[Spring Chickadee]

We've had our Investment property for almost a year, tenants in it for 9 months as we did extensive renovations first. We purchased the property knowing rents were due to go up in the coming years given a mine expansion.

The tenants are great, they keep the place spotless and have an amazing rental history. We allow them to have dogs, have upgraded the Aircon and arranged the odd repair within days.

So, I decided I should really take a look at what the Rental prices are in that suburb at the moment. Our tenants are paying $370p/w for a freshly renovated Full brick 4Bed 2Bath, 1.5 car drive through garage, air con, Pool, large grassy yard, pets allowed. Now for that price you can only get a 3Bed 1 Bath Fibro shack.

The tenants were on a 6 months lease when they begun, so according the TenantsNSW I am entitled to raise the rent (feel free to let me know if I'm incorrect). I'm wanting to be fair and reasonable, they are good tenants after all, but it's also reasonable to want to get rent inline with the market.

If I were to raise the rent to the market value it would be an increase of $60-$80, which for the poor tenants would be a bit of a shock after 9 months in the house. But then again they are working in the mines, so would be aware of the growth and would be profiting from it anyway.

So what do you reckon, way to cheeky to request a $60-$80 rental rise? Is there a limit to how much you can raise the rent by in one go?

[jactela]

you raise the rent you may loose a very good tenant! I know if my landlord was the raise the landlord by that much i could consider moving especially for that large a increase. are you thinking 60-80 per week, fortnight, month?

that is a huge increase and i certainly would seriously consider moving. You should look after great tenants!

[bluedragon]

Do you mean $60-80 a week raise? Wow that is cheeky. At $60 a week that over 3K a year extra!

I believe that you can only raise it by a maximum percentage at one time, I'm not sure what the percentage is but it's not that much. I'm in vic too so may differ state to state.

That would be a bit unfair on the tenant to expect them to cope with that, just because they work in the mines you can't assume they can just pay that much extra.

You should have researched rents before you signed the first lease.

[bluesurrender]

I would inform them that the rent will be increasing by $30 in two months time, then after 6 months do the same again- definitely do not do it all in one hit!

That is what my parents have done in the past if they wished to keep the tenant but get better value from the property.

[bakesgirls]

I personally think that $60-80/week is a massive amount to raise the rent in one hit. Over the course of a year perhaps, but not in one go. They may be working in the mines, but they may also have other financial commitments that they have taken on with consideration to how much rent they pay. This, of course, is not your problem, it is theirs.

You may have to consider that they will reject an increase of that amount, and move. If they are really great tenants, then is that a risk you are willing to take? You could either end up with another great tenant, or you could have someone who is not so great and doesn't take care of your property.

[hiccamups]

I would not really think anything more than $20 a year as being appropriate. If it truly is that far below market rent, you could try for $20 per week, every 6months, so effectively $40 per week by the end of the year.

Remember that having your home empty for weeks or months while trying to secure new tenants is going to cost you far more per week. Plus, you may not find people who will care for your investment like these people do.

[Guest_Retro_Mumma_*]

You are exactly what DH and I were like when we had our first rental property.

We were like "oh our tenants are such nice people, they are (apparantly at the moment) taking good care of the house, we want to keep them so lets not raise the rent".

Tenants can break lease and leave at any time, tenants can trash the house or not pay rent at anytime, at any time something can break and need to be replaced and you have missed out on that extra money each week just because you were trying to be a nice person or keep your tenants.

While I wont disclose exactly how much im going to raise the rent once ive finished renovating investment property in a few weeks time; I dont think its right to renovate the property, get new tenants in at a low rate and then jack up the rent after 6 months.

I put up the rent at every rent review but its never been over $50 a week, I personally think anymore than that is a bit steep.

But thats just me, id talk to your leasing agent about it and see what they reckon.

[Spring Chickadee]

I'm a little torn, they have been great tenants so I want to do right by them. But if the property is worth a certain amount per week I should be entitled to receive it, afterall I did invest a significant amount of money for that privilege.

Also If I don't rise it by much now, and not by too much next time etc etc then the gap between what I am receiving in rent and what I should be will just get larger and larger. The specific reason I purchased this property was to create positive cashflow to help support us as we start our family.

you raise the rent you may loose a very good tenant! I know if my landlord was the raise the landlord by that much i could consider moving especially for that large a increase. are you thinking 60-80 per week, fortnight, month?

that is a huge increase and i certainly would seriously consider moving. You should look after great tenants!

Yes, Thats a week hence why I'm worried it's too cheeky.

I wonder though whether they would want to move given they would only be paying the same amount for another 4 bedder and they have pets with them.

I believe that you can only raise it by a maximum percentage at one time, I'm not sure what the percentage is but it's not that much. I'm in vic too so may differ state to state.

The NSW info I've found doesnt indicate a % but I'll be sure to double check with my Property Manager. Thanks

You should have researched rents before you signed the first lease.

What do you mean? If you mean researched the rents to set an initial rate? If so I did and when the tenants moved in 9 months ago I had already priced the rent quite high ($15p/w more than the highest quoted by different RE agents). If you mean reserached what rents will do, I knew they would go up quite nicely but they took off a little quicker then I expected.

[~nikki~]

In WA I believe thats a $10 rise each 6 months.

So I'd put them on a year lease with a rent review in 6 months time if I were you :-)

[YodaTheWrinkledO...]

I would inform them that the rent will be increasing by $30 in two months time, then after 6 months do the same again- definitely do not do it all in one hit!

Agree it's too much in one hit. I'd probably be honest with them and let them know that the property is currently well under market value in terms of rent, so you are intending to bring it up gradually. Start with a $30/week increase and let them know that it will rise again 6 months (or 4 months later) later by a further $50/week. That way, you get your increased rent and they get a chance to adjust to the new rent. You've got a better chance of keeping a good tenant if you do it this way.

This post has been edited by YodaTheWrinkledOne: 08/06/2012, 12:27 AM