fact and stop expecting their landlord to subsidise their own living arrangements the better. If you don't want to pay rent, then buy a place yourself.
Skater is spot on! Rents and interest rates are two entirely different - and completely independant - creatures.
If there are lots of houses for rent, rents will go down to attract tenants.
If there is a shortage of houses for rent, rents will go up ..... because they can!
It's as simple as that!
Cheers
LynnH
If there are lots of houses for rent, rents will go down to attract tenants.
If there is a shortage of houses for rent, rents will go up ..... because they can!
It's as simple as that!
Cheers
LynnH
With the interest rates coming down, are we likely to expect a decrease in rent? If so, how soon?[/QUOTE[/I]
Interest rates won't do it however i am noticing a lot more rental stock coming into the market around the inner suburbs of Melbourne. They tend to be sitting longer before being leased. Some landlords aren't meeting the market and hence they are sitting vacant for weeks. Greedy fools
Hey Skater i'll think you will find the "General Public" is subsidising you.
I would say interest rates dropping will have the opposite effect.
Think about it:
1. IR drop, renters buy houses, which pushes up house prices, which pushes up rentals.
2. IR on credit cards and personal loans drops as well (remember, IR is for EVERYTHING, not just mortgages), leads to more disposable income and hence people will be able to afford more rent.
3. I would say rents will never drop..there is no reason why they should...supply/demand drives the market, but the market isn't stupid.
Think about it:
1. IR drop, renters buy houses, which pushes up house prices, which pushes up rentals.
2. IR on credit cards and personal loans drops as well (remember, IR is for EVERYTHING, not just mortgages), leads to more disposable income and hence people will be able to afford more rent.
3. I would say rents will never drop..there is no reason why they should...supply/demand drives the market, but the market isn't stupid.
As interest rates rise landlords push up rents to cover the increased cost of higher interest rate. If rates are dropping that upward pressure eases.
There is a connection.
I do realise its supply /demand as well but to say interest rates and rents are not connected is simplistic and wrong.
There is a connection.
I do realise its supply /demand as well but to say interest rates and rents are not connected is simplistic and wrong.
Bummer, we missed out on that.
We just raised ours as supply and demand and surrounding rent increases dictated.
Nothing to do with rising interest rates.
Dave
I cant see a connection either. We didnt raise the rents when the rates went up, why should we now bring them down! Our IP is in a new development and at the time, there were many rental properties available to rent, although ours is fully furnished which made it quicker to rent than the others. But we were mindul of the good ole supply/demand issue so priced it at the lower end. And kept it there, which made it even more negatively geared when rates soared. Now, things are looking much better.
One sign that our rent is too low is that the tenant decided he would find another place when the lease expired. So he went looking. And within 2 days he came back and asked if he could renew the lease. Seems like the grass wasn't greener after all.
Rent is now going to go up!
One sign that our rent is too low is that the tenant decided he would find another place when the lease expired. So he went looking. And within 2 days he came back and asked if he could renew the lease. Seems like the grass wasn't greener after all.
Rent is now going to go up!
Hey Skater i'll think you will find the "General Public" is subsidising you.
Is the "General Public" paying my Land Tax? What about the shortfall in the interest rates over rental income? Or Rates? How about PM fees? Don't get me started on all the other fees that us so called "Rich Landlords" are faced with.
In all due respect Lowell, you have no clue as to what you are saying. AND before you jump up and down and declare that we get neg gearing benefits, firstly that doesn't come close to paying costs, secondly you don't get ANY neg gearing (that's right NONE AT ALL) if the properties are held in a Discresionary Trust AND you have NO THRESHOLD for Land Tax, which the "General Public" get. That can add to thousands of $$ per property per year.
So, before you make blanket statements, how about you do some research first. I get absolutely NO benefit from the "General Public", I also don't qualify for unemployment benefits should I be unlucky enough to lose my income, even though my properties are costing me a heap of $$. I don't/won't get a pension, even if my properties aren't making a profit because I am declared "asset rich", which means that the "General Public" benefit yet again by us nasty landlords because that is one less person they need to provide for.
So basically, I chose to divert money from things that I could have/do today, to provide me with an income when I get older. While I am growing this little nest egg, the government comes and rapes me repeatedly in the form of extra taxes (Land Tax), and no neg gearing benefits, while the "poor tenants" get away with not paying from time to time, thus costing me more money. Not looking after my property in a way that I would - again costing me more money. AND the majority of them have more discresionary spending than I do all because I don't want to rely on the Government.
Can you please explain again how I am being subsidised by the "General Public".
I honestly think there is very little relationship between the two. Obviously there does reach a point when buying makes more sense and at that time there is increased demand for new dwellings and this eases pressure on the rental market. In terms of raising rents the time of the cycle when times are tough (rising unemployment, credit harder to obtain, consumer sentiment down etc and hence less new building is taking place) is the time that rents play catch up. That time is now. When things were booming landlords were offering free rent etc to get tenants. Rents are in many way counter cyclical. Properties in say inner Melbourne are still very negative geared so I can't see many landlords rushing to give the tenants a break when that "break" will come out of their own pockets. They were not able to pass on the full cost of the interest rate rises either. I, like many landlords, aim for market rent rather than looking at my holding costs.
I've never done this. I don't know anybody who has, except for the odd newbie on pi.com. For years rates and other holding costs (council rates from $800 -> $1200 for eg) were rising and I couldn't put them up because if I did people would simply move out and I'd get $0pw.
There is an distant indirect relationship, but the most direct relationship is supply and demand.
Rates have dropped by almost 3% recently, although I'll be putting my rents up again if I can in 1st 1/4 09.
My my, someone got up on the wrong side of the bed today.
Still, well said. Kudos, I hate having people assume that just because I invest in property I have lots of $$$ to splash around. People who spend their money on holidays, flash cars, and fine dining then complain to me that their rents are too high really tick me off!
My my, someone got up on the wrong side of the bed today.
Still, well said. Kudos, I hate having people assume that just because I invest in property I have lots of $$$ to splash around. People who spend their money on holidays, flash cars, and fine dining then complain to me that their rents are too high really tick me off!
It gets to me sometimes too, the poor hard done by general public,
but then I just sit back and smile because I know they'll just be sitting at home on the pension when they retire with nothing at age 65!!!
Guys,
evand is right! Give him a break.
Or maybe its just me. I hiked rates 18% last year when I got stretched a bit by the peak of the interest rate cycle. Now that my personal cash flow is way positive again I'm debating whether I even move rates this year. Why upset the boat if I don't have to?
I probably could get away with another hike, but if I do bother it will probably just be a polite 3% inflation move.
Its not as simple as just supply/demand. But then again, I don't use a PM and so know my tennant personally and her ability to absorb rental increases. Also, its a development site and I'm getting ready to develop it, so why bother doing all the hard work to force up rates when I'll be terminating her lease a few months later. Goes to show that there is a lot of different things that impact how much rents increase...
Cheers,
Michael.
The reality is that it is supply and demand primarily driving it. LLs can ask for more rent, but if the market is soft the tenan will leave, and the LL may be left with a vacant property and an eventual reduced rent.
Interest rates are a factor in the supply and demand equation though, as lower interest rates will get investors back into the market, increasing supply and decreasing rents.
PS - Have the tenants union issued their standard call for rents to be reduced following the interest rate cut?
Interest rates are a factor in the supply and demand equation though, as lower interest rates will get investors back into the market, increasing supply and decreasing rents.
PS - Have the tenants union issued their standard call for rents to be reduced following the interest rate cut?
