Whats the minimum you have inceased rent by?

[Stella]

Hi - after some thoughts please

Looking at renewing the lease & pm has recommended no increase to rent for tenants who have been there for 18mths troublefree months.

From what I can see on Re.com the rental demand in the area is still reasonable (around 40 houses) and the house is comparable to others although there are a few brand new places for $20+ week more with some of these being empty for awhile now.

I have no problems with another 12mth lease but am thinking of a $5pw increase - just to keep it around what I would consider average/market rent.

Is it worth a $5 (2%) increase? Whats the smallest increase you have made & why?

Cheers
Stella

 

[Alabex]

in our office, we always try to put through somthing even if it is just $5 a week. That way they are always ticking over!

 

[ned261]

Hi Stella, thought I'd start a poll for this (I have the same question) - hope you don't mind.

 

[alplant]

Has the rent increased over that 18 month period? If not and you agree to let it stand as is again that would make it two and a half years without an increase. If that is the case it kinda surprises me that the PM is recommending no increase.I think you are being extremely reasonable looking at a $5 increase. I would be very surprised if the tenants could be bothered going to all the trouble of moving over $5.

And yes we have increased the rent by only $5 in the past because we had 'troublefree' tenants, even though the PM was recommending $10. It came back to bite us though because we slipped behind market value and when we tried to catch up with a $15 increase 12 months later they bailed. Mind you they did us a favour because it rented again immediately at $45 more. That's how far we had let it slide because of good tenants. Big mistake.

 

[Stella]

Ned I would have started a poll too but didnt know how & wanted to generate some discussion so no probs - will be interested in seeing how it goes.

Alplant - the rent started off July 07 @ $270 then Feb 08 increased to the current rent of $280pw.

Might suggest to the pm we renew with a 12mth lease with a $5 increase, to be reassessed in 6 mths - covers all bases then.

Cheers
Stella

 

[thedon]

I think a 10% increase is reasonable. You need to be getting at least a 8% return on your investment. I've always hiked my rents as much as possible and still had good tenants. Get no thanks for leaving it low in my opinion.

 

[DavidMc]

If it were $20pw under market and they were good tenants, I'd raise it just $10pw and tell them that you are keeping it $10pw under market value because they have been great.

 

[Stella]

Think we will go with a 12mth lease, increase of $5pw - with a review in 6mths.

Keeps it around market & we can look at it again later if need.

Cheers
Stella

 

[angela]

Hi Stella

the headline story on page 3 of yesterdays Ipswich paper (QT) reads: Renters Pay the Price with Demand Sky-High, and one RE agency principal is expecting a huge influx of interest following the New Year (I think this is when a lot of RAAF and other govt jobs have their transfers).
Some personal evidence, I have settlement coming up next Friday, and my PM had 6 parties through the house yesterday with 4 applications out of it.
This house is at Churchill, is top end priced at $400wk. It is a nice house with a super pool/entertaining area and I will be making sure the lease is always expiring around December/January when demand for swimming pools is crazy.

Merry Christmas

 

[skater]

Stella, it would all depend on what is reasonable in the area your IP is in. Just raise (or leave as the case may be) the rent to the market value. For instance I have some units that I have held for some time now. They have not had an increase in rent for several years now, because in the area they are, rents have not increased. On the other hand, I have long term, exceptionally good tenants in another property, which is located in a totally different area, that has had increases of over $20 each year for at least 3 years now, and another one that has had an increases in a less regular fashion of $5 here, $10 there, you get the drift.

 

[Nathan]

personally, firstly all mine are in sydney, so diff markets as skater mentioned..

but for myself i dont renew leases... i sign up on 3-6 month terms, and after lease is up, i dont renew, got a 8 yr tenant, a 4 yr tenant, and rest are less, but i leave them just continue so i can put up rents whenever i see the amount of properties in the postcode disappear of re.com.
that gives me flexability, however if i had regional properties where harder 2 get tenants the SANF would kick in and id be happy to do 12-24 month lease (actually id push for that) but just depends on demand in the area, n if it easy to get tenants.

 

[Mom]

$5 increase in just not worth the hassle, in my view. Increase by $10 that's $520 a year. If they are thinking to move they'll move even with $5 increase, if they don't $10 is not that big a deal.

 

[GoAnna!]

Nothing wrong with $5 increase if that is what is market appropriate. My increase so far this year with existing tenants have ranged from minus $15 to plus $25. New tenancy increases have come in from $0 to $55. It all adds up to real money in the end

Setting a pattern of regular rental increases, however small, will make increases easier in the future.

DavidMc's comments are valuable in buidling good relations.

 

[DavidMc]

Think we will go with a 12mth lease, increase of $5pw - with a review in 6mths.

Keeps it around market & we can look at it again later if need.

Cheers
Stella

You'll find you can't do this. Not in Victoria anyway.

Think about it in reverse - the tenant is locking themselves in for those last 6 months rent at an 'unknown' amount. (i.e. what if you doubled the rent?).

Your options are a 6 month lease or just raise it $10 for the 12 months.

 

[imonmyway]

We just put our IP up $10 a week from $270 to $280, my feeling was that it was better to put it up a bit each year then risk loosing a tennent over a $30 week raise in a couple of years.

 

[Stella]

Thanks everyone for your thoughts.
After discussing with yet another new pm (which is a whole other story) we ended up going with a 12mth lease - $5 increase now & same again in 6 mths.
Tenant will now also pay for water too after we have made the place 'water compliant'.

Cheers
Stella