Granny Flat Tenant wants AC !!!

My Granny flat tenant in western Sydney pays $250 a week, and has just re-signed the lease for another 12 months. As they've been good tenants I didn't increase the rent when re-signing the contract. I am just cash-flow neutral on this property when I combine the cash-flow with the main residence. My PM calls me yesterday and says "The GF tenant wants AC, are you happy to install one". I said, "I can if you will increase the rent to $260". The PM goes, "can't do that, the contract says rent says at $250 for next 11 months". My heart goes out to the tenant, who had to survive the heat wave in Sydney last week without AC. But from a business point of view, it makes no sense. Any idea how much it will cost me to put an AC in a GF in the Penrith area? What would you do?

 

As I said in Tenancy Tip Thursday - Rent Raising Requirements recently, rent can be increased any time via mutual agreement.

Whats the square meters of the area? You can multiply that out to work out how many kilowatts you need and that'll dictate cost.

 

Get a new pm who actually understands the rules.

 

They signed the lease on the basis of the existing situation - ie no aircon.

Now they want to renegotiate the terms of the lease. If you are willing to entertain this option, then work out what an aircon + installation will cost, and then off to install but with a rent increase of enough that you will recoup the extra expense in 2-3 years (eg $10-$15 pw).

This is tenancy 101 stuff and the fact your PM doesn't know this is concerning!

 

^ ^ this.
Also ask for an extra $20pw and a lease for 24 months. That way after 2 years the tenant has paid for the A/Con and you are in profit after that.

 

The tenant wants aircon straight after signing a lease hey. Cheeky. I want a Ferrari - but I bet you won't give me one for no reason.

As the others have said, take a peek at pricing and if you wish you could graciously offer to install one in exchange for a rent hike.

Keep in mind that the aircon unit is then something you'll have to maintain (eg get cleaned sometimes to avoid dust buildup and such) so the maintenance isn't free. On the flip side you could add it to the depreciation schedule.

I personally would prefer not to provide extra "things" that can "break that I then have to pay to fix" in dwellings that earn lower amounts of rent. I'd certainly prefer the tenant buy their own mobile aircon at Bunnings !

 

This year i havent used my Air Con at all.
I bought a large industrial fan from Bunnings when they were on special at $99 and its much better.
I would say no to the tenant or if he can pay half if he wants it.

 

Like others have said, the tenant rented the property 'as is', so if they want air-con, & you are prepared to have it installed, they should get a rent increase.

Now, you say they are paying $250pw. That seems quite low, and I'm assuming that the GF is quite new, so I'm wondering why they didn't get a rent increase BEFORE this even became an issue. Too late now, but think about it next time. I usually only do 6 month leases, as it's easier to give smaller increases every 6 months than a larger one at 12 months.

Your options appear to be:

1) Do nothing. No air-con, no rent increase.
2) Suck it up. Give them an air-con, no rent increase.
3) Air Con - They get a rent increase.
4) Air Con - They get one supplied & installed at their cost, it stays when they leave.

If it was me, I'd be happy to do any of those options except number two. Number One, they can get a portable. Numbers 3 & 4 are a win for you, but you obviously have to maintain it.

I'd also be looking for another PM.

 

Now I feel like an absolute idiot, I never been inside this GF and looking through my contract there are no floor plans nor area mentioned of the GF.

 

This one is a 2 bedroom GF built in 2011, the GF and the main house share a common driveway, and there's no off street parking. Plus my PM suggested I keep the rent at $250 due to competing granny flats, in close proximity renting for similar amount.

 

Interesting! Wonder if I'd have survived last friday's temp's with an industrial fan.

 

It is getting a bit hot.

When you install the a/c, make sure you start digging that new swimming pool that they'll ask for. Don't ask about increasing the rent though - 'Lease says No'.

 

Rubbish. Those fans are very noisy.

 

Regardless of the circumstances, install an AC..
If this tenant doesn't get one chances are the next tenant will ask for one.

Wouldn't you want one of it was you?

 

I'm a big fan of installing both a dishwasher and air-con in investment properties where suitable.

The two main reasons;

1) In a strong market, you will get $10-20 per week more than one without

2) In a weak market, although you may not get any additional $$, a tenant will pick the IP with these things over the one without, thus reduced vacancy.

As D.T. Said above, simply get your PM to sign a mutual agreement to increase the rent by $10 per week. You don't need to get a new lease signed and this is an easy enough exercise that there should be no additional charge to your standard monthly management fee.

 

I'm with wylie
Small split systems are pretty cheap these days, install can add to it though.
If funds are tight at present check gumtree for a noisy wall unit which can be plugged straight into a powerpoint.
There's also portable units available, there on wheels, can have em in any room etc

 

Just to throw another possible approach into the mix...

Electrical things are annoying as they have to be maintained. But what about more insulation? Perhaps consider installing more insulation and if the tenant wants A/C they can buy it themselves from Bunnings.

Insulation doesn't really need maintenance

 

I hear you! Armed with the feedback provided in this thread, I'll be having another chat to my PM on the options I have.

 

If you don't mind, can you please post the concise of your discussion. Just want to know the result, out of curiosity.