澳洲Australia property Tenant says she cant afford $10 increase


在澳大利亚 The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m


Each year I up the rent $10 per week. So now it will be $240 per week. This is for a 1 bed (renovated kitchen) unit, 8 km to the Perth CBD.

I couldn't believe it when the PM said that the tenant said she couldn't afford the increase! Hopefully she will see reason. Looking at realestate.com all the other propertys are renting for the same amount or higher. Its market value rent. She wont find anything cheaper for what she's got.

hmmm... hoping she decides to stick around and not move back to her parents. i'm not thinking too far ahead but if i were to have a vacancy at least now I have a buffer that would last me a few months if there is a vacancy.

It is a little worrying for me though. PM says she'll get back to me tomorrow.

Geez... Everything goes up every year... goods, services, rents. Her wages probably even go up too! Its life.

ps there is no way in hell i would ever back down on the increase even though she has been an excellent tenant. $10 per week is a very reasonable increase!
I'm just glad now I didn't ask for $20 lol. I would've well and truly scared her off haha. Maybe she is just trying to test the waters and see what she can get away with. I dunno.

Fingers cross she sticks around for at least another 12 months.


How are rentals in Perth? I keep reading that Perth rental increases are going up now!? The vacancy rate is around 2.5%


If I had to re-advertise I'd probably advertise at $230 just so as to get someone in. Another unit in the complex had trouble getting someone for $250 per week. Anyway I wont worry about that unless it happens.  

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If she leaves and you say you would advertise for $230 (which is what she is paying now), why not offer her a $5 per week increase. Much better to get an extra $5 per week than have it empty for a week or two (or more) plus have to pay a week's letting fee.

Having said that, we have told a tenant that we are increasing the rent from $495 to $525 (appraisal $520 - $540). Each time the lease was up on this house, there was a good reason for us to keep it lower. We need to play catch up.

The risk, of course, is that she will leave and we may have it empty. If it comes down to that, we would offer to keep her at $515 per week because that saves having it empty for a week or more.  

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Whats your re-let fee with the agency and estimated vacancy?

If its, say, 2 weeks rent + GST relet fee thats $528. Two weeks rental vacancy is another $460. If she was to give notice then that erodes your rental increase benefits for the next 24 months.

How good a tenant is she? Always on time? Takes care of the place?

Not saying dont increase rent, just take into consideration the pro and con of doing so. Maybe do $5pw now and another $5pw in 6 months?  

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When I have a good tenant I usually keep it about 5% below the market value.

I realise that I might get more but good tenants are hard to find, long term I have been happy with the results.  

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Alex P Keaton said: ↑
Geez... Everything goes up every year... goods, services, rents.Click to expand...
Hasn't one of your holding costs just come down 25 basis points?

Alex P Keaton said: ↑
Her wages probably even go up too! Its life.Click to expand...
A bit of an assumption that may not be correct.


I would say the short term costs of standing your ground and demanding the rise and risk loosing your tenant is far greater than going OK no rise or offer $5pw but only give a 6 month lease the review it then again.  

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Alex P Keaton said: ↑
Anyway I wont worry about that unless it happens.Click to expand...
You should be planning ahead.
If she's a good tenant i'd keep her on the same amount or $5pw max... but then is it even worth worrying about for an extra $250pa. Keep her happy and leave it for review in another 6mths.  

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If the tenant constantly paid rent on time, gave me no hassles and looked after the property then I wouldn't risk losing them over an extra $10 per week.

The re-letting fee alone is probably going to be one weeks rent - which will take you 6 months to get back.

Cheers

Jamie  

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It's all a learning curve on where to draw that line isn't it...

Good luck with it A-lex  

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Thanks for your replies. I'm now having 2nd thoughts. If she did go then it would be more expensive for me and true she has been an excellent tenant and you want to hang on to those! i'll see what the pm has to say tomorrow and maybe we could compromise on $5 per week increase. And also the thing is if she left I cant be certain how long it would take to lease it out again. It would get expensive for me anymore than 1 month. Plus the marketing fee and reletting fee.

Yes good point on the IR cut, that is going to help me big time!! So if I take that into account it would pretty much be the equivalent of a rental rise wouldn't it! There is talk of another IR cut soon too so thats good news for me! :)

I'll see what happens tomorrow.  

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At first I was thinking "no just put it up" but when I read that you would advertise it for $10 less if she moved out I changed my mind. If rents aren't that strong why put it up.
Yes we all like to up the rents and do so when we can but rents don't rise equally each year the same as CG doesn't go up a standard % each year. Some years they go crazy then it's quiet.

I'd say that I'll go half way with $5. Saves the worry and the tenant thinks you're reasonable but not a pushover.  

