All Topics / Value Adding / Provide internet access to increase rent

Viewing 13 posts - 1 through 13 (of 13 total)
  • Profile photo of tjunctiontjunction
    Participant
    @tjunction
    Join Date: 2011
    Post Count: 18

    I own a block of 6 units on one title. None of the units currently have phone or internet services. I’m considering connecting a phone line and offering an internet service to the units and charging extra in rent (say $10/week)

    I’m interested in any advice others might have. Considerations include;
    1. Is it more trouble that it’s worth? It may result in lots of support requests from tenants.
    2. What technologies have been used? ADSL/Cable, Ethernet/WiFi, download limits, bandwidth limits, etc.
    3. Is it best to offer the internet service agreement (e.g. $10/week) separate from the rental agreement? To save any arguments if/when the internet service is down/flaky.

    Any advice would be appreciated.

    Profile photo of Jeff123Jeff123
    Participant
    @jeff123
    Join Date: 2012
    Post Count: 31

    Personally I’d steer clear of providing internet services. You’re potentially lining yourself up for a whole world of hurt with support demands and complaints. If the tenant wants internet access then it should be up to them to organise it for themselves.

    Profile photo of tjunctiontjunction
    Participant
    @tjunction
    Join Date: 2011
    Post Count: 18

    OK, thanks for your response Jeff.

    Profile photo of superAndrewsuperAndrew
    Participant
    @superandrew
    Join Date: 2014
    Post Count: 188

    I’m with Jeff on this one. In a perfect world it could be a good idea. I’d definitely rent a place that had internet, electricity etc all included and set up. However I find that a lot of renters don’t see the value in it.

    Cheers
    Andrew

    ps: The easier you make it for a tenant to move in, the easier it is for them to also move out. Also something to consider.

    superAndrew | Property Analyser and Finder Tool
    https://property-analyser.com.au

    Profile photo of tjunctiontjunction
    Participant
    @tjunction
    Join Date: 2011
    Post Count: 18

    OK, thanks Andrew. Good point RE inclusion of services (electricity/internet) actually reduces the tenant’s commitment to the property and thereby makes it easier for the tenant to leave.

    Hmmm. That’s two out of two responses AGAINST providing internet access. Interesting, and not what I was expecting…

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    I would be worried about 2 main things:

    1. Child porn/copyright infringment, and

    2. Internet not working – they will be complaining constantly.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Downtime issues would be a major headache. You are ensuring the delivery of a service, without it you’ll get constant calls about downtime/latency issues/intermittent speeds and everything else under the sun.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
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    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of tjunctiontjunction
    Participant
    @tjunction
    Join Date: 2011
    Post Count: 18

    OK thanks guys. I’ll give this a wide berth for the time being.

    Profile photo of jaredjared
    Participant
    @waxie
    Join Date: 2015
    Post Count: 3

    Sounds good on paper. Reality sounds worse huh

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    As a general rule, I find that properties with the least management hassle are the properties with the least facilities provided. eg If there is no dishwasher, then the dishwasher can’t break. So no complaints requiring you to pay for repair of the dishwasher, or do dishwasher servicing. Same applies to internet. The likes of Telstra is painful enough without you having to sit on hold forever to them every time your tenant wants to complain about something.

    Terry is right… you DO NOT want to be the accountholder if someone infringes on copyright laws (eg downloads a film that falls under copyright).

    Jacqui Middleton | Middleton Buyers Advocates
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    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of James MRDJames MRD
    Participant
    @jamesmrd
    Join Date: 2015
    Post Count: 5

    How did you go with this…? Did you end up making a decision? I’d be interested to hear how it works out if you go ahead with it.

    James MRD | MRD Partners
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    MRD provide ethical property investment expertise that drive long-term wealth creation

    Profile photo of tjunctiontjunction
    Participant
    @tjunction
    Join Date: 2011
    Post Count: 18

    Hi James,

    I did a lot of research into this, and very long story short concluded that providing an internet service was not going to make me any money, and beyond that the quality of service to tenants was not going to be good enough to be worthwhile.

    The costs are high;
    -CAT6 cabling
    -network hardware (access point/s, router, modem)
    -electricity monthly connection fee
    -electricity usage charges
    -ADSL setup fee, phone line activation
    -ADSL monthly service charges
    -phone line rental (if non naked ADSL)
    -payment gateway fees
    -operation and maintenance fees (Modem restart, hotspot restart, create user, delete user, BYOD connection issues, etc, etc, etc)
    I was going to use an established hotspot provider in order to manage user payments, misuse, and maintenance issues….for a fee of course.

    In summary;
    Setup costs amounted to $3,049.00.
    Monthly Expenses amounted to $177.14.
    Revenue assumed every tenant paid $45 per month for a 1/6 slice of an Australian ADSL service. Not good value.

    At the end of the day;
    – the model wasn’t profitable.
    – the model didn’t scale well enough (more users increases the cost of internet services)
    – it was going to take 38 months to pay off the setup cost.
    – I don’t want the tenant associating the quality of the internet service with their need to pay rent.

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,376

    Hi TJ,

    – I don’t want the tenant associating the quality of the internet service with their need to pay rent.

    Wow, that is GOLD !!! Thank you,

    Benny

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