Putting Rent Up - for the first time! help!

[sarahd]

I have a rental property and its been under rented for a few years i.e. should be about $330 per week, I've rented it out for $305 per week. Mainly because they've been good tenants and I wanted them in there because I knew them - better the devil you know.

Its getting to the stage I really need to put the rent up.

I've not wanted to because I might lose them and get tenants that are the 'unknown' and it might be not tenanted for weeks at a time and therefore I'll be losing money on non-tenanted weeks.

Is this pretty dumb? Or renting out lower to keep good tenants a 'strategy'?

Sarah

[cube]

Do exactly what the tenants will do - check the local papers to see what else is available for the price.

If everything under $330 is in a worse state, one way or another, then you can confident that the tenant will find the same.

If the increased rent causes hardship, and forces them to move somewhere grottier, but cheaper, then you can attract a new tenant who can afford the higher rent (hopefully).

cube

[Propoholic]

Hi sarahd

Its getting to the stage I really need to put the rent up.

I've not wanted to because I might lose them and get tenants that are the 'unknown' and it might be not tenanted for weeks at a time and therefore I'll be losing money on non-tenanted weeks.

If you are concerned about the $25 pwk jump then give them a $10 pwk increase now and another in six months. The next increase will be in March which is a fairly strong month for reletting (if need be!). Look upon a vacating tenant as an opportunity to get a better and financially stronger tenant who will be able to wear rent increases.

Dont get into the habit of letting rent reviews slip, even during a soft market give a $5 increase every six months. Tenants wont move for a $5/$10 per week increase

Is this pretty dumb? Or renting out lower to keep good tenants a 'strategy'?

I used to believe there was an advantage to have rent under the market but I found that my tenants stayed 3 - 5 years while paying market rent. Good tenants will always stay a good length of time in a good property when the rent is at market, you dont haveto discount the rent.

[TWT]

you could also confirm your rental price in the region yo uare in...
http://www.dbh.govt.nz/housing/tenan...t%20region.asp

+ Additionally your could also go and check out all the local agencies and see what leases are on offer in your price range and find out how fast they are moving... if you get some hairy answers ... then go and write down all the listings in your area and then check on them every week (make a call to the agency and see if thery are still avaliable for rent). As soon as they are not available you can see how long it takes to lease them out..... you can also go and see a few to see how they compare to your ... make out you are a tennant looking for a place to rent and go through them like you were a tennant...
Hope this is of some value to you.....
Best of luck.
Kiwi

[sarahd]

Thanks. I have spoken to the tenant and increased it by $10 per week.

I will do a review again in six months time.

Good advice guys, thanks.

[David_W]

Nice work Sarah - communication is always the key, when it is rent review time.

[TWT]

Way to Go SarahD!......

[xris]

Hello SarahD,

A brief anecdote.

A few years ago I did not pay much attention to the rent charged for long standing nice tenants. All of a sudden I woke up to realise that while I had been dozing their rent had slipped about $40 below market.

I went round and was nice to them.

They pleaded poverty and said what good tenants they were and how they didn’t bother me will trivial little problems.

I agreed to raise the rent by only $20 then.

I told them I would review the rent again, probably upwards, in six months.

Five months and three weeks later they phoned me to say they had finally managed to save a deposit and had just gone unconditional on a house for themselves, and they were therefore giving me 21 days’ notice.

From this I learned once again:

Don’t be nice: be businesslike.

Don’t believe anything tenants tell you without getting evidence yourself first.

I was paying for the deposit on their new house.

Do not fall into the trap of under-letting.

Do not tell people you will increase the rent in six months time.

What it feels like to be a gullible fool.

xris

[drelly]

I bought a place 18 months ago and immediately put the rent up $50 a week. The tenant made noises about moving but is still here. I knew that she couldn't find cheaper in the same area.

[r2]

Putting Rent Up

I find that the Tenancy Services - Market Rent Information, is a great site for keeping track of rents in my area. Every month they post the statistics for all new rents for which bonds have been deposited. The site is at www.dbh.govt.nz. It has all sorts of other great stuff too. When I see I am getting behind in rent I copy the stats, write a letter explaining where I think my property sits in the market (relative to mean, upper or lower quartile) state the rent increase accordingly, and it generally keeps any emotion out of the equation.

[RentMaster]

I agree r2.

Whever I put the rent up I always include the web site address to www.dbh.govt.nz to provide support as to why I have put the rent up. I think the tenant is less likely to be angry at the decision to put the rent up if they can see a logical unbiased reason for it.