new PM, suggests low rent increase

A few months ago my PM Chris and I were discussing the possibility of a rent increase due when the lease expires in September. We like a long lead-time, and had settled on around $25 subject to a market assessment closer to the time when we had to notify the tenant. In early May a new PM Harry was appointed, a pity as Chris was excellent.

Harry has just advised me that it's best not to make the tenant unhappy and leave if we ask for an increase. He said that $10 may be possible and that it's best to leave the rent unchanged at $350/week. There's one property near me asking the same as the current rate. This is well below the standard of my property. The rest are $380-400/week, with a few similar to mine. It's quite possible that Harry wants to make the lease renewal as easy as possible for him. The tenant has good pay, a senior manager.

I'm tending to ask for a $20-30/week increase.

Comments about the above would be valued.

 

It comes down to the market, if it justifies a rent increase (and be slightly below market rent so it makes sense for the tenant to stay), then I would go for it.

Possibly Harry is inexperienced if he's not using good comparables.

 

If market was $380 a good tenant in place is worth a $20 discount to me but YMMV if market rate is $400 then $375/$380. Just because advertising is $400 week, is it renting, does it take weeks to find a tenant plus other costs to change tenant.

I know someone who wanted to put the rent up a little. The tenant wasn't happy. He said think about it for a week and you tell me what's fair. After a week they accepted the increase happily because it was a good deal.

 

Thanks. Except during the pandemic when rent went south at warp speed I've always increased the rent a little at the end of each fixed period. This made the tenant aware that the rent was increasing. I agree that the rent can be a little below the going rate, and am happy to have this to keep the tenant and void the hassle of finding a new tenant, With the rent below the going rate the tenant will probably stay. I've never had a tenant walk away due to a rent increase.

I'm now tending towards $25, just below the market.

 

Always keep rent as high as possible so you are are at market the whole time. If you fall behind its hard to catch up. In many areas at present tenants fear being forced to move since it will be hard to rent elsewhere for the same $$$ and all costs of new connections and the like. Moving is a horrid process and nobody would want to choose it.

Coles & Woolies dont feel sorry for customers buying food at higher prices.

 

Obviously it depends how many similar properties are sitting on the market. I would say that now is a good time to increase but I will be keeping my walk-up 2-bedder at a very competitive rent to keep my single reliable tenant.

 

I just got a call from one of my PMs in Blacktown telling me I can increase the rent by $20/week.

We plan on putting a GF in soon so we're holding off on increasing it atm. They told me the GF would rent well and comfortably at 420/week.

 

Harry just wants to keep both parties happy and a win-win. While not lazy, it is the path of least resistance, and it's a $10 figure that sounds small enough not to get push-back.

 

Thanks again. Harry wants to keep the rent the same. It could be that he wants have the rent stay the same to make it easy for him, and that the hassle of an increase or getting a new tenant is not worth it for him.

I looked at other rentals in my suburb and none are as good as mine. One has a garage (mine has a car port) and tiny rooms (mine are big). One has a HWS in the kitchen. Most are old (mine has a recent reno). Some are further from shops (mine is close to shops). If the property was advertised I'm comfortable asking for $400/week, so $375/week is below the market. It's tight market.

 

Harry should know how to negotiate an appropriate and fair rent increase with a tenant without degrading the relationship.

 

This!

I keep my rents at market. I've never once had a tenant move out due to a rent increase. If you are at market rents then what is the tenant to do? They'll have to pay that where ever they go as well as the costs and inconvenience of moving. In fact we've just had one go up $150pw, and the tenant has stayed.

 

If they wanna play, they gotta pay.

Yes, yes I'm a big meanie apparently

 

I wouldn't be too happy with Harry. If you don't even try for market rent then you will fall behind. If you do ask the tenant will either agree or try to negotiate less. Not much room for negotiation in $10!

Mind you we do seem to have an issue with keeping tenants when we increase the rent to market, but we always get a new tenant in at market rate.

 

Most reasonable tenants will be happy to pay marker rent. Much better than being responsible for the actual much higher mortgage repayments . If a place is quite under market rent, then I'd say adeoius muchachoes.

 

I've followed the recommendation of my PM - almost every lease renewal has had a rent increase, and every change of tenancy has had a rent increase without any vacancy. There was 1 rent increase where the PM suggested a figure (cant remember exactly what it was), but we ended up going slightly less than the initial proposal.

Having said that, these are properties in areas with high rental demand - I am happy with the judgement of my PMs (have been very happy with the PMs I have now - previously, not so much!), and I would listen to the advice they give if demand drops too.

Cheers,
Inertia.

 

Haha, me too.

 

Exactly! We're living off of rents. Cost of living is going up, and so are rents. So.....much as I feel their pain (sometimes), I have to do what's right for me, and my family.

 

Same here, and that's all well and good if you've got a good PM. However I've learnt from my many years on this very forum, that there's less good ones than there is lazy or overworked, who take the easy way out.

 

I also keep a pretty close eye on the rentals in the area so I know what's happening anyway.

Last one, the tenant gave notice to break lease - there were 3 other (overpriced) vacancies in the same street, 2 quite similar, and they'd been available for at least a month already. We said put it out for $850 and had a new lease signed for 2 days after the vacate date.

The two similar properties are using the same agent who seems to have an unusual strategy, changing the weekly rent up and down every few days. But had them listed in the range $960-1000 pw.

Two months later and the 2 similar properties in the street are still there, one now has a deposit taken, one has dropped to $800. Takes a long time to recoup a 3 month vacancy!

 

Oh, rent....OP put it up if the prior amount is still under market by 20 bucks or so, Harry needs a new job if he is working for the tenant but paid by you !