Hi everyone
We have an investment unit in Sydney which is managed by an agent and the rent has been the same for two years. We would like to increase the rent by at least $20 per week but would not like to lose a long term tenant. If we provide an incentive, e.g. ceiling fans or something else the tenant would like, do we ask the agent to approach the tenant on our behalf or are we able to speak to the tenant ourselves. Thanks
GinaS
Hi Gina,
Don’t be afraid to put the rent up regardless of incentives if it is in line with increases to the median rents for the area. This information is available from the Residential Tennencies website for Queensland but I am not sure for Sydney.
I am saying this because I made the mistake of not increasing rents regularly in line with the general market to keep a ‘good’ tenent and now find myself with the ‘good’ tenent angry about recieving two small increases in one year after 3 years of no change and myself feeeling very frustrated by a still needlessly low rent return from the property. That said, the tenet may whinge, but they aren’t showing any signs of leaving when there isn’t better deals around. It just isn’t worth the hassle for them. Putting in the fans or some other incentive may keep the tenent happier but make sure it doesn’t eat up all the gain from the rent increase.
I have learned an expensive lesson being too ‘nice’, close to $10k over two years and still the tenent thinks I am greedy anyway. I hear vacancy rates are low in Sydney at the moment, which is all the better for you. An old friend of mine who has managed her own ip’s for around 50 years says, “If they don’t like it, they can pack up and leave.”
Good luck,
Louise
Hi Gina, I found myself in a similar position recently also. I self manage my properties and approx 6 weeks before end of tenancy I sent a letter to my tenants telling them what the expected rental return was and what I would charge them, giving them a discount for being such good tenants. They do some of the maintenance and have made a couple of improvements out of their own money. I hadn’t raised their rent in 2yrs and I raised it by $40/week and they were happy because they know they are getting cheap rent. We’re happy with no vacancy, no workload of finding new tenants and only have to worry about major repairs at the moment as we’re a bit time poor. I’ll be doing some improvements myself in the next year and then hiking the rent up. I need maximum cashflow so the banks will let me buy more properties (as well as equity of course). So I wouldn’t hold back at putting the rent up if it’s due, and if it makes you sleep easier at night, a small discount. I’d also ask your property manager if a fan,etc would increase rental value before going through expense.
Hi gina,
Any tenant in Sydney (especially in inner city areas)…
would be expecting a rental increase due to:Rising interest rates, maintainance,
security costs, insurance, and inflation.Don’t worry about the fan [biggrin]
How’s this for an idea.
If your agent doesn’t do it..
I will rent your unit out for $30 more and less agent fees.Now there’s an incentive
Hey Gina,
If the rental increase is well justified and in keeping with the market growth, then you don’t need to offer any form of incentive, especially incentives that will cost you financially. Come on, Gina, be strong, damnit
Do you know what similar properties in the area are renting for? If you’re renting your property $20+ short compared to similar properties, then i’m sure your tenant will understand. If not, I doubt your tenant will want to go through the hassle of moving out, finding a new residence….and then pay exactly the same amount you were demanding.
http://www.propertyinvestmentproject.co.uk/blog/2007/01/18/joslin-rhodes-conveyancing/
Thanks everyone [biggrin]
I spoke to the agent and he said he was reviewing rents anyway. So we have put the rent up $15 per week with another possible increase in 6 months time. Only regret is we should have done it sooner…lesson learnt!!!
GinaS
Gina,
I have clients talk to me about this all the time. Do you have a rental review section in your lease? If not then you have a problem, a fixed term lease can not be altered to allow for new provisions and you can not write to the tenant during a fixed term lease and say you are putting the rent up IT DOES not work that way unfortunately.
My advise is this even if your agent is reviewing the rent there is nothing he can do about it except until the lease is up and put the rent up then and allow for rent review every six months.Hope this helps if you’d like to talk more drop me line.
Benjamin
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