Hi everyone,
Just interested to see how many of you are considering putting up your rent/s due to the latest rise in interest rates.[gossip]
Regards,Sharon
it depends if the tenants will pay!
I wouldn’t mind if my landlord tried to raise my rental. It would be just the catalyst I need to go and find a nice, newish inner city apt to rent from a desperate landlord.
Sharon,
For the non-residential stuff – yes absolutely – have already done so and locked in further increases for subsequent years.
For the residental stuff – forget it – check out Baloo’s comment above…very realistic and the very reason we now shy away from the stuff…they simply will not pay and are happy to ‘up stumps’, knowing that there are desparate, negatively geared and happy res Landlords out there, just falling over themselves to provide their tenants with brand new everything with extras thrown in at ridiculously low nett rental returns.
We are not prepared to compete with Landlords like that anymore.
Cheers,
Dazzling
“Go hard or go home”
You don’t put up rent because interest rates rise.
Supply and Demand determine rent.
A canny landlord should already be renting at close to the max the market can bear. Just because your costs rise doesn’t mean it automatically gets passed on to the tenant.
Do your research and find out what is available, what the demand is and comparable rentals. Determine a price that will see your property let quickly. Remember that a week with no rent is 2% of your annual cashflow.
All the best,
Simon Macks
Finance Broker
[email protected]
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.
Thanks all, for your replys.
I wasn’t actually referring to my situation as I know I am already priced at what the market will bear in my area, taking into consideration the competition (similar vacant houses).[thumbsup2]I have seen rents rise as a matter of course following interest rate rises in the past, however this was in a semi-rural residential area and may have been controlled more by the 2 managing agents in the area than by supply and demand. Tenants were so conditioned that they knew any rise in interest rates automatically meant a rise in rent [blush2]
Obviously from everyones comments it is clear that this is not a widespread practice. Perhaps if a tenant had made a complaint, the REA’s involved would have come under scruntiny from the powers that be [cop]
Strange goings on in the bush![surprised]
Regards,Sharon
If landlords raise rents in rate rises, will they lower rents if rates drop?
kay henry
if you want to gauge the market, pretend to be a tenant and go look at some of the rentals on offer – from what I have heard it is very ordinary out there
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
Very good advice to check out the other rentals in your area. These properties are your competition.
.
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Make yours the best in its price range through some low cost value adds and then think about a rent rise. Just a thought.
.
Good Luck.
.Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
It is the market that determines the rent. Correct.
Yet the market is not composed just by tenants, it is made up by tenants and landlords and properties and many other factors.It is a simple economic reality that if cost increase rent must increase.
The fact that it does not always follow particularly in places with oversupply is because 90% of landlords are mums and dads with one property and their agents are morons.There is little else to add.
If RE agent would be worth half the money they charge for mismanagement, they would create a culture of matter of fact. Rate increase automatically equal to rent increase, like night follows day.
Yet they do not, they will tell with trembling voice to their owners that if the tenant goes, the loss of rent will be never recovered. True? of course!… but only because of their lack of guts.
Every time I call my agents to say to put up the rent, they give me an ear full about how “you cannot pass on the cost and bla bla bla” I cut them short every time and say that for me it is a matter of principle, and that if I cannot pass on the cost increase be it GST, Land tax, interest rate increase or cost of maintenance, then this is not a business but welfare and I am not the DSS.
So far it worked every time, some tenants put conditions and ask for paint or some other minor compensation. No problems there.
In Queensland I put the rent up 5 dollars last year in a block of flats and two tenants ganged up and threatened to leave. The agent rang back terrified with the usual bla bla that if the flats are vacant for a week and so on and so forth.
I said, LET THEM GO. I don’t want them, I do not respond to blackmail, I rather have it vacant for a month then give in.It worked. Not only they paid the increase, this time with the latest increase, I cranked it up another $10 with no ill effects.
It takes two to tango, if the market is weak it is because of many factors but also because landlords are being scared by their agents who are only interested in not doing a thing and collect money for jam. You risk losing a tenant? If the value of your property is there, you MUST charge accordingly or you are not only shooting yourself in the foot, your tenant will leave anyway if he does not want to apy $5 more and not only that, you are stuffing up the market for the rest as well.
