Three month lease or a Six month lease?

[monalisa]

Hi all

I have my first IP (a unit in Mount Druitt) settling next week , and have been in touch with the agent who looks after my sister's property up the road.

I wanted to advertise the unitfor $320, or $310 as a minimum. The agent advised me that we should go with $300 to not risk leaving the place vacant for a number of weeks. I am ok with this.

However, just wondering if I should enter a three or six month lease? Three month lease would mean I can raise the rent quicker rather than having to wait for the lease to expire? Do tenants generally prefer six month leases?

What are your thoughts?

Thanks
Mona

 

[Aaron_C]

The peak period for leasing occurs in January. I would try to get a 12 month lease, or 6 months if that is not possible. Otherwise you are going to have more difficulty getting tenants when the lease ends. Your ability to raise the rent is covered by the Residential Tenancies Act in your State - you can't just put it up because the fixed term lease has ended.

 

[Rolf Latham]

3 will turn a lot of people off...........it is too short to provide any surety

ta
rolf

 

[Lil Skater]

3 months is too short for Mount Druitt. Many tenants seem to stay for long periods in the area and at $300 per week I'm guessing you have a 3 bed property? Which means you're aiming at families who may be uncomfortable with such a short lease.

I'd go with 6 months as a minimum and do a rental review after that.

For city apartments you are able to get away with shorter leases, as there's usually a higher turnover and also a lot of enquiry received from relocation agencies who are placing people for work only.

 

[buster]

What makes you think rent will be higher and not lower in March?

 

[wylie]

Why not try for the first week at $310 or $320 and be prepared to listen to the agent if he says the feedback is that it is too high.

Don't do this for longer than a week. That first open house should tell you if it is too high.

I'd offer twelve months if you get the higher rent, maybe six months if you have to accept $300.

 

[DaveM]

Hi all

I have my first IP (a unit in Mount Druitt) settling next week , and have been in touch with the agent who looks after my sister's property up the road.

I wanted to advertise the unitfor $320, or $310 as a minimum. The agent advised me that we should go with $300 to not risk leaving the place vacant for a number of weeks. I am ok with this

It would need to be near new unit around the Hythe street area to get >300pw.

Even newly renovated older 2 bedders get in the high $200's.

What are the details of yours?

 

[Bon]

lol @ raising rent in Mount Druit... sounds like a good way to send people in closer to the city.

 

[travelbug]

lol @ raising rent in Mount Druit... sounds like a good way to send people in closer to the city.

You obviously don't know the Mt Druitt market.

Rents have been rising the last 2 years just like most of the rest of Sydney.

Why not try for the first week at $310 or $320 and be prepared to listen to the agent if he says the feedback is that it is too high.
.

I think sometimes it's false economy. Even if it's empty 2 weeks, that's your $10 a week lost already. Better to get someone in. You can always put it up $10 in 6 months if the market can wear it. You need to know the market and also look at comparables on the net. Sometimes there's no competition, sometimes lots. It is about timing sometimes also.

I see places on the net for high rents. I speak to my agent and ask why there's is worth $20 a week more than mine. She tells me it's not but that's what the LL wanted to advertise it for. It sits there for weeks. You need to be realistic.
When I had a few agents out to one of my places last year they asked what I wanted to get for rent. I said that's irrelevant. What will I get. Having said that I was told different things by different agents. 2 said $300pw. One said $340. At $340 it was snapped up within hours of being on the net. I knew it would get $330 just by looking on RE.com

 

[Rolf Latham]

When I had a few agents out to one of my places last year they asked what I wanted to get for rent. I said that's irrelevant. What will I get. Having said that I was told different things by different agents. 2 said $300pw. One said $340. At $340 it was snapped up within hours of being on the net. I knew it would get $330 just by looking on RE.com

I think thats an important point. I have found many agents are not up to date with their market. Where an agent doesnt have a "commercial" attitude to push the envelope just enough, they are doing the investor ( and the agent owner a dis-service)

ta
rolf

 

[wylie]

I agree it is not worth losing even one week by having the rent too high. But if the agent has given a range, I would try the high end for the first open house. By the first open, the agent either gets feedback that it is too high or has interested parties (assuming he has people actually go through).

