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Surely, if you want to increase the rent and the one next door is $50 per week more you have the right to do so. As you already know, you risk that they will move out, and you will lose a couple of weeks rent (maybe more, maybe less) plus the cost of getting new tenants.
We lowered our rent in Brisbane to get tenants two years ago. We were advertising at $320 per week but had had floors polished and some other work done so had lost some weeks rent and needed to get some income stream quickly.
Mind you, the tenants (who are fantastic tenants by the way) said they loved the house and would like to pay $275 per week – yeah right!! We settled on $300. One year later we increased to $310 and while they have now gone to month to month, we don’t wish to risk losing them with our interest in advance due in a month, so we will not increase again for some time.
They are in a good house paying slightly less than market value, but it suits us to leave them at the price they pay, and they are great tenants.
I’d sack the agent. We’ve never used an agent and have only had one bad experience in 25 years. If you can afford to ride out a couple of weeks lost rent, I’d go for it. Only you know your position and whether you can afford it.
If they do leave, use the empty time to do anything you can to make it more appealing. If you can’t afford to take the risk of lost rent, maybe increase it $10 per week and again in six months. It costs a lot to move and maybe they’d stay rather than pay a carrier.
Log onto the Residential Tenancies Association RTA website (Qld – not sure what it is called elsewhere). That website gives you all the time limits involved in giving notices etc, plus the forms if you want to do it yourself.
Good luck.
Wylie
We have three boys, oldest grade 11, age 16. We tend to be a bit like your parents, expecting him to get good grades (he’s on a half scholarship) and when he got a C last term we said something like “this is a great report for most students, but for you it is a bit disappointing”. Part of it is that on a scholarship, we expect that the school will be expecting better grades. Unfortunately, being bright, he’s never really had to study and though he still gets A’s and B’s that C was a disappointment to him as well. It was a subject he was dropping at end of year 10 so he had lost interest.
We (especially me – his mum) have good communication and he knows we love him (good marks or not), but I think you should show your parents the comments you posted. Depending on your relationship with them, they may be surprised at how you feel.
We have told our boys that we don’t mind what they chose to do in life but that completing year 12 is their chance of getting an entry into whatever they want (at our expense). If they don’t get a high enough score to get into something they want to, they have to either repeat grade 12 or probably pay HECS to do grade 12 later.
Good luck and keep up the good work. I’m sure it’s just that life is busy and sometimes we tend to take each other and our good achievements for granted. I know I have to remind myself to praise my boys and give positive feedback, rather than expecting them to be able to read our minds.
Besh wishes, Wylie.
You sound like you are in a similar position to mine about 20 years ago. Because we were fortunate enough to have a low interest housing loan through my employer, our solution was for me to increase my superannuation from 5% salary to 10% salary. I had several years of this because of different types of maternity leave and career break and even though I wasn’t earning, I kept up the super payments each fortnight. My superannuation account grew very quickly and it enabled me to accumulate a hefty superannuation (because my employer matched what I put in – from memory).
When I left work completely (actually resigned) I drew that portion of my super that was available (because I had been paying double back then). It reduced our housing loan which gave us a buffer and allowed me to stay home.
I realise this scenario may not suit your needs or may be very much changed with all the changes to super rules since then.
I only mention it because the money I directed to super was money we couldn’t “waste” and it made a huge difference to the amount I have sitting in my fund now, as well as giving me funds to reduce my housing loan on my resignation.
At the time this was better use of the money than reducing the staff rate housing loan or reducing the IP loan which would have meant we lost some of our negative gearing.
I haven’t worked in the paid workforce for more than 13 years and while my superannuation nest egg can’t buy my groceries, it is growing nicely.
This perhaps won’t help you but I thought I’d throw it into the mix. All the different ideas you get will eventually gell into something that works for you.
We plan to do the same, but turn the enclosed verandah entry to a queenslander into a fourth bedroom and move the front entry. Easy job and the rent for 4 bedrooms is more than for 3 bedrooms. I convinced myself by doing a search in our suburb through realestate.com.au for 3 bedroom rentals and then 4 bedroom rentals. Not many 4 bedroom houses available and rent seems to be at least $10 more. Because we can do this with very little expense, we plan to do it when our present tenants move on. If they decide to stay on when the lease is up very soon, we will possibly do the work while they are there and reduce the rent while it is happening to compensate for the inconvenience.
