I’m looking at increasing the rent on my IP.
It’s been rented out at $165 for the past 3 years now so I think it’s time to increase it! (If anyone wants to know – it’s located in Merriwa, Perth:)
I have about 2k to spend on the property – so I was thinking I would increase the rent to say, $175p/w regardless of any enhancements to the property.
Or, offer the tentant enhancements to the property for higher rent.
Such as:-
– Installing of Aircon – for $185p/w
– Or, installation of a Dishwasher – for $185p/wand so on…
It would be good if the enhancements I choose to do also add value to the home for valuation purposes – as I’m getting another loan out agaisnt this property.
Any recommendations?
Cheers
Wayne
Wayne Leech
*Below are links to my websites – any feedback, comments would be appreciated:)
http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
http://www.homesearcher.com.au – List your property for FREE (Private sellers only)Hi Wayne,
Your suggestions sound fairly reasonable to me, and I would imagine after 3 years (with the same tenant????) a $10 increase “should be” agreeable. Perhaps you could negotiate the alternative changes, and ask the tenant if he/she/they would prefer the dishwasher or air con whatever, but it would be a jump of $20 instead of $10.
No harm in asking I suppose!![blink]
Good luck, and keep us posted.
Cheers,
Jo
Hi Monopoly,
No, it’s a different tenant – though the most recent tentant has been in there for over 1 yr.
Yes, asking the tenant is probably the better way to go.
And yes – jumping the rent by $20 more for these enhancements would be more resonable:)
Thanks for your feedback:)
Wayne Leech
*Below are links to my websites – any feedback, comments would be appreciated:)
http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
http://www.homesearcher.com.au – List your property for FREE (Private sellers only)Send a letter saying that due to market forces the rent will be raised $15 pw. If they call or complain then negotiate it back to $10. Win win all round.
I have seen this work so well that in most cases the tenant cops the original rise. If they do you can always offer to drop it to $10 if all rent is paid on time, gardens are maintained or something similar.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Wayne,
It depends on the market rental that similar properties are getting. For example, I think it weas in Indooroopilly, or some suburb in Qld. Nice suburb, has had huge CG, but rent drops have also been the largest for the state (this according to API mag).
The market rental thing… to be fair, if you’re going to send the tenants a letter suggesting market rents have increased, do your research first, and it’s my opinion that you shouldn’t overestimate what that market rise actually is. Fair’s fair, and tenants are the biggest asset we have- an IP is worth nothing without them.
kay henry
Thanks Kay, thats a valid point you have.
I’ll check out the current market though I’m pretty sure it is under valued at the moment.
Anyone out there with rentals in the Merriwa, Clarkson area of perth?? Would be good to know what your charging?
Cheers for your suggestions aswell Simon:)
Wayne Leech
*Below are links to my websites – any feedback, comments would be appreciated:)
http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
http://www.homesearcher.com.au – List your property for FREE (Private sellers only)Hi Wayne,
Don’t know if you have tried it already, but another way to check out the going rental rates for properties on offer (through REAs) is to go to http://www.realestate.com.au or http://www.property.com.au and select RENT option, type in the state, and area you wish to look at.
Have fun,
Jo
I only increase rent when the market rent has gone up in the area.
I dont waste my time trying to offer air conditioning and dishwasher etc. to increase the rent.
I only consider that if the tenant requests it. I am yet to see a tenant request it.
I only enhance a property if I consider it necessary and only between tenants.
Hi yack,
I see your point. However my main drive behind increasing the rent is so I can levy against this when I’m apply for a loan for my next rental. Eg, if the rent in higher on this property then this alters what loan amount I can get.
I have about $2k to spend on the property and I’m trying to think of the best way to use this to increase the rental return.
