Vacant Tenancy

[WebBoard]

From: Glenn M


Hi Guys,

I have just purchased another Investment Property last week and I urgently need some advice. The IP currently has a tenant, however, I need to do some renovations i.e. Kitchen/Bathroom/Re-Carpet etc. I should be able to increase the rent from $260 to $300 per week after the renovations.

The question: Do I get rid of the tenant and at time of settlement and have vacant possession? Or do I keep the current tenant, tell them that I want to increase the rent and that they will be significantly inconvenienced due to the renovations to be done on the Property?

What have other investors found to be the best way of approaching this problem?


GlennM.

 

[Owen]

Reply: 1
From: Owen .


I recently did the same thing and I asked for vacant possession. It was much, much easier to do the renovation with the place empty but then, of course, I had problems finding a new tenant in this current market. It took me 6 weeks after the reno was completed to re-let. It did, however, allow me to get the valuation I wanted, wrap up my deposit, costs and reno costs in a new loan and get a higher rent to cover it, all in a very short time frame. The classic buy, renovate, hold scenario.

In this market I probably would do the same as the valuations are still pretty good right now and that is the purpose of a reno. The current tenants could move out in a months time and you could be stuck having to do a reno when you are not ready to and get a bad valuation in a depressed market. Rents are bad and tenants hard to get anyway and an unrenovated place is going to be even harder to rent so you should do the reno when you are ready to do the reno and when the valuation will pay off.

Tenants will always come and go although you should always maximise your service to tenants to ensure they look after you newly renovated property for as long as possible.



Owen

"Gambling promises the poor what property performs for the rich – something for nothing"

 

[Jacque]

Reply: 1.1
From: J Parker


I couldn't agree more with Owen. Tenants prefer renovated places anyway. Just be sure that you don't advertise too much or else you won't get a tenant! Vacant possession is much better, as you can reno at your own pace and can get things done a lot quicker, without furnishings etc. Have fun! BTW, where did you buy Glenn?
cheers, Jacque