Time for my tenant's lease to be renewed... I suppose I'm gonna have to cough up another grand for the lawyer to update the contract grrrr. How do you guys work out how much to raise rent by?
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The normal (formal) approach is to have a valuer come along and do a valuation for rental purposes for you.
So they look into recent leases of similar properties in the area and come up with a rental figure for you.
But of course it costs money.
Then you take that to the tenant and say "The rent will be going to this level, and here is my valuation report as evidence."
The tenant can either agree, or they can commission their own valuation.
Or, what normally happens is a bit of negotiation goes on.
And in fact, if it's a small tenancy, the informal way to go is to say to the tenant "How do you fell about a $x per annum increase?" and negotiate...Squadly dinky do!
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Originally posted by Davo36 View PostThe normal (formal) approach is to have a valuer come along and do a valuation for rental purposes for you.
So they look into recent leases of similar properties in the area and come up with a rental figure for you.
But of course it costs money.
Then you take that to the tenant and say "The rent will be going to this level, and here is my valuation report as evidence."
The tenant can either agree, or they can commission their own valuation.
Or, what normally happens is a bit of negotiation goes on.
And in fact, if it's a small tenancy, the informal way to go is to say to the tenant "How do you fell about a $x per annum increase?" and negotiate...
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Yeah this is what I often do.
3% is certainly reasonable.
And for the renewal, I often do that via email. As long as you have something in writing...
But I stress it's for the smaller tenancies. When big money is involved, the formal process is safest.Squadly dinky do!
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Originally posted by Davo36 View PostYeah this is what I often do.
3% is certainly reasonable.
And for the renewal, I often do that via email. As long as you have something in writing...
But I stress it's for the smaller tenancies. When big money is involved, the formal process is safest.
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I don't even change the lease agreement...
They're picking up a renewal in the exisiting lease agreement right?
If so, just get the tenant to agree to an email saying they will renew, with everything being the same, but the rent will go to $x p.a.Squadly dinky do!
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Originally posted by Davo36 View PostI don't even change the lease agreement...
They're picking up a renewal in the exisiting lease agreement right?
If so, just get the tenant to agree to an email saying they will renew, with everything being the same, but the rent will go to $x p.a.
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relatively new at this but done two rent reviews so far and I found out that ff there's enough comparable to lease around then it's not too difficult to work out a comparable lease per m2 that is about market levels. If that's not the case then a friendly real estate agent who do leasing tend to have lots of examples to assist. I've found they're willing to help as they want your business when it comes time for a new tenant. I did both.
On documenting the rent review - checked with my lawyer and a signed letter is sufficient. Scan and send as a pdf - tighter than an email. My tenants were fine with this as well as according to my lease agreements they had to pay the legal costs.
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Originally posted by Scouser View Postrelatively new at this but done two rent reviews so far and I found out that ff there's enough comparable to lease around then it's not too difficult to work out a comparable lease per m2 that is about market levels. If that's not the case then a friendly real estate agent who do leasing tend to have lots of examples to assist. I've found they're willing to help as they want your business when it comes time for a new tenant. I did both.
On documenting the rent review - checked with my lawyer and a signed letter is sufficient. Scan and send as a pdf - tighter than an email. My tenants were fine with this as well as according to my lease agreements they had to pay the legal costs.
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I took an assumptive approach and did not get the client to sign anything.
Letter was of the form
Dear XXXXXX,
I am confirming the outcome of the rent review process for XXXXXXX.
The rent was reviewed as per the lease agreement.
The new agreed rental is $XXXXXXXX p.a. plus GST effective January 1st 2017.
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Originally posted by Scouser View PostI took an assumptive approach and did not get the client to sign anything.
Letter was of the form
Dear XXXXXX,
I am confirming the outcome of the rent review process for XXXXXXX.
The rent was reviewed as per the lease agreement.
The new agreed rental is $XXXXXXXX p.a. plus GST effective January 1st 2017.
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Originally posted by Merlot Mike View PostOk sounds good. I'm just a bit surprised that the tenant does not need to sign.
I also checked with a real estate agent I knew who is himself a significant commercial property investor for decades and he rarely used lawyers on rent reviews. He did it with difficult tenants.
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Originally posted by Scouser View PostHad some contracts training (minimal as part of my professional life) and my understanding is stating an agreed contractual 'approach' in writing, which they then effectively agree to (by paying) means they have "contractually" (not really but sort of) agreed to. I believe it would stand up in court. It's also not a new contract it's a change in one very specific detail to the contract covered by the original contract in a manner determined by the original contract. Essentially once they've paid the 1st payment it is deemed to be the new details. It's actually the new details if they don't object to your letter (I won't go in to why) but paying is proof of acceptance. They could argue they were still considering it in court until the point they pay. If they pay but object that's a different issue but I don't see that being relevant in this case. If you're really concerned use a lawyer. I am NOT A LAWYER so take that in to account when reading my comments.
I also checked with a real estate agent I knew who is himself a significant commercial property investor for decades and he rarely used lawyers on rent reviews. He did it with difficult tenants.
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