Thanks for your input:)
Wayne Leech
*Below are links to my websites – any feedback, comments would be appreciated:)
http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
http://www.homesearcher.com.au – List your property for FREE (Private sellers only)wayne :o)
I don’t know if it’s a house or an apartment that you have… but you could probably save yourself that 2k if you made the Body Corporate do some stuff (if an apartment). BC’s can ensure cable TV satellites can be put in, water systems can be made, the outside of units can be painted, gardens planted in common areas etc. It may not be hugely relevant to getting a rent increase for an individual unit, but making the BC do stuff can also assist in making more CG for our IP. Some BC’s can be incredibly proactive (probably in blocks where there are a lot of owner-residents, and some can do nothing at all, and let the block fall into a screaming mess. The other thing, of course, if that BC’s don’t “keep up appearances” on common areas and the outside of the building, then we will not have properties that are so desirable to tenants- there always needs to be that point of differentiation.
kay henry
Hi Kay,
Unfortunately it’s a standalone 3×2 house. Though that’s for your comments:)
– Wayne
Wayne Leech
*Below are links to my websites – any feedback, comments would be appreciated:)
http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
http://www.homesearcher.com.au – List your property for FREE (Private sellers only)Wayne, what does 3X2 mean? I’ve seen 3X1 etc in different states. It’s not a term we use in nsw.
kay henry
It’s a 3 bedroom, 2 bathroom house:)
Wayne Leech
*Below are links to my websites – any feedback, comments would be appreciated:)
http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
http://www.homesearcher.com.au – List your property for FREE (Private sellers only)Hiya kay
3×2 = 3 Bed, 2 bath
3×1 = 3 Bed, 1 bath etc. etc.I thought it was a very American terminology, but I guess it’s very prevalent here in Aust nowadays…
Cheers
MelThanks guys. Yep- and 3 X 2.5 means an extra toilet- gotcha
(Since when is a toilet an actual half a bathroom?)kay henry
Ensuring a BC maintains the apartments doesn’t mean higher levies. One of my places has an admin/sinking fun total of 100k- that’s money that can be spent on improvements. Spending BC money is an investment into the life of the property- it has nothing to do with the raising of fee levies.
kay henry
I bought an IP last month (Two flats next to each other) and this month received the RE statement, with some mysterious deductions of $40 each fortnight.
Unto enquiry, I found out I was paying to mow both tenants backyard. In addition, two identical flats, one rented for 130 the other for 110.The reason?
We do not really know, she has been there for a long time, was the answer.Well I thought, if it is going to be painful may as well do it all in one go, like pulling teeth.
So I said, no more mowing and the rent is 130 for both.
The RE agent panicked.
I said wait and see.Both tenants agreed to mow their lawn “providing I can supply a place to keep a mower”.
In addition, the tenant that copped the rent increase came up with a long list of defects, previously concealed. Half the doors did not close properly; the front lock was on the way out, and other minor adjustment of the sort. I secretly welcomed the news, cheap and necessary repairs.The RE agent seems to believe that rent increase can only be the result of some improvement on the place. In this case, the culture was applied in reverse, do not complain about the conditions of the property and keep the same rent.
Lesson:
My properties cost me a lot of money, I want to keep them in tip top condition and I also want to charge top dollars for it, as high as the market allows me and even a bit more.By letting rent lapse for years and years all we are doing is keeping outdated rent prices that badly influence the market, ruining returns for ourselves and the rest of investors. It is like running a shop that sells stock from 3 years ago at 3 years ago prices.
May God prosper you always.[biggrin]
MarcThe rent increase is overdue anyway if the rent level is below market. No need to add the extra expenditure, don’t play all your cards at once. Get the increase in place, wait a few months for the new level of rent to become the norm, and for the weather to warm before offering an airconditioner, on a stinking summer’s day and night, an airconditioner looks cheap for $10 extra rent per week. Why work uphill and try to sell fur coats to africans and icecreams to eskim-os, when it can be so much easier the other way around. good luck.
cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
I got $25/week rent increase for an air conditioner in qld and they loved me.
Another one was I was getting a tenant out to reno as I had bought a place recently and she pleaded with me to keep her there. I explained I needed to reno anbd she said ok to a $45/wk rent increase if I fixed the TV antenna and replaced a damaged vertical blind in the main bedroom(original 14yo). I said ok and she stayed. In the last 6 months I have fenced her courtyard area and put a new clothes line in, new ceiling fan in bathroom and exhaust fan in kitchen. Rent goes up another $5.00/wk next lease.
I expect to have no complaints. I bought this premises as it was run down and super low rent for the area so dont think Im a meanie.
DD
Don’t sweat the small stuff,and it’s all small stuff!!
invite pets
Manoj
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