Request to lower rent.

Viewing 10 posts - 1 through 10 (of 10 total)

Lalibella
Participant
@lalibella
Join Date: 2007
Post Count: 116
June 25, 2013 - 11:50 am
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 ?
rhino101
Participant
@rhino101
Join Date: 2008
Post Count: 31
June 25, 2013 - 12:01 pm
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 Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
June 25, 2013 - 12:14 pm
I've never heard of such a big drop in rent. What's the vacancy rate like?
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
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wilko1
Participant
@wilko1
Join Date: 2010
Post Count: 510
June 25, 2013 - 12:26 pm
Mining or satellite town?
Lalibella
Participant
@lalibella
Join Date: 2007
Post Count: 116
June 25, 2013 - 12:47 pm
Mining. NSW
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
June 25, 2013 - 1:37 pm
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.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
June 25, 2013 - 11:09 pm
Lalibella 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?
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone Me
Mortgage Broker assisting clients Australia wide Email: [email protected]
Tony Fleming
Participant
@the-dark-knight
Join Date: 2008
Post Count: 396
June 25, 2013 - 11:20 pm
Is the property in good condition?
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
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NSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
kong71286
Participant
@kong71286
Join Date: 2009
Post Count: 261
July 1, 2013 - 11:54 pm
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 period
jenni_nextplace.com.au
Member
@jenni_nextplace.com.au
Join Date: 2013
Post Count: 36
July 2, 2013 - 12:54 am
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.