Me iudice
Marc GGMay God prosper you always.[biggrin]
MarcIt is a simple economic reality that if cost increase rent must increase.You seem to be ignoring the fact that most rental properties were bought before property prices reached excessive levels. The landlords holding these properties are not under pressure to raise rents as a result of the interest rate rises, and can therefore undercut the over-stretched speculators who bought at the market peak. Why would they? Because that’s all it takes to ensure 100% occupancy when there is a 2 – 5% vacancy rate.
Also worth noting is that many renters will be prepared to move to a smaller cheaper apartment / house if rents outstrip wage inflation.
It’s worth mentioning that I do believe the ratio of rent to house price will return to historic trend – just not in the way you expect it to Marc!Cheers, F.[cowboy2]
Hi Shaztaz,
in our part of the world we are experiencing a shortage in rental properties with an even tighter market forecasted due to state and local economies doing so well. Even so we (my beloved and I) have written into our tenancy agreements that the rent will be reviewed every six months and adjusted to meet the current % rate of CPI (2.6%). We make sure that the tenant/s is/are fully aware of this before signing the 12 month lease. On average the rent increases every six months by $5 with no problems so far. I imagine as the rent increases so does the compounding effect of CPI of the years previous, so a review of current and future trends needs to be observed so no one feels ripped off.
I believe this is a more balanced way of approching business than the good old knee jerk reactions to external infuances. Chao for now JPDJPD
JPD, That sounds very fair. Out of curiosity, would you lower the rent if CPI was negative for a whole 6 month review period?
Cheers, F.[cowboy2]No, but I wouldn’t raise the rent if the was a major and sustained down turn in the ecnomy.
JPD
Excellent post Marc1;
I concur with most of your points. Comes down to attitude and not being influenced by the wet nursed PM’s, who in general may know something about managing individual properties, but have precious little experience in managing wealth from a personal standpoint.
Residential renters have it all over Landlords in this country. I found London and New York to be amazing. There the Landlord can be choosy due to the number of tenants clambering for properties.
That attitude shift is all that is needed, and of course for all those vast tracts of land surrounding each Metro area being cleared for new housing coming to a halt.
Cheers,
Dazzling
“Go hard or go home”
I agree with Dazzling that the urban sprawl needs to slow and a more sustainable approch to development adopted. The outcome would beifet all.
JPD
Originally posted by JPD:I agree with Dazzling that the urban sprawl needs to slow and a more sustainable approch to development adopted. The outcome would benefet all.
JPD
JPD
Originally posted by foundation:
[brYou seem to be ignoring the fact that most rental properties were bought before property prices reached excessive levels. The landlords holding these properties are not under pressure to raise rents as a result of the interest rate rises, and can therefore undercut the over-stretched speculators who bought at the market peak. Why would they? Because that’s all it takes to ensure 100% occupancy when there is a 2 – 5% vacancy rate.
Also worth noting is that many renters will be prepared to move to a smaller cheaper apartment / house if rents outstrip wage inflation.
It’s worth mentioning that I do believe the ratio of rent to house price will return to historic trend – just not in the way you expect it to Marc!Cheers, F.[cowboy2]
Ha ha my friend foundation i love your post.
Properties excessive prices…overstreched speculators…ratio of rent to house price return to historic levels….not the way Marc (me) expect it…..
Love it.
Was wondering how do you know what I expect or perhaps hope for, but I can guess.
You picture me as 80 years old, bald, dressed poorly to save on clothes and counting my money at night time, kept in an old strong box bought from a railway auction. During the day I engage in evicting poor widows and use kids to mow the lawns and clean gutters (with no safety gear of course that cost money). Lunch and dinner I get from “meals on wheels” that i regularly rip off by telling them I am poor and inferm.
My properties are all in deplorable state with leacking roofs and rotting floors but I charge abusivly high rent that I collect with the help of a one eyed veteran of the Golf War that goes around with an aluminium bat.
My pastime is to throw stones at the windows of people I know to have comunist tendencies.[biggrin]May God prosper you always.[biggrin]
MarcYes absolutely…[blink]
And my point was invalid because?
Cheers, F[cowboy2]
BTW Somebody has already ‘prospered me’, and it wasn’t ‘God’.Basically if rents increase then there will be demand for increase in wages which will lead to somewhere those of us who are heavily geared don’t want to go….. I reckon somewhere around the 10% mark. Bring on the next .25%[specool]
Bring it on. My money is in the bank ready to snap up over extended “investor” property for a song.
If rent becomes a problem I’ll move out. Problem solved.
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