Tenant says she cant afford $10 increase

[Alex P Keaton]

We put the rent up $5, the tenant moved out and we re-let almost immediately at around $30 per week more.

If the REA advises against a rise it needs to be based on the current market not the tenants personal situation. What you do with this information is up to you.

I just found out that my unit is slightly under market value. So now we are just waiting to hear back from the tenant. PM says a $10 increase is reasonable.

Scater, Good point re: the tenant moving costs. Thats another thing to think about.

The important thing for me is I need to keep her. I dont want the vacancy costs and all the stress as well with that. The IR cuts will help anyhow.

fingers crossed

 

[Rixter]

Alex, are you running your investment business from the heart or your head?

Business is from the head and as such you have to think of your IP as a business.

You have obvioulsy done your rental due diligence. Look at the numbers because its the numbers that ultimately dictate what you should be doing.

At the end of the day you are in business not a charity.

 

[jaycee]

I'm not so sure if it's that straightforward Rick.

Alex mentioned she wannts to put the rent up, but when told the tenatn might leave, she ***** herself at the prospect of not being able to fill it at the new price and was worried it coudl take a while also, so suggested if this happens, she would advertise it ot a new tenant a the smae price as now (before the $10 increase she is considerinhg).... hmmmm

Once correctly determeineed, the "business" decision which should be made by the head not the heart is easy to see..... but determining what the right rental amount actually is might be the sticking point...

And also to be fair, I think sometimes market rate is not exactly a fixed figure but maybe something like $230-$250.... I've never seen it written firmly in stone and when I advertised my place, I knew there was another in the complex going for $10 or $15/week less than I wanted, and I got it..... that did not necessarily mean the other unit was undermarket, it had no aircon....

 

[Ausprop]

this whole thread is a shocking indictment of the resi property market and it's price sensitivity - it's pretty bad when umpteen people debate $5 per week. i left a unit sit around chasing $310pw, when the agent said i needed to go under $300 to get a whole bunch of applicants. great, a whole bunch of people with no money applying for my place, hold me back

 

[jaycee]

this whole thread is a shocking indictment of the resi property market and it's price sensitivity - it's pretty bad when umpteen people debate $5 per week. i left a unit sit around chasing $310pw, when the agent said i needed to go under $300 to get a whole bunch of applicants. great, a whole bunch of people with no money applying for my place, hold me back

Yes it certainly just "IS WHAT IT IS"

I remember Dazz saying perfectly a while back something like "
insisting on doing business wiht people who have no interest in doing business with you"

 

[jaycee]

In Shuggy's defence, I think that Rixter' post suggested that in theory you make business decision baed on fact not emotion. Which I think Alex P Keaton was / is already trying to do, but was/is finding themelf confused.....

But I didn't get what Rixter was suggesting would help Alex over that hurdle...

From what Alex ha told us, I started thinking perhaps it wasn't time for rent rise... not sure if Rixter meant this also, or if he was suggesting the opposite - put the rent up and don't worry about your tenant. Sounds pretty cool in theory, but I'm sure Rixter would also take into account market rates & all that other stuff too before deciding and that this might change the decision he would make.......as Alex has to do and has admitted having trouble doing.

 

[Alex P Keaton]

Tenant accepts $10 rise!

I fully weighed up the pros and cons. Thats all I'll say on the matter.

Anyway


Good news people. Well kind of. Tenant has accepted the $10 increase! Just a 6 month lease though because she might be moving interstate. Good news is if she does move interstate the PM can show people through the property whilst the tenant is still living there and would hopefully be able to find someone ASAP.

Just outa curiosity. How many weeks before the tenants actual lease expires can the PM start showing people through. 4 weeks ? 6 weeks ? 8 weeks ? Whats the usual practice ?

 

[Alex P Keaton]

I had a feeling the tenant wanted out!! But I'm glad its because of a possible interstate move rather than her moving back to her mum and dads place because she couldn't afford to rent anymore! At least this way she might not even be moving interstate. Its not certain yet.