In your case, you would have the expense of building alternative car accommodation and we have found that lock up car accommodation is very important for some people, not for others.
I am in Brisbane also and have objected several times over more than 20 years. My parents have a number of IPs in Brisbane also and have objected many more times than I have (with supporting arguments etc.) On a couple of occasions the valuations have been reduced by a token amount. My parents still object as a matter of principal (they pay a HUGE land tax bill).
I don’t bother anymore. I grit my teeth and pay it and think of the profits I have made (though you can’t buy groceries with paper profits!).
As long as you can handle the negative gearing, I wouldn’t worry about it. I assume it will bring your tax rate down. We’ve been in this position with each IP we have bought over 20 or so years. Only one property was positively geared from the outset.
We like to buy and hold, however three boys tend to make a dint in the expenses (and I don’t work outside the home – and as little as I can get away with in the home!) – and we have sold a couple of times to fund the needs of our family. Each time, we have reluctantly made the decision to sell, but the profits have gone into our family home, never wasted on “fluff”. The last time we sold we renovated our PPOR and reduced our housing loan. We could have hung on but with three children, costs do start to escalate as they get into high school.
If you can hold on, make cheap improvements to gain more rent and still live fairly well, time will take care of the rest.
We have had this scenario before. Contact a broker and see if he/she can get cover for you. I know we have even offered for one of us to move in while renovations are done, but some insurance companies say a bed and a fridge do not constitute “moving in” and still refuse. Let’s face it, someone renovating is on site more hours per day that once it is rented, but the insurance companies don’t seem to have a clue, do they?
I’d get a broker, or keep ringing the companies until you find one who will listen. Your broker shouldn’t cost you anything.
Sorry, that should have read “hassle”.
Just for what it is worth, I have owned investment propert/ies since I was about 19 (25 years ago) and have never paid to have them managed. I had a bad experience last year, but insurance looked after minor damage and I was out of pocket less than $1000 (excess plus bits and pieces).
I have sometimes asked agents to find tenants in exchange for one week’s rent, but they don’t ever bother because they know they will not be managing the rental. Twice, real estate agents have found me a tenant. One was fine but one was a prostitute who had done time. I prefer to find my own.
I think it comes down to what you know and feel comfortable with. I was 15 when my parents bought their first investment house, so I have grown up with it and feel very comfortable. I have helped renovate 26 houses but don’t feel comfortable being part of the sharemarket. Horses for courses.
What I am saying is that don’t be put off by doing it yourself, but if it becomes a hastle, an agent will gladly take over.
Thanks Sue and Matt. Yes, we do have some number crunching to do. The only reason we could afford to do this is by getting the land for “free”.
Matt’s point is valid. When we first went into this the cost of building new was roughly line-ball with moving the Queenslander and then making it comply with current regulations. It is only because since the pre-lodgement meeting two years ago, prices of building have blown out so much that we think it may be cheaper to move the house back and move another on.
We cannot move an old house to the back of the block past the existing house because of driveway width. Also, the front house is not legal headheight so it would pay us in the long run to raise it anyway. We might as well raise and slide at the same time.
The back house could easily be cutting edge new style or old Queenslander. It is in a character housing area so the front house must fit in with the streetscape, but not the back one because it will not been seen from the street. Also, one side neighbour is a Queenslander and the back and other side are brick and timber townhouses so style is not so much an issue.
I guess I need to start doing some more specific homework to see how the numbers stack up.
Thanks again. I really appreciate your thoughts.
I have had long settlements, but be very careful about insurance. Check with your insurance company as usually the house won’t be covered after 30 or possibly 60 days. My understanding is also that if you go on a long holiday and leave your own house empty, insurance would be denied. I imagine many folks who go away for several months don’t know this. Insurance company we were involved with wouldn’t even accept someone moving in with say just the basic bed and couch, in a “caretaker” role. It had to be genuine “moving in”.
My parents bought their own home using a three month settlement. Vendors agreed but had suggested earlier settlement and said they’d rent back for a couple of months. Just make sure the house isn’t left empty.
This is my experience, others may have other thoughts.
