Tenant Requesting Air Con

Hi All,

Have a 4/2/2 highset IP in LCC currently renting for 450/w which is on the high side for the area.
Have great tenants (very blessed!) signed through to early next year but if they leave, I'm told it will be difficult to replace the rent.
Last week they requested a new air conditioner installed in the lower built in area for the upcoming Summer.
I took this opportunity as an opening to extend their lease so offered to install a new air con if they signed until this time 2019 at the same rent (they've accepted but haven't signed).
Through research and speaking with agents/PM's/BA's the consensus is most 4/2/2's in the area are currently going for between 360-420/w (although most of this stock is lowset with the 2nd bathroom being an ensuite).
So if I take the high side of that range I stand to lose at least 30/w which over 18mths = 2340.
I figured a new air con would cost 2k so I'll still be in front and won't need to pay another letting fee.

Just wanted opinions on the following:

1. Would you guys have done anything differently, e.g. offered to split the cost with a 6 month extension instead?
2. Have I extended them for too long as 2 years is a long time and the rental market could change by then?

Happy to hear all thoughts/opinions.

Cheers
BB

 

1. Nope I did something similar and only locked for 6 months. Which ended up being too short because the rental market didn't recover and I had to drop the rent again to keep them after the 6 months was up.

2. Possibly but probably not given that you are still above market rent currently.

 

There are houses without aircond?

Vacancy time, letting fee, possibly less rent, etc. Long term relationship benefits are many.

 

Put in aircon
Collect rent
The end

 

All my IP's have AC, either refrigerated or evap.

One in western sydney had no AC when I bought it, every summer the tenants would go stay in motels on hot stifling nights to be able to sleep. It used to have a box wall unit but it broke and previous owner just removed it and filled in the hole.

Settled late Jan, drove over and introduced myself, asked if they wanted split system installed... she almost burst into tears from happiness. Didn't increase the rent as it was already high'ish given the condition, happy tenants and their ledger is now almost perfect compared to the mess of arrears it was before I bought it.

 

Zero of my own properties and zero of my company's managed properties are without aircond. Most would have some form of heating as well.

 

I'm not 100% sure but I think the layout suits their family - couple on top with elderly relative on the bottom so I think the little extra separation you get compared to a traditional 4/2/2 lowset is most likely the reason.
I think market hasn't changed much because I was quoted 420 max when the property settled and supply seems to be same if not more so I regard myself extremely fortunate.
Helps to have a gun PM also who will push the limits - I was very reluctant to list for the 450 but put trust in her and she came through so very satisfied.

Also, I forgot to mention there is already an existing air con on the top level.

 

Sounds like a great result, well done. Which PM?

 

Seems to be paramount in/around Brisbane these days.
The only property I have yet to have air con is a highset on the north side of Brisbane which is ex-houso.
Tenants haven't requested yet but they are from far nth QLD so maybe they're used to the heat?

 

For QLD would you install both cool/heat system or just cool?

 

Ray White Rochedale.
I normally don't like going with the big names but followed the PM when she got head hunted and moved over.
She is now the BDM but still oversees for most of her clients and is always available for advice.

 

Not familiar with qld market, but I assume they don't need much heating there. Check with your PM, they should be on top of what competing properties in the area have.

 

I don't understand how a rental property in QLD could attract a tenant without aircon. I don't think you have a choice. To avoid a vacancy, I think you have to provide aircon. What the house can fetch in rent is almost a separate matter.

 

To be fair, the property already has aircon upstairs.
The request is for an additional unit for the downstairs area.

 

Unless you see a different response from a local agent, like @Richard Williams, Just do it.

You are leasing to a couple who use the upstairs house and an elderly relative downstairs. It only needs to be a small unit to cool two rooms as I would assume half of the downstairs area is a garage/laundry and you will only be cooling the residential area.

Dont worry too much about the lower rent price for an an average 4/2/2. Yours is different from a lowset and will demand its own rent.

 

Its interesting. We went without aircon in our PPOR for 7 years as we had a million other things we had to do to the home first, and aircon was something we considered a luxury. I would imagine more IPs have AC than PPORs for that reason.

 

I don't manage many properties without air-conditioning, but when they come along, I often negotiate between the tenant and the owner to install an adequate split-system in exchange for a rent increase, e.g. $10wk. It's a great way to offset the expense, create a lot of good will with the tenants, add value to the house and enormously add appeal to future prospective tenants.

As your house is already rented above market you don't really want to do the rent increase, so I think locking them in till 2019 was the perfect thing to do. Well done!
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Definitely go reverse cycle. It really doesn't cost much more even if the tenants rarely use the heater and it's a bit of an expectation that they do both.
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I just wanted to agree with Angel's point above too- properties where semi 'dual living' situations are possible can command significant premiums over the usual floorplans and are quite popular around here.