Target exceeded! Anyone noticed their rent coming down?

Basically. The market will bear what the market will bear – in other words, I have to follow the rest of the (comparative) rental market. Trying to simply increase rent if my own costs increase could result in me losing my tenants.

As Shauno says, investment property is about trying to make money in the longer term. My aim is to buy properties where the rental income covers the holding costs (after tax). Then the capital gain (if and when it comes) is free to me. That said, if you don’t run investment property like a business, and take care of your clients (tenants), you will end up in trouble.

tylersmayhem said :

Interesting points. So it’s not simply to cover a increase in water costs or higher interest rates to you as a landlord?

Why would it? The only point in owning an investment property is to make money. So you are to a point always going to ask for as much rent as the market can afford.

Interesting points. So it’s not simply to cover a increase in water costs or higher interest rates to you as a landlord?

I don’t use $15 as a flat figure. I make the decision based on a few factors, including:

1) What rent could I achieve if the property was currently vacant?
2) Has the tenant looked after the place and not caused me hassle?
3) What does the managing agent recommend?
4) What does the place rent for currently, and what percentage increase does the rent rise represent?

Typically I won’t charge what the market will bear if the tenant has paid on time and looked after the place (good tenants are valuable). For the rent raise I did a couple of weeks ago, the agent recommended $15, and if the property were empty I could probably get an extra $30-40 without much trouble. The tenant is very good, so I figured $15 seemed about fair, as the $15 is about a 4% increase, which is approximately in line with CPI. But it’s ultimately a subjective thing.

Berlina, as a landlord what do you base your regular yearly increase of $15 a week ($780 odd per year) on as a matter of interest? And before answering, I do understand that it is your prerogative.

In that case – absolutely.

VYBerlinaV8_the_one_they_all_copy said :

I’m guessing JB’s comment was directed at me. I figure that running rents a bit below market in exchange for good tenant behaviour is reasonable, and given I am the one carrying the exposure on owning the property, it’s my choice to make.

I meant the regular increases rather than the total amount.

VYBerlinaV8_the_one_they_all_copy said :

I would have thought targets wouldn’t mean too much in this area. The reality is that if people have to front a land ballot to try to get some land to build a home, that not enough land is being released.

Unfortunately it’s going to take a number of years for supply of usable dwellings to meet demand, simply because it takes so long to develop and build property (including ACTPLA dragging their heels…).

My suspicion would be that the target was set after checking what the planned release was going to be anyway.

Then wait a year and announce… *SUCCESS!!!*

Never mind what’s going on in the real world.

I’m guessing JB’s comment was directed at me. I figure that running rents a bit below market in exchange for good tenant behaviour is reasonable, and given I am the one carrying the exposure on owning the property, it’s my choice to make.

I would have thought targets wouldn’t mean too much in this area. The reality is that if people have to front a land ballot to try to get some land to build a home, that not enough land is being released.

Unfortunately it’s going to take a number of years for supply of usable dwellings to meet demand, simply because it takes so long to develop and build property (including ACTPLA dragging their heels…).