No Tenant Until New Year

[Deactivated] on 07/12/2016 - 13:27
Last edited 07/12/2016 - 13:55 by 1 other user

Hi guys,

Tenant in my investment property is leaving next week, and it's unlikely we will get another until the new year.

What would you do if you were me:

  1. Would you use the time to renovate? Property is only 7 years old.
  2. Would you try rent it our as holiday property? Property not in holiday location and unfurnished.

Without tenant for a month, I'm looking at about $2000 of loss income at minimum.

I have already dropped the price, dropping further would be just as much as losing $2000m, if I include relet fee.
In theory if I raised the price in 6 months and they leave, I have to pay the relet fee again.

Poll Options

  • 21
    Renovate
  • 4
    Holiday
Home & Garden

Comments

  • geek001 on 07/12/2016 - 13:37
    +1

    What about trying to find a tenant at a reduced rent for 6 months? It is very hard to recoup the loss of rent for even one week, might as well try and entice someone to sign up for 6 months at reduced rent and list the deal on Ozb. :)

    • [Deactivated] on 07/12/2016 - 13:43
      +1

      I tried that, but didn't work. There is one that asked for a lot of reductions.

      A lot enough to equal $2000 including relet fee

  • SnoozeAndLose on 07/12/2016 - 13:43
    +1

    Just reduce the rent as this time of the year is hard to rent out.

  • CLoSeR on 07/12/2016 - 13:44
    +2

    At 7 years young renovating is a waste, get used to losing about a months rent between tenants. It's normal and not a long time for the property to be untenanted.

    If it were 3 months then yeh you'd have something to complain about and would want to drop the rent.

    • [Deactivated] on 07/12/2016 - 13:46
      +1

      It's the first time it's empty since it's rented 3 years ago

      • CLoSeR on 07/12/2016 - 13:49
        +2

        Yep, so you have had a good run. Last two tenants I've had have lasted about 12-18 months each, in both cases relationship breakdowns resulted in them moving out.

        • affable on 08/12/2016 - 08:01
          +5

          Not good feng shui in that property, hopefully it doesn't claim any more victims lol.

  • CLoSeR on 07/12/2016 - 13:45
    +1

    Don't think it's worth dropping the rent too much, nobody will want to move in this time of the year.

    Get it advertised now, and hopefully you'll have a tenant mid Jan.

    • [Deactivated] on 07/12/2016 - 13:49
      +1

      I have already dropped the price, dropping further would be just as much as not finding one for 1 month..
      In theory if I raised the price in 6 months and they leave, I have to pay the relet fee again.

      • CLoSeR on 07/12/2016 - 13:52
        +1

        You need to keep your rent in line with market or slightly below, raising it slightly will not result in a tenant moving as it costs them money and time to move. Provided your asking price is reasonable.

        • tonyjzx on 07/12/2016 - 13:53
          +1

          get out to multiple agents and award to whoever can get first tenant

          done

        • [Deactivated] on 07/12/2016 - 13:54
          +1

          the drop that they asking for is significantly below the market. If I give it to them, when I raise it at 6 months, it will be big enough for them to leave (perhaps angrily).

        • [Deactivated] on 07/12/2016 - 14:00
          +1

          @tonyjzx: isn't there is penalty if the agent found out?

          I think there is some clause in the contract that said so

      • snook on 08/12/2016 - 10:53
        +1

        Offer the first week free if signed up with two weeks from now and then normal rent after that.

  • SnoozeAndLose on 07/12/2016 - 13:57
    +1

    After reading OP comment, I would say that you should use the time to do some improvement, put it off the market then re taking the picture with a higher rent.

    • [Deactivated] on 07/12/2016 - 14:02
      +1

      At 7 years old, not sure what I can do to improve…
      Perhaps change the carpet, but that's about it…

      It's a modern apartment in modern suburb.