 

[jaycee]

I think the PM would normally start advertising xx days before the place is available, so I'd hope theyd be able to show people through as of then...

Perhpaps.. first question to ask is when the PM would normally start advertising ?

 

[skater]

Tenant has accepted the $10 increase!

I had a feeling the tenant wanted out!! But I'm glad its because of a possible interstate move rather than her moving back to her mum and dads place because she couldn't afford to rent anymore! At least this way she might not even be moving interstate. Its not certain yet.

Tenants will often complain about the rent rise & say they can't afford it. Guess what? They rarely actually move because of a rent rise, unless you are increasing it to well over market, or they downsize.

 

[Dazz]

How many weeks before the tenants actual lease expires can the PM start showing people through. 4 weeks ? 6 weeks ? 8 weeks ? Whats the usual practice ?

To the best of my knowledge, it is 3 weeks, and is tied to this ;

http://www.austlii.edu.au/au/legis/wa/consol_act/rta1987207/s68.html


Congratulations on the $ 10 pw rent increase. Can you indicate if that, along with the interest rate payment cut, whether the property is now cashflow neutral ??

 

[INVSTOR]

Yes, 3 weeks. Tenants have to let people through under the act.

 

[Alex P Keaton]

Tenants will often complain about the rent rise & say they can't afford it. Guess what? They rarely actually move because of a rent rise, unless you are increasing it to well over market, or they downsize.

yeah, guess i found it a bit scarey, being the 1st time its happened to me. probably over reacted.

 

[skater]

yeah, guess i found it a bit scarey, being the 1st time its happened to me. probably over reacted.

That's OK, the more IPs you get & the longer you keep them for, the more of this you will see.

 

[Alex P Keaton]

To the best of my knowledge, it is 3 weeks, and is tied to this ;

http://www.austlii.edu.au/au/legis/wa/consol_act/rta1987207/s68.html


Congratulations on the $ 10 pw rent increase. Can you indicate if that, along with the interest rate payment cut, whether the property is now cashflow neutral ??

thanks

Yeah I'll have to work that out when I get home. About a couple of years ago I had worked out that when I get $270 per week then the rent would cover the repayments. That was calculated at Dec 2009 IR's.

Hopefully there will be some more IR cuts.

 

[Alex P Keaton]

That's OK, the more IPs you get & the longer you keep them for, the more of this you will see.

Yep



......

 

[Rixter]

thanks

Yeah I'll have to work that out when I get home. About a couple of years ago I had worked out that when I get $270 per week then the rent would cover the repayments. That was calculated at Dec 2009 IR's.

Hopefully there will be some more IR cuts.

Dont forget to add in ALL you other expenses also.

 

[Jaggannath]

That's a funny (as in interesting but correct) quote of Dazz's about renting properties being insisting on doing business with someone who doesn't want to do it with you... rarely do people renting do their own sums/DD before renting to calculate what everything is worth to them

 

[Alex P Keaton]

Fast forward 6 months - Rent up $30 per week.

About a month ago I told my tenant I'd be increasing the rent by $30 per week to $260 per week which is fair market rent. PM said she is going to vacate. So as I was getting ready to re-advertise at $260 she comes back to my PM and says that she couldnt find anything else suitable for her price range and could she please stay on.

She now realises it is more expensive everywhere!

PM asked me if I'd consider leasing to her on a periodic basis until she found somewhere else to live. She says she is going to try to find something to share with her friend. So I thought about it and agreed to keep her on as she has been a good tenant. She just needs to give me 21 days notice if she wants to vacate and I need to give 60 days if I want my property vacant.

 

[Rixter]

About a month ago I told my tenant I'd be increasing the rent by $30 per week to $260 per week which is fair market rent. PM said she is going to vacate. So as I was getting ready to re-advertise at $260 she comes back to my PM and says that she couldnt find anything else suitable for her price range and could she please stay on.

She now realises it is more expensive everywhere!

I too also increasing rents on a couple of IP's here in Perth $30 a week... $380 in Queens Park & $390 in Cannington. Thats a yield of 14.4% & 16.4% respectively. Both 3 bed villa's