Melbourne 3 bedder - demand for rental?

I have a three bedroom IP in suburban Melbourne (Cheltenham). Currently rented for $460 pw.

When discussing the possibility of a $5 - $10 rental increase, the agent mentioned that three bedders are hard to rent just now and implied that it would be better not to raise the rent.

Would love to hear thoughts from those familiar with the Melbourne market.

The property has two living areas, a garage, and a laundry with second shower. The bedrooms have wardrobes but are smallish. Polished boards, ducted heating and a newish wall mounted air con. Reasonable condition, and clean - but the eighties kitchen is a bit dated.

The tenants are excellent. The rent was raised by $10 last year.

 

Is that to do with 3 bedder or the location of 3 bedder?
how many bedrooms should be ideal for good rental?
As I've got a 2 bedroom house and thinking of adding another bedroom for better rent.
Regards
Moses

 

Why raise the rent when you have good tenents.. opening up the chance to lose them for $1200 a year minus agent fees.. and to get new ones you lose possible weeks of an empty house plus adverting fees... food for thought.
Good tenents are like gold in a downturn

 

Not sure. Has always rented quickly. Anyway, didn’t raise the rent.

 

We have great tenants and they are currently paying about $25 under market value just because we have never increased the rent as they are excellent tenants, and I wouldn’t want to lose them. I’d rather think of it as me spending $25 a week in order to have a stress free property. We’ve had them for 2 years

 

I read wrong thought you said $25 a week. I still believe in keeping a tenent happy by not raising.

 

What is your justification for raising the rent? Has the market moved? Are properties like yours in short supply?

Or is it a case of wanting an increase just because it is a year since you raised the rent?

Your PM is best placed to advise.
Marg

 

Had the place for 5 years and only one $10 raise. Reading PC, it sounds like many expect to raise the rent every year.

 

It depends a lot on the location. I have a 3 bedder in the inner west and it's never been vacant in over 5 years. The PM has advised us to raise the rent by $10 every year and we've done so each time. All the tenants we've had have been great so far.

 

Where in the inner west?

 

Kensington

 

I do a rent review every 6 months but don't expect to raise the rent ever year. Rents go up and down and I follow the market. In my area in Melbourne, rents barely moved for 10 years. Not much fun.

 

It mostly depends on whether the market justifies the increase- has the market improved to the tune of what you're asking?

 

My overall rents have actually dropped in the last five years not increased. So it depends on the market, but as a whole, rental growth has been very slow in recent times.

 

Hi, question on this topic also. I haven't raised rents in 2 years and while reviewing currents rental properties in it's Melbourne suburb (Sunshine West) I notice my property is easily $20 to $30 under current market value for a 3 bed, one bathroom. Rented currently at $320. My question is how much can rent reasonably be raised? Obviously the tenant will experience rental shock but this is still business. The property has been rented for 10 years and I've been unable to justify increases until recently.

Cheers!

 

Reading this thread it appears that a lot of people don't raise the rent because they're afraid of loosing a tenant. There's also comments that the markets aren't moving up.

The problem is this is often a universal sentiment. If nobody increases the rent because then of course the market is going to stagnate.

I often get the same message from my property managers. "The market hasn't moved," is the message I hear year after year. A few months ago I was told the market would only support a $5 increase (rent was $400/wk), only to discover that the neighbour's identical property is advertised at $480/wk. I told the PM to increase the rent by $20 and had not protest from the tenant.

Nowadays I tend to give tenants the first year with no increase, then I make sure it increases every year, regardless of what the PM tells me. At a minimum of $5/wk, but I tend to try increase by CPI. I really don't care if the market hasn't increased, my costs increase every year.

At the same time, I don't try hit tenants with a huge increase to try catch up. Even if the market justifies this, my experience is that a tribunal will see a large increase as unjustified and will prohibit this.

I've never lost a tenant doing this, in fact I haven't had a vacancy in 4 years now. The properties are still below market rents a little overall, but not way behind. It's probably also relevant that all my properties are in blue chip locations.