We did this at our last vacancy. Started at $440, feedback at first open was it was too dear. We dropped to $430 and filled it (from our own advert on Gumtree - still paid the agent who did all the paperwork and checks). That tenant was happy to pay $440 in exchange for a dishwasher.

I've found over the years that we we have asked agents for an appraisal, we have easily got $10 or $20 more. My issue is that if it "could" get $320 and the agent rents it for $300 you are possibly already $20 under market with a twelve month lease to run before you can play catch up.

Having said that, "market rent" is not a precise science.

 

[monalisa]

Thanks All. So six months it is. It is a two bedder, on Hythe, 14 years old - so it is modern enough.

The same agent has already advertised another newer property for $300 as well (on Hythe). I did have discussions with him before Xmas, and he told me then too to stick to $300. These agents have a big market share in Mt Druitt, so I'd like to think they are aware of the market. Now come to think of it I could've gone for $310 - I am going away for 5 weeks in two weeks time, so ideally I want it all done and dusted by then - so I am going to stick to $300, rather than having to worry about it while overseas.

So do we need to wait for the lease to expire completely and then send a rent review? Or can we do this two months prior to the lease expiration given it takes about two months to be effective?

thanks
Mona

 

[Jamie M]

If it were me, I'd be more concerned about getting a "decent' tenant rather than an extra $10 per week.

Cheers

Jamie

 

[monalisa]

If it were me, I'd be more concerned about getting a "decent' tenant rather than an extra $10 per week.

Cheers

Jamie

Agreed.....

 

[ahri]

I also would not raise the rent too soon, especially if you get a good tenant! We had a fantastic tenant in one property. They had the house and yard in better condition than we ever did when we lived in it. For this reason, we didn't raise the rent as much as we could have done for the duration of the tenancy (which ended up being about 5 years).

Also, if I were renting a property, I'd be right peed off if the landlord's increased my rent in just 3 months! I actually think a year is a reasonable time before a rent increase.

 

[monalisa]

Ahri - what about market rent? I mean I gotta fund the negative gearing too and if the market rent is higher at some point, I'd raise the rent - but yes, not in just three months.

 

[stevie_sloth]

Your ability to raise the rent is covered by the Residential Tenancies Act in your State - you can't just put it up because the fixed term lease has ended.

Really? Our old landlord refused to give us a lease longer than 6 months. We lived there for 5 years, and when he bought the property 2 years into that time, he proceeded to put the rent up every single time a new lease was due. Every single time. By between $15-$30 a week.

The agents tried to get him not to put it up so much and apparently that kept it down a bit, but when we left (to buy a place), he put the rent up by $50 a week!!

So I thought you were able to put the rent up every single time a lease is renewed.

 

[Lil Skater]

Stevie, if you had a 6 month lease, then yes in most states.

Eg. In Vic you cannot increase the rent during a fixed term tenancy, but you may increase the rent every 6 months outside a lease. I beleive this is similar to NSW as well?

Also, bare in mind your rent may not have been in line with the market if you were at the property for 3 years prior.

 

[stevie_sloth]

Yeah, that makes sense.

When we moved in in September 2003, the rent was $280 a week. 3 bedroom, 1 bathroom, 1 laundry, large lounge, 1st floor walk up older apartment 5 doors from the beach in Mermaid Beach on the Gold Coast.

It went up to $290 by the time it sold 2 years later.

Then over the next 3 years, with the new landlord, it went up every 6 months and it ended up being $480 by the time we left.

No renovations or improvements were ever done during this time. We loved living there, but it did need stuff done. Carpet was old, kitchen was old, bathroom was old, no A/C or ceiling fans, etc.

Comparable properties were renting for the high $300s back then.

 

[Aaron_C]

Looks like the landlord did a good job because you stayed and paid the higher rent.