      • SnoozeAndLose on 07/12/2016 - 14:07
        +3

        if it is a modern apartment then you should consider a laminated floor or hard wood flooring

        Many tenants like our house as we had laminated flooring instead of cheap carpet, no matter how old is the carpet people always think that it is dirty.

        Also you can change the blind as well.

        • [Deactivated] on 07/12/2016 - 14:20
          +1

          that was exactly what I was thinking…

          I was also thinking about the blind, it is still quite nice, it's a privacy roller blind. But I was thinking to change it to nice double blind, one see-through, and one blocked.

  • [Deactivated] on 07/12/2016 - 14:05
    +7

    Air B and B that crib, mofo

    • Euphemistic on 07/12/2016 - 15:06
      +1

      yup, buy two sleeping bags and a couple of camp chairs and use it for a holiday let.

    • [Deactivated] on 07/12/2016 - 15:20

      Sorry I don't understand.

      • [Deactivated] on 07/12/2016 - 18:09
        -1

        I'm thinking if a homeboy cant dig my velvet beats, then he's down skidrow without a piece. You dig?

  • Skids andy on 07/12/2016 - 14:10
    +1

    Where is it located ?

    • [Deactivated] on 07/12/2016 - 14:21
      +1

      sydney, about 12km from cbd

    • JoFord63 on 07/12/2016 - 16:11
      +1

      12km from cbd? North, south, west or south-west?

      • [Deactivated] on 07/12/2016 - 18:42
        +1

        North shore

    • niknah on 07/12/2016 - 22:29
      +2

      Sydney's vacancy rate is actually below 2%

      Check on oldlistings.com.au to see what similar places in your neighbourhood rented out for.

      The last time I rented out my place, I didn't even pay for advertising, just put it up on Gumtree. The time before that, I had a 10+ people show up for the inspection.(inner west, 5km from cbd)

  • CyberMurning on 07/12/2016 - 14:53
    +1

    who is leaving at the end of december, that tenants are crazy.

    • [Deactivated] on 07/12/2016 - 15:00
      +1

      they bought a place, can't blame them…
      Maybe next time I should kick tenant out that won't commit to a contract.

      • CyberMurning on 07/12/2016 - 15:04
        +1

        and make sure nov dec jan is in the middle of the contract. ie dont make one year contract start jan to dec for example. if necessary make it 14 months contract or 17 months whatever.

        • [Deactivated] on 07/12/2016 - 15:14
          +1

          When their contract ends, can I force them to sign a new one or kick them out though?
          is that legal?

        • CLoSeR on 07/12/2016 - 15:20
          +3

          @fm:

          Works like this:

          14 days notice if they are 14 days or more behind in rent.

          30 days notice if it's at end of a fixed term agreement (i.e at the end of 12 month lease)

          30 days notice if you provide a contract of sale with intention to sell property.

          90 days notice if the fixed term agreement has ended no new lease signed.

          So if you want them out at 12 months, you need to tell them at 11 months otherwise it's 90 days.

        • [Deactivated] on 07/12/2016 - 18:43

          @CLoSeR: thanks

    • macrocephalic on 07/12/2016 - 16:30
      +1

      I've always thought that around new year was a common time to move. Almost every lease I've ever had fitted roughly with the calendar year. The end of the year is when people often have time off to move, children are on holidays, teachers are not at work at all, etc.

      • [Deactivated] on 07/12/2016 - 18:44
        +1

        Maybe in my area it's not like that. I personally prefer not.

  • dasher86 on 07/12/2016 - 15:20
    -1

    Let it out with one month's rent free period to 12 lease beginning at the end of the rent free period.

  • Randxyz123 on 07/12/2016 - 15:24
    +1

    It's tricky since it is unfinished. You can't list it on Air BnB…..

    Maybe you can try and get some cheap furniture off gum tree and put it on air BnB.

    Is it near the beach in Sydney?

