Under market rent how much is to much?

[WBG Redcliffe]

hi all

If you have a good tenant, what's it worth to keep them? Ive read several thread's and it seems that some "good" tenants get discounts that seem huge.

What's a good tenant worth to you. $10, 20, 30, 40 under??????

Personally I chase close to what ever the market will pay. Within $10.

 

[BayView]

I used to think that you should keep the rent under market to keep good tenants.

The reality is though, if the rent is at market level, even after you put it up, then for them to move because of a rent increase is not worth it.

They have to find something of equal standard, in the same area, and will be paying the same, or maybe a bit less; there's no incentive.

I think this is where the PM is worth some of their extortion money; if they know the market and are good at communicating with the tenant, they can easily justify the rent increase. to the tenant.

 

[Rixter]

Personally I chase close to what ever the market will pay. Within $10.

I agree, within $5-$10.

 

[Rixter]

The reality is though, if the rent is at market level, even after you put it up, then for them to move because of a rent increase is not worth it.

They have to find something of equal standard, in the same area, and will be paying the same, or maybe a bit less; there's no incentive.

I think this is where the PM is worth some of their extortion money; if they know the market and are good at communicating with the tenant, they can easily justify the rent increase. to the tenant.

I agree LAA. You are in business and you're not a charity.

However I wouldnt call it extortion money. I look at it as a commission for not hearing anything from them. No news is good news.

You could be sabotaging your successes. Change your descriptive inner language around because you will attract more of what you focus on - good or bad!

Hope this helps.

 

[BayView]

I agree LAA.

However I wouldnt call it extortion money. I look at it as a commission for not hearing anything from them. No news is good news.

Yeah; silence money. Unfortunately, they are not silent enough.

You obviously don't have a PM in W.A.

But then again; you live there, so I'm tipping you do?

 

[Rixter]

Yeah; silence money. Unfortunately, they are not silent enough.

You obviously don't have a PM in W.A.

But then again; you live there, so I'm tipping you do?

We have a portfolio spread across both seaboards, east & west of Australia.

Yes WA has diffferent fees than some other states however thats just a fact of doing business in what ever state you have holdings in. No good focussing on it. You can only change things that are in your control not out of it.

In the big scheme of things fees are just a cost of conducting business and should fade into insignificance in relation to your reason for being in business in the first instance.

Success is 80% mindset & 20% strategy.

Hope this help.

 

[INVSTOR]

I used to give good tenants a discount. I found though that it wasn't worth it as I would begin to hate the property and investing at the same time. When I was researching to purchase another property I noticed most of the tenanted properties were being rented under market value also. I self-manage and treat my tenants with a lot of respect, promptly carry out repairs, and try not to inconvienience them and it works vice-versa.

 

[redsquash]

Just charge market rent.
I have not met a single person who likes packing , moving and unpacking. This all requires effort and organisation which many people avoid.

In theory the arguments to keep the rent under market value to retain a tenant are sound , but in reality I think its the inconvenience factor which precludes tenants from moving.
A rent rise with a sound explanation seems to work well rather than increasing the rent only.

 

[WinstonWolfe]

Wayne, you are a policeman right?

My bet is if you let your tenants know that when screening, you'll have 95% less trouble with them. (some might argue you'd have more trouble ) But any outright trash would know you have access to databases that makes them running and hiding impossible.

Re rewarding good tenants, something I've done in the past is charge full rent but give a week or two rent free at Chrissy. 1 week's rent is a 1.92% discount. IT can seem like a bigger act of generosity to the tenant than $10 a week, and has the advantage that your cash flows are better during the year, and encourages the tenant to hang in there til the end of the year.

The tenants love having the extra cash for pressies or credit card in Dec/Jan too.

 

[kathryn d]

Last year we had an incentive. Pay you rent on time, without any NSF cheques or asking us to delay depositing them , along with no damage (in our opinion) the 13th month rent was free.
Out of about 15 tenants at that time, 2 families made it to the last month, and one family qualified.

This qualifying family are young, but very nice and keep a spotless house.
When we took them last year we agreed to lower the rent $50 a month.This year we advertised it and had an applicant offer $125 month more (we have a $75 month surcharge for a dog)and wanted a 2 year lease.
We asked the current tenant if they would match the offer. They said they couldn't, but could offer what we originally advertised the property for.
After talking to the new applicants, we figured they may be happier in our 3 bedroom apartment.
We accepted the house offer and then put the new tenants in the apt.(we have a $75 surcharge for a dog there as well)

So now we have 2 happy tenants.
We no longer offer incentives.

 

[skater]

hi all

If you have a good tenant, what's it worth to keep them? Ive read several thread's and it seems that some "good" tenants get discounts that seem huge.

What's a good tenant worth to you. $10, 20, 30, 40 under??????

Personally I chase close to what ever the market will pay. Within $10.

Full market rents with no discounts. I'm a business & not a charity. I keep my part of the contract & provide a well maintained house & expect them to keep to their part of it & pay market rents.

However, in saying this, I am now toying with a little play on words for a couple of my properties where I seem to get tenants that routinely fall behind. After talking to my PM, I am thinking of giving a "performance bonus".

The way this will work is that if for instance, the rent is $240pw, then if they pay this amount in advance (I don't care how far in advance it is, even if only one day) then at the end of the month, they will get a rebate of $5 pw. Note, though, that they need to sign the lease at the greater amount & they instantly lose this credit if they fall behind in any way.

I am hoping that by doing this it will serve me by keeping the tenants, at the very least, up to date with their rent.

 

[WBG Redcliffe]

Hi WWolf

I agree and all my tenants are aware that I am a cop. Have had no trouble with tenants at all so far.

Kathryn
I like the idea of the 13th mth free, not only keeps the rent on time but encourages a lease renewal.

 

[sailor]

I charge market rent, although have a couple of longer term tenants who are quite a bit under that. Tis difficult putting the rent from $220 to $280pw, when the market has zoomed ahead over a 6-12 month period. However, these are ones I self manage and I'll be handing them over to my new PM this year, and she can push the rents up.

 

[Brenda Irwin]

For a good tenant who is usually on a 6mth lease, I will not increase the rent for the second 6mth period.

 

[WinstonWolfe]

Wayne, have you rented that Banyo property out with the flat at the back?
How'd it go?

 

[WBG Redcliffe]

WinstonWolf

Did not buy it. I bought a duplex in Morayfield instead. The BCC informed me that the grannyflat was certified but could not be rented as a 2nd dwelling. The grannyflat could be used as a dwelling but must be controled by the person who lived in the main dwelling.

 

[WinstonWolfe]

WinstonWolf

Did not buy it. I bought a duplex in Morayfield instead. The BCC informed me that the grannyflat was certified but could not be rented as a 2nd dwelling. The grannyflat could be used as a dwelling but must be controled by the person who lived in the main dwelling.

thought as much....
thx for answering...

 

[kathryn d]

Hi WWolf

I agree and all my tenants are aware that I am a cop. Have had no trouble with tenants at all so far.

Kathryn
I like the idea of the 13th mth free, not only keeps the rent on time but encourages a lease renewal.

We no longer offer it. The ones that aren't going to pay on time, it doesn't matter to them.