Hi all,
I have a recently acquired newly built Melbourne bayside townhouse with a good tenant. She is now seeking some improvements to the place such as paving (approx $1,000-$1,500) and a new gate ($360). Already I have paid for an TV antenna($220) and a sill pit ($330) to provide better drainage.
It is a fair and well known call to increase rental for added value improvements to property and as I’m looking for more cash flow this could be an opportunity. But I’m just not sure as to what the increase might be and how I should best approach it.
Whilst the other option is to seek a contribution I think the longer term benefit of rental and cash flow would be better. The current lease expires in August 2005 and is at $350 per week. The property’s value would be around $380k to 400k in today’s market.
I would appreciate any input or suggestions from anyone particularly those who have already followed this strategy.I imagine a new lease would be required and I guess at the same time an extension could also be sought?
Thanks and regards.
Chris
Hi Chris,
the first thing to consider is that you own the property, not the tenant. Therefore, it is for you to decide whether or not you want to make any improvements over and above it’s current state.
If the tenant won’t live there without the improvements they request, they can always go elsewhere.
However, it is quite possible that the improvements that your tenant has suggested will improve the value of your property both in CG terms as well as attractiveness to other tenants – think of it as the market (in this case your tenant) giving you some free advice about your property.
How you go about negtiations with your tenant is up to you. I remember a point from Steve M’s seminar in July where the Landlord went to the tenant and asked if there is anything that they would like done in return for a small increase in rent (eg, A/C unit, new fence). Often they would not mind as it improved their standard of living for a relatively small weekly amount.
Regards,
Clint
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