Long term tenants want Aircon installed in my STR

Hi,
With Covid killing STR demand I turned my Airbnb property into a long term rental a few weeks back. The rent is about half of what the Airbnb rent is.

I just got this email from my property manager.
What would you do? Note, if the country opens up, I feel I would be much better having it as an Airbnb again.


The tenants are very happy in your unit.
They have bought the new microwave (receipt and image attached). I can reimburse them from your account if you are ok with that.
They have also expressed interest in contributing 40% to the installation of a reverse cycle aircon unit as they would like to stay another 6 months after their lease ends in November. I think they are hoping to do this before their lease is up so it's ready for the new agreement in November. We could be clear to them that under their current lease, reasonable electricity is included at about $32 a week for 2 people so if the bill is more, they will have to pay the difference. Alternatively we could try and negotiate a completely new lease once the aircon is installed that does not include electricity.

 

I think the tenants staying longer is the issue. As a STR in normal situations the rent is $500 a week more.

We only planned to have it as a LTR until Covid blows over/country reopens up.

 

Why are you paying for a microwave for them, or did you rent it furnished. You don’t have to put in aircon as they rented the property ‘as is’, however if you do want to do it, having them pay part of it, is a good time to do it. My thoughts are that demand for short term rentals will be low for a while, so I’d be asking to renegotiate the rent and put the power in their name. It’s easy to put back into your name when you are ready to air BnB again

 

Sounds reasonable, and I agreed to the microwave beforehand (they aren’t expensive items these days).
As to renting, yes, rented it furnished. Good idea putting electricity in their name if it is extended.

 

Seems like a no brainer subject to cashflow. Tenant should pay for power.

 

I'd personally do it. If it's vacant in summertime this property will not be high on prospective tenants lists.

As Wylie said I'd get it in writing that they are owed no money when they leave.

 

Doesn’t seem like any drawbacks, it’s a value add and if they actually pay for 40% then it’s not a bad deal. The electricity arrangement however I wouldn’t be comfortable with since it’s now longer terms not air bnb

 

Yes, do this. We've had tenants install things & we always state that the item will be left there at the completion of the tenancy.

 

could you renegotiate the lease now? put them on a 12 month lease (or equivalent up to the date they were wanting), get the electricity in their name, and have them pay the 40% of aircon install?

Sounds like a pretty good deal to me. I wouldn't expect epic demand for AirBnB in sydney any time soon.

cheers,
Inertia.

 

I would do it too, nice discount on the AC.

 

Sounds like a great deal but Id only do it if I was intending on leasing it to them for the other 6 months. If they pay 40% and then get booted in November that seems a little bit unfair.