Lock it in?

Hey all,

just had a word with my PM regarding air cons,

The tennants are still requesting an aircon, but we'd agree (PM & me) it'll be a $10 a week increase. and she said she could lock them in for 2 years.

is this a good plan or is it too good to be true?
 
Old A/C went in my Elizabeth East property, tenants wanted it replaced which happened just before renewal along with a $10p/w rental increase. They were happy so was it. Win-win.
 
Hey all,

just had a word with my PM regarding air cons,

The tennants are still requesting an aircon, but we'd agree (PM & me) it'll be a $10 a week increase. and she said she could lock them in for 2 years.

is this a good plan or is it too good to be true?

2 years maybe pricing yourself out of future rent increases due to market movement?

1 year would be better.
 
well i guess its a good deal from what i have gathered. so i rekon i'll go with it. my PM reckon she can get it supply and it for 1600. i thought thats quite good.
 
So just to clarify, the tenant is signing a fixed term lease for 2 years at $10 more per week than they are currently paying?

Are you using equity or cash to pay $1600 for the AC supplied & installed?
 
Using cash.

Putting a side tax savings and by electing to purchase with cash, are you aware you've just taken a $1080 hit ($1600 less $10/w increase) to your back pocket over the year, as opposed to putting $440 in your pocket for same period if you used equity @5% to make the purchase?

1. $1600 x 5% = $80 p/a
2. $80 / 52 weeks = $1.53/w
3. $10w - $1.53 = $8.47
4. $8.47 x 52 weeks = $440.44
 
I haven't done a thing yet I'm not a entrepreneur I'm just joe blogs with a house your typical aussie bogan. ****ed if I know mate
 
Why would I take it out of my equity and make my loan go backwards when I pay cash and that's it, its done. Haven't you heard the saying "cash is king" Seems abit backwards to me....
 
Because it's for an IP.

Better off keeping your cash against your offset, either against PPOR or even still ok against IP.

Either way taking money from offset (cash) or equity will net the same result. But future and current tax can be different.
 
Why would I take it out of my equity and make my loan go backwards when I pay cash and that's it, its done. Haven't you heard the saying "cash is king" Seems abit backwards to me....

You didnt purchase your IP with cash savings did you - You borrowed right?

Its the same thing using equity to purchase IP fittings/fixtures or building renovations .
 
Last edited:
Where is the IP located? Depending on where it is, think about whether you want your rent to stay at the same rate for 2 years. Sydney rents have been soft for a little while and I see them rising shortly. Therefore I would not want to lock someone in for $10 for 2 years (depending on how much the rent is now also). If it's $200 and you are putting a $10 increase, not so bad. But if the rent is $300+ you can easily justify a $20 within a year.
 
Back
Top