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Rental increase

Discussion in 'Property Management' started by Eugene82, 2nd Oct, 2015.

  1. Eugene82

    Eugene82 Active Member

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    Hi everyone,

    I've been reading this forum and Somersoft for a long time now but never registered. So here's my first post.

    I have a question. In my IP, the one year lease for the current tenants is about to end. During this year the rents in the area went up by between 80-100$ per week. While I'm happy with the tenants, I also don't want to miss out on lost potential rent. What would be a reasonable increase in rent? I'm happy to compromise.
    Thank you
     
  2. thatbum

    thatbum Well-Known Member

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    Personally, if you've done your research and you're sure $80 to $100 is market, then personally I think its reasonable to increase it to market.

    Otherwise, if you want to compromise, its probably best to have a chat to your tenants about it.
     
    legallyblonde likes this.
  3. twobobsworth

    twobobsworth Well-Known Member

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    Depends $100 rise on $200 is a lot, $1500 not so much. Didn't think there has been much rental growth in many places.
     
    legallyblonde likes this.
  4. Eugene82

    Eugene82 Active Member

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    From early 500 to early 600. Lower North Shore 2 br unit
     
  5. Scott No Mates

    Scott No Mates Well-Known Member

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    As per @twobobsworth how big a jump is the $100/wk as.a % on current rent? Tribunal would need good justification to increase above 5-10%

    You also need to be comparing apples for apples ie similar properties not refurbished vs new or old vs new.
     
    Kael likes this.
  6. Jackson

    Jackson Member

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    If you are certain that the market rent is up between $80-$100 per week then increase it to match the market. Personally, I would go for the higher amount ($100), put it forward to the tenant and see their response. This will also allow you room to negotiate should they come back to you with a lower figure.

    Otherwise, you could raise it by $60 for the first six months and $40 for the next six months.
     
  7. HUGH72

    HUGH72 Well-Known Member

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    Nice, must be a strong in demand rental location. Are you comparing like for like and are the properties listed for 100 pw more actually renting quickly?
    It's a good position to be in, I can't ever recall having increased the rent anywhere by more than $35 pw after a 12 month lease.
     
  8. DiligentPM

    DiligentPM Well-Known Member Business Member

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    Sorry post disappeared. Check RTA Fact sheets as for existing tenants a rental increase cannot be deemed excessive...increasing rent significantly to align to current market conditions when advertising for new tenants with a vacant property is a different story
     
    Eugene82 likes this.
  9. Ed Barton

    Ed Barton Well-Known Member

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    I'm usually in favour of increasing rent to at the top of the market range. But this is a huge increase.
     
    legallyblonde likes this.
  10. legallyblonde

    legallyblonde Well-Known Member

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    Wowsers! That is a huge hike.. But like others have said that... If you can justify it.. it is all good.
     
  11. Eugene82

    Eugene82 Active Member

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    Thank you for your replies everyone. I will speak with PM after the long weekend and update you.
     
  12. skater

    skater Capitalist Premium Member

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    If the rental market has strong growth, I would only allow a six month lease, that way it is much easier to stay on top of market rates. For instance, if you had already raised the rent by $40-50 six months ago, you wouldn't be having any problems now increasing it again, but to increase it by $80-100 in one hit seems like a large jump.
     
  13. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    @skater makes good points. I try to time my leases to factor in moves in the market. I am offering shorter leases on my Sydney stuff now as rents are moving and ought to continue for a while.

    Talk to your PM. If they're competent, they'll be able to confirm market rent and you can raise it accordingly with the knowledge that:

    1. The tenants may not like a huge jump
    2. If they wish to go elsewhere (comparable), they'll be paying the same as your proposed increase anyway