Tenant says she cant afford $10 increase

[MTR]

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.

Hi Alex
Resi Landlords enjoying some good times now in Perth and lets take advantage of this.
As Rixter stated treat it as a "business".

All the best. MTR

 

[Ausprop]

I'm really trying to assess the rental demand in mandurah.this new listing here has had 1350 internet hits

http://www.realestate.com.au/rent/in-mandurah,+wa+6210/list-1

do you think that's a lot for a rental and if so is the market ready for higher rents there?

this one over on 7 goats has had about 600...

http://www.realestate.com.au/property-villa-wa-cannington-407981175

and even that seems like a lot?

 

[Rixter]

Was down Mandurah today and looked in a couple REA windows. Appears to be a lot of competition both on the sales & rental markets all competing. Rents do look low but I guess with the competition needs to be to attract a tenant.

Looking at that Cannington rental, it appears to be around the going market rate currently.

 

[Ausprop]

to clarify my question, so you would expect 600 - 1300 internet hits for a rental, or is that suggesting extreme demand / under pricing?

 

[Rixter]

to clarify my question, so you would expect 600 - 1300 internet hits for a rental, or is that suggesting extreme demand / under pricing?

I would like to know how long they have been advertised for to try an gauge it better. With a high demand one would expect to see a high hit count. 600 hits over a month equates to 20 per day.

 

[Ausprop]

they are both listed as "NEW" which I think means about a week on re.com

 

[Rixter]

Those figures are extraordinary demand if they only been on a week.

 

[Rixter]

I know of an investor who was gauging current demand for rental accommodation in Perth Metro. He showed up at 30 different rental home opens and told me each one had approx 30 people lining up to go through

 

[ali]

When we rented a house in 2010 it had 1000 hits within two days on it's realestate.com.au site. It was/is in a low vacancy area near Sydney.
Cheers, Ali

 

[Alex P Keaton]

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.

wow, someone else is asking $300 per week in the same complex. The only difference to mine is it has air con and new carpet. So if I wanted to I could give her 90 days notice to vacate and re-advertise at $280 per week. I'd most likely get it I reckon the way Perth rents are going. Going from $230 - $280 in the space of 12 months would be a huge jump!

 

[Rixter]

Cannington PM just phoned to advise tenant is not renewing lease in August. PM reckons instead of the $30 week increase offer to existing tenant they say I could get $50-$60 week increase to a new tenant. - takes it to $410-$420 p/w.

 

[HotRod]

Cannington PM just phoned to advise tenant is not renewing lease in August. PM reckons instead of the $30 week increase offer to existing tenant they say I could get $50-$60 week increase to a new tenant. - takes it to $410-$420 p/w.

That'll pay for the leasing fee and then some over 12 months!

 

[Rixter]

That'll pay for the leasing fee and then some over 12 months!

No need to pay letting fee. Just capitalise it and collect the increased rental cash flow now instead.. Paying 6.5% of the let fee over the year sure beats copping a 100% hit now.

$50p/w rent increase x 52 week = $2600 p.a

3 x $410p/w let fee = $1230 p/a.

$1230 x 6.5% interest to capitalise = $79.

$2600 rent increase - $79 capitalise interest = $2521 p/a cash flow increase to rental income

It's all about 'controlling' the asset whilst 'others' cover the holding costs for you.

Gotta luv property

 

[locko24]

3 x $410p/w let fee = $1230 p/a.

3 weeks rent for a letting fee? Glad i don't pay that...
1 week for me!

 

[Rixter]

3 weeks rent for a letting fee? Glad i don't pay that...
1 week for me!

Substitute what ever letting fee charged.

IMHO from a cash flow perspective capitalising ALL expenses is inductive to maximising cash flow providing you have structured your portfolio appropriately - but that's for another thread.

 

[Jake D]

IMHO from a cash flow perspective capitalising ALL expenses is inductive to maximising cash flow providing you have structured your portfolio appropriately - but that's for another thread.

My eyes have just been opened.

 

[tess85]

Rixter, so how do you arrange to pay the PM's management fees etc separately to having them deducted from the incoming rent (as is what usually happens?) do they invoice you and you pay it from a LOC etc?

 

[Rixter]

Tess, PM deducts small expenses/petties from rental income..larger expenses (ie replacement fitting/fixtures, strata fees. letting etc) I transfer out of Investment LOC's to PM account.
Smaller PM type fees you can do the same..its up to how you want to organise it with your PM.

 

[devank]

larger expenses (ie replacement fitting/fixtures, strata fees. letting etc) I transfer out of Investment LOC's to PM account.

I assume your would claim the interst on that Investment LOC. Is this ok with ATO? Isn't it kind of interest on interest?

 

[Rixter]

I assume your would claim the interst on that Investment LOC. Is this ok with ATO? Isn't it kind of interest on interest?

Yes I claim the interest on my investment dedicated LOC's. It is an allowable deduction how its structured.