QLD Tenant asking for replacement air con units to reduce her power bills

Let's say this property is worth $100k more than you paid for it. Update the air cond. You will need to check if there are any Qld Govt subsidies.

 

Makes sense - they do seem to be quite old units!

The current quotes advised that they can simply leave the old (now disconnected) units in place, rather than requiring the wall to be patched.

I suppose this could adversely impact my rentability for the next tenant, so I guess you are right in that I would need to patch them in as well... Expensive proposition!

 

This is ridiculous proposition from the tenant. It sounds like the thin edge of the wedge. Next will be insulation, dishwasher , solar panels etc

I've got a 40 year old a/c and it works fine. When it does break down I tell the technician to fix it. Even if custom made parts are needed.

I'd be inclined to tell tenant to buy their own portable a/c unit . You can probably get a top of the range for $1500. That way they can take it with them.

But if new tenants are hard to come by, then they got you over the barrel.

 

What's the market value of the property and the weekly rent? Is it a big house?

I would order the units myself and ask the PM to get quotes for install. Increase rent by $20/week

 

Yeah, I have tenants that do not like the electricity bills and water bills and gas bills & ask me to do stuff all the time.

What I do is tell the PM to tell them, do not use, or cut use, of anything that they do not like paying for......simples.....but most don't get it.

Funny they can always pay for fuel for v8 or v6 gas gusslers, or large TVs, or holidays, and so on and so on.....and the old....I can't pay my rent at Christmas time cause......"insert excuse"

 

I routinely update or install all these things, as well as a choice of...wood, gas or electric heating, I also install at least 1 spa bath, elevators, inclinators, and hire a butler, and that is before I send my landscape crew, my plumber and sparky (must have downlights and new tap fittings etc), then I send my env. expert and recycle expert to make sure we have less greenhouse gas from my IP than the hot air exhaled by my tenants and PM - who are vile carbon emitters in many cases.

All tenants are hard come by, just do the minimum as per above, then do kitchen and bathroom renos, new fitouts and coverings at the end of each tenancy, will leave you about 20k in front on each place at least, so you can do a river cruise and 2 4 week holidays at your choice...

Not bad being a LL hey ?

 

How did you select the kilowatt power of each of the units in your quote - because there is a big variation 7.1/3.5 and 4.6/9.2?

It’s just as bad to get a unit that is too big as a unit that is too small and will cost more than necessary to run.

Get it sized correctly, ideally by a professional.

 

Getting a bigger one isn’t too bad as almost all air cons are inverter models.

 

They’re obviously very old units.

Have you considered negotiating a small rental increase for the installation of the units?

For example, if you negotiate a $10 per week rise this will cost the tenant an extra $521.43 per year which will probably be less than than electricity bills they’re paying. What this does is kind of put the onus back on them to take some responsibility for their claim. If they genuinely believe it, then why wouldn’t they do it? They’ll be better off.

Furthermore, you can then depreciate the new units and will obtain a tax refund in part which effectively reduces the cost to you in addition to keeping the tenant happy. Depending on your marginal rate this could be quite a good move.

You’re going to have to replace them at some point anyway, best do it while they’re not broken as then it’s 100% your responsibly and you might be able to use the situation to your advantage and negotiate a deal with the tenant before they go bust anyway.

- Andrew

 

What would you do with the old units? Leave them in the wall, or remove them and fill in the hole which would add to the cost?

 

Tell 'em you are going to invest in Green Bonds instead to offset the carbon footprint.

 

Yep it’s possible they won’t but that’s why I said the rent increase might be less than the higher power bill than they say they’re receiving. Just looking out for the landlord

I agree with you. I wouldn’t be paying for anything until they move out to factor in an increase then. In fact this happened to me recently (similar), my tenant kept asking for air con and I said sure, for $15 a week increase. No, don’t want to pay that. They moved out recently and the first thing I did was install two air conditioners and put the rent up

- Andrew

 

Hey guys, so as a quick update, I responded through my property manager informing the tenant that, whilst I acknowledge the current unit is old, I can't afford or justify a >$5k outlay to replace an air con unit that is still working, particularly when all of the bedrooms have ceiling fans in them & the electricity bill is not significantly higher than what I'd expect.

I said to explain I'd be happy to look at installing new units and patching up the hole in the wall from removing the current one if the tenant would sign a new 24 or even 12 month lease at +$20 per week rent ($450 instead of $430).

Response I received was as follows:

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I have spoken with the tenant and she has advised she cannot afford to pay the extra $20 per week as she is already paying an extra $5 for the ceiling fans.

I asked her if she would consider staying on and renewing at the same rate and she replied with ‘probably not’.

We will have to see if she weighs up moving out or not using the air-conditioning units as often.

Regards

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We are coming up to the tail end of summer, so there's a chance she will simply continue on a recurring month-to-month lease from here for at least a while longer, but I guess there's always a risk of her moving out from here.

Maybe I could respond explaining that I can't justify that big an outlay without at least tacking on some rental increase & offering to do this for $10 per week instead, or asking what increase she could afford and would be willing to sign a new lease at?

 

This tenant wants to have her cake and eat it too... outlay $5k to save her pennies on her electricity bill, but god forbid you ask for some sort of compensation? Does the PM think there's room for negotiation?

If she's digging her heels in then I wouldn't be too worried about her leaving. I also agree with Wylie about avoiding a periodic tenancy.

She also makes a good point about asking the agent whether there's further benefit in installing those units. If it's in a nice area modern appliances will make a big difference, but in some areas people don't care as long as they can cool the house.

 

Your tenant needs to pay their electricity bills on time. It's not your fault as her landlord that she is paying her bills late and incurring late fees.

The quotes you have been given for new split systems are wayyyy too high.

 

This is not unlike the idea of installing solar. Is that the next request ?

See ya later tenant.

 

Tenant beat me to the punch and asked if I'd agree to sign a 12 month lease with her at +$10 per week instead of $20 per week in exchange for installing the new air con ASAP.

I guess that could work if I can find a more competitive option to proceed with (maybe just order on appliancesonline with installation or something and leave the current unit in there for now - get a handyman to remove and wall up if/when current tenant moves out).