How do you decide when and by how much to increase rent

Yeah but I also value the time and effort that it requires to have IPs. A stress free tenant is worth far more to me than $10 per week (minus tax!). I’ve had whingey tenants before and they drove me mad and cost me a lot of money. Imagine that x10 !! I don’t want to deal with that. Luckily I’ve never had non-paying tenant.

 

Well, speaking from experience, I've had over 10 IP's, mostly long term and all pay market rent. Whiners get moved along.

 

Yes, but again, it's still market rent for the property in the current condition. Knowing what is on offer, is knowing what the market is. We've got one that is in need of painting. Happy tenants that don't want to move, so we'll paint when they do. The home is market rent for the current condition. When it does get painted, the rent will go up again as it will be in better condition.

And in your example of them wavering about, then they are thinking of going anyway. If they leave 6 months early, they're still leaving, but doing it a little sooner. It's swings and roundabouts.

 

I understand. It's sometimes hard to see what the motivation is sometimes. I look at how much I can get in a low socio area, and sometimes not that for away is much nicer, bigger homes for not a great deal more, and I wonder why you wouldn't go for the better home (I would) if you've got the income for it (and a lot do).

 

Change of tenant means vacant period, loss rental. You might need to do minor touch up and cleaning, that's $. Also, if you end up a "not so good" tenant, imagine all the costs associated with it. There were horror stories told on PC.

 

I wouldn’t …

For $500 it’s just not worth it when they are good tenants … and in this market IMHO

 

Which market are you in?
The one I'm in means that getting a new tenant means almost certainly additional $50-$100 pw rent.
Around here, there are no rentals, vacancy rate is something with lots of zeros after the decimal point.

For each rental there are tens(!) of people coming, trying to apply.

The OP is around my area.
His tenant won't move an inch cause they know the houses around them cost more then whatever the raise is.

 

The whinger gets a bigger rental increase.

 

I've done that too.

 

Update regarding my ip. Sent a request for rental increase to $370(increase of $10) via pm.

Tenant did not want to continue renting if rent was increased. I guess it is their bluff.

But for me it was not worth the risk of them actually moving out, with the lockdown and so many people in unstable employment in Melbourne. If I have to find new tenant it would cost me at least $1000 in lost rent/ad cost etc.

 

I ask the advice of the Real Estate property manager.

I have noticed that the property managers don’t tend to raise the suggestion of a rent increase themselves - I always have to bring it up.

Had the discussion last week and (for an older, middle ring suburb in Melbourne, 60s house, 3 bedrooms, 2 living areas) they are suggesting up to a $15 a week increase.

 

The proactive ones do.

 

I think a lot of property managers are tenants themselves which might have something to do with it. In Victoria, I think we can only put the rent up once a year now. Had to organise rent safe inspections to comply etc etc.

 

Oh! That's, if you ask me, the wrong move on your behalf.
You showed your hand, they didn't.
If you pull back now, the tenant will have the feeling you're in his pocket and it's never a good thing.

Check vacancy rates in Cranbourne. I think you'll find it's very very low, meaning you'll re-rent very quickly. Maybe even for higher then $10 pw increase for the new rent.

A tenant that is willing to play chicken on $10 pw with the LL is not good news.

 

BTW, I had property near you, in Berwick up until 9 months ago and it was in the midst of the lockdowns.
It was sold as IP and the new owner not only found tenants within a week, they also paid 6 months in advance just to secure the place.

Currently I'm up the hills from you, about to get rid of my tenants, and I already have someone waiting for them to move out.
Vacancy rates are very very low this end of town. You tenant knows they have nowhere better to go.

 

Look, it's your call.
No one can predict the future.

I reckon, based on the information I have, that you won't have a major loss. But my information is very partial.
My main problem is that you showed your hand and now it's a power play. If you're backing off now - it sends a message I personally wouldn't want my tenants to have.

It's a gamble. It always is. But it's part of the game.

EDIT: I thought it was the OP.... So my answer was to the OP rather then @wylie