LalibellaParticipant@lalibellaJoin Date: 2007Post Count: 116
Our PM informed me today our tenant has presented a written request to lower the rent by $100 to $150 per week. Current rent is $460
Current mean rent is approx $400, which I was unaware of. I have agreed to $400 and am waiting the tenant's reply. (he is on a 6 figure income…yes I know, not relevant. Just had to include that.)
Anyone else had a similar experience ?rhino101Participant@rhino101Join Date: 2008Post Count: 31
Where is your IP situated?
Yep, I have had similar in the past – usually seems to occur when supply exceeds demand and vacancy rates are going up. Puts the tennant in the drivers seat as they know that if you don't agree they can walk and get a better place for cheaper rent elsewhere. Sometimes it's a bit of a bluff as they are the ones that will then have to pack up all their furniture and go through the 2nd most traumatic event in life aside from a wedding (moving house!). On the other hand if they are a great tennant who looks after the place and pays on time it might be worth lowering rent to meet the current market as an alternative to losing a great tennant and having an empty property.Jamie MooreParticipant@jamie-mJoin Date: 2010Post Count: 5,069wilko1Participant@wilko1Join Date: 2010Post Count: 510
Mining or satellite town?LalibellaParticipant@lalibellaJoin Date: 2007Post Count: 116
Mining. NSWRichard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,018
Needless to say it says it all.
All good when it is going up but can be very volatile.
We would never put a client into a mining area full stop.
Yours in FinanceJamie MooreParticipant@jamie-mJoin Date: 2010Post Count: 5,069Lalibella wrote:Mining. NSW
OK, that explains it. They can be quite volatile – in both yield and property values.
Is the PM confident that they can secure another tenant if this one decides to walk?
JamieTony FlemingParticipant@the-dark-knightJoin Date: 2008Post Count: 396kong71286Participant@kong71286Join Date: 2009Post Count: 261
Main issue with lowering rent is it will lower the value of the property
This is the formula provided in some of Steve's seminars:
Price = Annual Rent / Yield
Instead of offering a lower rent, it was suggested to offer a rent free periodjenni_nextplace.com.auMember@jenni_nextplace.com.auJoin Date: 2013Post Count: 36
Mining areas do fluctuate a lot. Generally the properties rental market value is much much higher than in the rest of Australia.
Look at the future volatility of the area and the mining company. If mining production is slowing and the tenants are great tenants and you are still receiving a great return and can secure them on a long lease could be worth looking at.