Rental increase how much to put it up too

[catcha]

Hi All,

ive been renting my IP 3 bedroom with spa ground level in Leanyer in Darwin for 2 years at $420 lease expires this june. Have been told by my PM what I would like to do. with the rent apprasial its should be from $420-430 pe week in this rental market.

I actually lock it in for 2 years at $420per week with this current tennant.

Currently looked at other around the area and lowest is $470 and up.

i'm thinking minimum $450 and if the market dictates even more.

Whats peoples opinion on rental market in Darwin.

 

[skater]

Hi All,

ive been renting my IP 3 bedroom with spa ground level in Leanyer in Darwin for 2 years at $420 lease expires this june. Have been told by my PM what I would like to do. with the rent apprasial its should be from $420-430 pe week in this rental market.

I actually lock it in for 2 years at $420per week with this current tennant.

Currently looked at other around the area and lowest is $470 and up.

i'm thinking minimum $450 and if the market dictates even more.

Whats peoples opinion on rental market in Darwin.

It sounds to me like you are a long way behind market rates. You might have difficulty trying to get the existing tenant to agree to a price jump so high.

A bit late now, I know, but you are much better off giving regular smaller increases and keeping the property at market values at all times.

 

[catcha]

would be $450 be reasonable ? I think so ?

 

[skater]

Well, that is a jump in $30pw for the tenants. What did the PM say? The most I have pushed mine up in one jump is $25pw and that is after the PM has said that they can really only go up $20 max in one hit.

 

[Jody in Darwin]

Hi Catcha,

Mid March is a little early to do a June appraisal as prices can change in this time (June is usually busier than March in Darwin). I would try and avoid 2 year leases if possible because, as you have found, the market will leave you behind.

Having the rent a long way below market value doesn't do anyone any favours - not even the tenant. They very quickly see the lower rental as a 'right' and often (in my experience) don't make hay while the sun shines by saving. It makes for very angry tenants when the rent eventually has to go up.

How much you increase your rent depends very much on the tenants you have in place. If they are particularly good, you may want to do it in increments - say $20 this year & then what the market will bear next year. There is no harm in keeping the rent a little under market value ($10-20) a week to keep a good tenant BUT they must be made aware that they are getting a discount & why or you would miss out entirely on the goodwill it is meant to generate (which would be a waste of money).

Good luck with it.

Kind regards,
Jody.

 

[skater]

I would put it up by $20 and then another $20 in six months. I don't believe in keeping rents below market value at all.

 

[Cdro]

Cd

There is no reason that you should keep the rent too far below market rates. You just need to keep the rent low enough so it is not worthwhile for the tenant to move somewhere else.

Is $470 the market rate for your type of unit, or is that just the lowest in Darwin? Find out the reasonable rate for a comparable residence and then stay 5-10% below that to avoid the tenant moving.

I agree with the suggestion to raise the rent in a couple of stages. Don't lock your lease in for 2 years if you know you are under the market.

 

[catcha]

Hi $470 is the cheapest 3 bedroom house around the area I put it up to $445 extra $25 a week. Pm will present it to tenants if in an unlikely event they reckon it's too high I'll get new tenants and make it $470

 

[Ed Barton]

Hi All,

ive been renting my IP 3 bedroom with spa ground level in Leanyer in Darwin for 2 years at $420 lease expires this june. Have been told by my PM what I would like to do. with the rent apprasial its should be from $420-430 pe week in this rental market.

I actually lock it in for 2 years at $420per week with this current tennant.

Currently looked at other around the area and lowest is $470 and up.

i'm thinking minimum $450 and if the market dictates even more.

Whats peoples opinion on rental market in Darwin.

so the pm has told you 420-430??
you think market is 470+??
you want to set rent at 450??

 

[catcha]

yes why not

 

[Ed Barton]

yes why not

i'm wondering why there is such a big difference between the pm's estimate and yours.

 

[catcha]

i'm wondering why there is such a big difference between the pm's estimate and yours.

Ed, I think it comes down to this PM being new and not knowing that I had fixed it for 2 years at 420.

I mean for me to raise it only 10 more or keep it the same is silly. i'm not charity.

the $470 is the lowest advertised in this suburb and its a good suburb. you could probably get a 3 bedroom in a bad suburb for $420 and have kid and people break into your house all the time.

so lets say median rent is about $450 i'm putting it at $445 I'm pretty confident they won't be able to find something similar for the price.

Once inpex comes it will be interesting to see how rents are affected.

 

[rexilla99]

I would offer about $5-$10 discount from the market rental and have contracts for 1 year ending either Jan/Feb or June/July which are the busy times. This will allow flexibility to increase rents. If you feel the market is not strong than lock the contact for more than 1 year.

 

[Fudge]

Hi Catcha,

How much you increase your rent depends very much on the tenants you have in place. If they are particularly good, you may want to do it in increments - say $20 this year & then what the market will bear next year. There is no harm in keeping the rent a little under market value ($10-20) a week to keep a good tenant

Couldn't disagree more.

Increasing you rent and rental values should not have any bearing on who rents the property.

The market sets the rental figure and you should not be 'sympathetic' to good or long standing tenants.

It is a business, and feelings should go out the window.

$20 / week is $1000 / year! I wouldn't be giving my tenant a $1000 benefit every year.



F

 

[Fudge]

Ed, I think it comes down to this PM being new and not knowing that I had fixed it for 2 years at 420.

Why not approach other local agents to give another estimate. If you have a new PM, maybe they aren't switched on to the Darwin demographic?

F

 

[catcha]

Why not approach other local agents to give another estimate. If you have a new PM, maybe they aren't switched on to the Darwin demographic?

F

I'm quite happy with this PM so far besides the rental advice. Its all comes down to me and what i set it at. and if the tennants feel that its too much well seeya there is the door. I know someone else will rent it for more.

rent covers the mortage to a confortable level i'm happy with at this stage and if it needs to be raised more then i will do it.

 

[atsim]

Hi All,

ive been renting my IP 3 bedroom with spa ground level in Leanyer in Darwin for 2 years at $420 lease expires this june. Have been told by my PM what I would like to do. with the rent apprasial its should be from $420-430 pe week in this rental market.

I actually lock it in for 2 years at $420per week with this current tennant.

Currently looked at other around the area and lowest is $470 and up.

i'm thinking minimum $450 and if the market dictates even more.

Whats peoples opinion on rental market in Darwin.

property manager is probably friends with the tenants. put 2 and 2 togeather

 

[catcha]

Maybe that may be the case hence why I stood my ground in increasing the rent above what she recommended