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i'm so glad I came on here. seeing things in perspective now. thanks guys! :)  

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travelbug said: ↑
I'd say that I'll go half way with $5. Saves the worry and the tenant thinks you're reasonable but not a pushover.Click to expand...
Yeah thats the thing I was a bit worried about. I dont want her to think I'm a pushover. I guess i'll first try a $5 compromise if she does reject the $240 per week and if she doesnt want to compromise then i'll leave it at $230.  

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jaycee said: ↑
It's all a learning cure on where to draw that line isn;t it...

Good luck with it A-lexClick to expand...
thanks :)

________  

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Alex P Keaton said: ↑
Thanks for your replies. I'm now having 2nd thoughts.Click to expand...
So she's called your bluff and won.

$10 is the cost of 2 latte's, or a packet of smokes (probably less), or 2 drinks on Friday afternoon and I bet she wont deny herself those.  

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travelbug said: ↑
At first I was thinking "no just put it up" but when I read that you would advertise it for $10 less if she moved out I changed my mind. If rents aren't that strong why put it up.Click to expand...
Ah, well thats different then.  

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Alex P Keaton said: ↑
Each year I up the rent $10 per week. So now it will be $240 per week. This is for a 1 bed (renovated kitchen) unit, 8 km to the Perth CBD.

I couldn't believe it when the PM said that the tenant said she couldn't afford the increase! Hopefully she will see reason. Looking at realestate.com all the other propertys are renting for the same amount or higher. Its market value rent. She wont find anything cheaper for what she's got.

hmmm... hoping she decides to stick around and not move back to her parents. i'm not thinking too far ahead but if i were to have a vacancy at least now I have a buffer that would last me a few months if there is a vacancy.

It is a little worrying for me though. PM says she'll get back to me tomorrow.

Geez... Everything goes up every year... goods, services, rents. Her wages probably even go up too! Its life.

ps there is no way in hell i would ever back down on the increase even though she has been an excellent tenant. $10 per week is a very reasonable increase!
I'm just glad now I didn't ask for $20 lol. I would've well and truly scared her off haha. Maybe she is just trying to test the waters and see what she can get away with. I dunno.

Fingers cross she sticks around for at least another 12 months.


How are rentals in Perth? I keep reading that Perth rental increases are going up now!? The vacancy rate is around 2.5%


If I had to re-advertise I'd probably advertise at $230 just so as to get someone in. Another unit in the complex had trouble getting someone for $250 per week. Anyway I wont worry about that unless it happens.Click to expand...
I don't understand at all why you would advertise it for $230 when you say the going rate is $240.  

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I have previously resigned tenants up for 12 mth lease with a $10 increase written in to come into effect after 6 or 9 mths. Then it doesn't hit them in the face and they can plan for the upcoming increase. This would be a good compromise to put to the tenant if any at all. A good tenant is well worth keeping at 5% under market. Like others have said - you have just had a win with IR's so I wouldn't be getting too bold with a great tenant.  

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If there are low vacancies and a similar place would cost $240 or more, then I'd stand my ground. Chances are that a) She's bluffing & just doesn't want to pay more (who would?). b) It would cost her in more $$ to move than stay, not to mention the inconvenience. c) If she did move, another tenant would be waiting to jump straight into the place.

If, on the otherhand, vacancies are high, and you are at the high end of what is 'market rent'. Then I wouldn't have put the rent up in the first place.

Like another poster said, rental increases don't usually form any kind of pattern, ie $10pw, pa, etc. For instance, I look at my rentals every 6 months and usually only lease out for a 6 month term. Then I set my rents at 'market rent'. Sometimes that means no increase at all, and other times they might get a $25pw increase in one go. I don't subscribe to the notion that you keep below market value for a good tenant because if they don't want to pay me market rates, what are they going to do? The next place they go to will be the same cost anyway PLUS the costs of moving & inconvenience.

So, I just did a search for 1 bedroom units in Perth & I got a list of 16 in nearby suburbs that were between $200 & $250pw. When I set the search for a max of $300pw I get 52 entries. Based on that, if your place is in the same suburbs that come under the search, then I would have to surmise that you are below market rates.  

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DEC said: ↑
Ah, well thats different then.Click to expand...
Well yes it is because she obviously thinks the market will only wear $230 (not $240).

If you are going to lose why push the point.

I push the point but I know that rents are going up and the tenant would not get something similar for the price.  

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We had a tenant claim they couldn't afford a $5 increase and if we pushed it they would move out. I asked the REA if we were being unreasonable and was informed that the tenant could not find anything equal to our property for the same money, in fact they had few rentals available at the time and were confident they could get higher rent if the tenant vacated.

We put the rent up $5, the tenant moved out and we re-let almost immediately at around $30 per week more.

If the REA advises against a rise it needs to be based on the current market not the tenants personal situation. What you do with this information is up to you.  

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