Should I voluntarily offer to reduce rent?

Got a couple of IPs in a Perth suburb and given the current Perth market the tenants could move into a similar rental in the area (over 50 in the suburb to chose from) and save up to $50pw.

Was thinking of offering to reduce the rent by say $20pw for each, as they are good tenants and I can't be bothered finding new ones. Given the current market it could take quite a while to find new tenants and it would likely be at a lower rent than what I am proposing.

The extra $2k per year would always be handy but we don't need it. Not looking to apply for any further loans in the next 12 months either.

I am leaning towards doing it. Any thoughts?

 

We can't have that Vassago - pro-active management just isn't on. It creates the impression that you might listen to legitimate issues, undertake repairs and look after your property and hard earned $$.

We have done that on one management a while back, saved the tenant over $5k/yr. Rent is still below where it started however is reasonable for now, the owner is on board and resigned a new lease.

 

Well worth considering. I would be approaching them early for their intentions, most good tenants are honest and know how the rental market is doing so are most likely to offer you some reasonable terms to begin with ( rent reduction, lease term, install something etc) and you can negotiate from there.

 

@Vassago , this is what happened to my IP in perth

Tenants were paying $390.. paid that for 1 1/2 years.. no drama

after that They struggled to pay rent.. PM took them to court/tribunal

evicted them;

4-6 weeks no tenants

new tenants are paying $340 now..

you make a call! good tenants are worth keeping in some pocket of perth ATM.

 

Just re renting two units in manly . Mid winter . Less people fighting over rentals so lower than previous rents , but still above what it was when we bought .

having said that most tenants wouldn't necessarily be tracking rents so they may not be aware .

I'd probably do it if they asked , but I wouldn't volunteer one .

Cliff

 

Really it is a bit of a risk mitigation strategy, take a smaller loss of income now to reduce the risk of a big loss of income.

Potential losses of $1500 from weeks vacant and say $50 pw lost rent ($2600pa) or a definite loss of rent of $20pw ($1000pa) and much lower chance of vacancy & lower rents.

Does anyone know if the bond would have to be refunded for the decrease?

Already got a tenant leaving another IP in a week, got to spend a bit money on that one to get it up to spec and am looking at offering at a lower rent than previous given the current market. I offered to reduce the rent when the tenant gave notice but it was too late.

 

I think making a small drop in the rental price lets the tenant know you have been looking at the market and are prepared to move with it, it also makes there decision to stay a little bit easier. Probably dont have to drop the full market amount in my view, there is a cost and effort to moving that tenants dont like as much as landlords dont like.

 

As per Department of Commerce website http://www.commerce.wa.gov.au/consumer-protection/changing-bond-bond-variation - there is no requirement to reduce the bond.

 

Just bear in mind that moving house is a PITA. If they're happy, they probably won't move for a few bucks a week, and if they're unhappy it's unlikely they'll stay even if you do lower the rent.

If they mention it, I'd be open to the idea but I wouldn't offer. Maybe just have a general "how's everything going, happy with the house?" type chat and see if it comes up.

 

I had a 3 bedroom 2 bathroom house advertised in Montmorency (Vic) with the first OFI Wednesday 5.15pm. Agent rang me at 6.30pm Weds to say 2 people interested. One in particular had already been approved by them as he wanted to rent another house, they had already done the reference checks etc., they had approved him to rent that house but it did not include gardening (mine does). and he really wanted the gardening included. He paid his bond on Thursday and moved in today (Friday). References are great. This is the quickest I have ever had a rental re-let. I have had this house for more than 20 years an d this is definitely a record!!!

The first month's rent is already in my bank account!!! I knew houses for sale were flying out the door but had no idea that rentals were the same

 

I would keep the ace up your sleeve. Or maybe get them to sign them up for another year lease and give them an incentive?