increase in rent?

with the nation wide changes/increases of rates on investor/IO loans, have any of you started the increase of rent from your properties?

im hoping one positive to take from the lenders hiking rates is the nation as a whole lifting rent.

thoughts?

 

I doubled rents last week and will double again this week

 

I think it might be heading that way, a lot of other costs are getting more expensive. Unless I've got perfect tenants I'm going to lift the rent.

 

Rents should always be at the maximum the market will pay anyway no?

 

Depends on the supply/demand in the area. If there is a lot of supply, and a lot of rentals available in your area, you don't want to lose a good tenant and have vacancy unnecessarily.

 

try this in perth guys ,haha

 

As the Property Twins alluded to.
There is 0 correlation between holding costs and incoming rent.

Rent is based on supply and demand. If people can't afford it they won't rent it, regardless if your property cost a motza. They will simply move back home to parents, share with another family, or move to a more affordable area.

At best you could say low yields reduces the number of investors in an area potentially keeping prices lower in a predominantly investor-owned area.

 

Investment used to be for people with money take on a modest amount of debt and get rental income, the good time roll on and you get good yield, in bad time like high rate, you do with a bit less without any issue or hardship

these days people load up debt to their eye ball cos it is an easy way to get rich and they had it lucky for the last decade

some will find out the hard way going forward that breaking fundamental rules of money about leverage going to cause you lot of trouble.

 

Surely rents are more dependent a local supply and demand basis than a notional level of small interest rate hikes.

 

Its not what you want but what you could get in a given market.

 

very true.

I guess with my circumstances changed where I have taken on some non-deductible debt, any additional cash flow is better right?

I guess what I was planning to use as leverage in order to obtain a rental increase was the recent increases in interest rates...

 

I don't think this has started yet but I think with time and continued tightening of lending criteria it will start to move the needle on the supply side.

A natural consequence of making it harder to qualify to buy investment properties is that the pool of rental properties will shrink. Surely this has to put upward pressure on rents. The question is how significant thus will be?

 

not really because the stock is already there it just changing to different hand or don't change at all so supply and demand don't actually change in term of a number of available houses.

say you got 1000 properties for rent now and at any one time 50 properties are up for sale
if those 50 buyer cant get finance and buy those houses does it change at all?
the old investor just cobs the increasing cost and can't get out.

unless development complete stop over night and no more additional stock is added to the market and you get a lot of population grow then it is a different story.

and if they building new houses and investors can't get a loan, that stock will be taken up by the first home owner or renter moving to home owner etc...

some places in Australia we have a surplus of supplies and over all, we are not under any stock shortage so basically, it changes nothing if investors can't get a loan
so it just market supply and demand depends on where you are located.

 

Would you lower their rent if they had to get a lower paying job and their income decreased???
Marg

 

Nope, I still think these changes, if they persist will still have an effect on supply. Nothing happens in isolation, there will be markets with rising rents and those with falling. There will be population growth, there will be industry driving growth in some areas etc etc but one thing I am sure of is that significant intervention in financial systems by government/regulators always causes distortions both intended and unintended.

The regulator is putting the screws on investment lending and debt in general, they will no doubt succeed, the question is what impact will that have downstream and as investors how are we reacting to this. I for one entered this game to make money. If my costs are rising and other participants are falling away because they cant get finance, then as soon as I can get away with it I will be pushing my rents up.

 

No, also this is not a like for like comparison.

A better analogy would be if an entire town had to get lower paying jobs (think mining towns) in that case the market as a whole has shifted and you would have to make adjustments accordingly.

 

No one cans top you from upping the rent, whether you can do it outside market force is another story. Past evidence shows that you can only do it in a tight market, outside that if you jack up rent higher than your local market force you be sitting with empty houses.

 

With such a low IR available plus first home homeowners grants, the quality of tenants around my area it seems to be a better option.

 

There are markets within markets. If people get lower paying jobs they could put upwards pressure on cheaper houses as their would be more demand for them.

 

Yeah I've moved a few, but only because when reviewed versus the market they were underdone. I don't set my rent, the market tells me my rent.

Bondi +$70 p/w
Carlingford +$35 p/w
Tarneit +$30 p/w
Gold Coast +$10 p/w
Logan +$10 p/w.

No link between the above and rate changes.