    • [Deactivated] on 07/12/2016 - 21:56
      +1

      It's finished. You mean unfurnished?

      I think it costs more to furnish it even with the cheapest IKEA stuff.

      The area is just not much demand for furnished apartments

      • Randxyz123 on 09/12/2016 - 09:38

        Yes I meant unfurnished…

        I would personally check everything in the apartment, light fittings, curtains, etc etc make sure everything is in decent condition. If anything needs replacing replace it before the New Year.

        I agree with below tap washers would be something worth checking.

  • tunzafun001 on 07/12/2016 - 15:57
    +2

    I'd be delighted to have no tenants in that time frame (2 properties @ 6 months and counting).

    My advice, if funds permit and you think it will make it a more attractive property to stick around in (not necessarily making it worth more), check your depreciation schedule and update if needed accordingly.

    A lot of flooring, curtains etc are 100% write downs after 8 years. So these items will bring you the best returns in the next tax cycle.

    I would definitely make use of an empty house to replace tap washers etc, as it will save that annoying call out on a Saturday/ Sunday in the future. Possibly a quick paint as trends have changed in 7 years (definitely do first before flooring).

    • macrocephalic on 07/12/2016 - 16:32
      +2

      Agree on paint. Paint can get pretty grubby in 7 years, particularly in highly trafficked areas and around doors and corners. You can paint yourself and it will only cost you supplies.

    • [Deactivated] on 07/12/2016 - 18:46

      What's is the current colour trend?

    • [Deactivated] on 07/12/2016 - 21:57

      Thanks for the advice mate.

      What is tap washer? You mean the water tap? Why would it be broken?

      • Name on 07/12/2016 - 23:18
        +5

        A tap washer is the rubber seal that sits under the tap that you turn. It's the reason taps eventually drip. They wear out and need replacing every now and then. It's an easy job if you know what you're doing and don't want to call a plumber. Just YouTube it.

        He is suggesting you replace it now while the place is empty and you're there rather than wait for it to start dripping and have either the tenants ignore it resulting in a large water bill or they call a plumber costing you a bunch or to save you having to go out on your day off to fix the annoying drip and do it now while you're there.

  • avgbowlofpho on 07/12/2016 - 18:04
    +2

    how is it a holiday property if it's nowhere near holiday destinations?

  • DelhiBelly on 08/12/2016 - 09:19
    +3

    Offer 1-2 weeks of free rent if they sign and start the lease by 31 Dec

  • Seraphin7 on 08/12/2016 - 09:59
    +1

    Not quite sure what you are trying to achieve here?

    If the goal is to recoup the $2k in potential lost rent, why are you considering renovating? Let's just say the renovation costs $5k, add that to the $2k lost rent and you're now down $7k.

    It appears you are renting the place for ~$500/wk. To recoup your $7k over even two years you're looking at a price hike of $75/wk (15%). Given you are struggling to rent the place out at the current price, why would it become easier to rent at a higher price?

    By all means, renovate the place if you think it needs it/will add value, but it doesn't seem the most obvious thing to do "because the place will be vacant for a month".

    Welcome to the joys of investment property … there will be periods where it is untenanted and not produced a rental return.

    As an aside, are you really thinking about a "holiday rental" in a non-holiday location with no furniture in it? Indoor camping perhaps?

    • [Deactivated] on 08/12/2016 - 10:41
      +1

      If the price isn't increased, I thought renovated property increased its attraction in the market?
      If a potential tenant have two properties to consider, they would choose the renovated one, don't they?
      Even if it's just a new carpet/flooring?

      • Seraphin7 on 09/12/2016 - 09:34

        Of course it will increase its attraction, but as I said I'm not quite sure what you are trying to achieve here.

        You seem to be saying that because it is close to the end of the year, you are not going to be able to get a tenant for a few weeks, thus missing out on $2k rent. Your post suggests this is the only reason it will be vacant.

        On that basis I can only assume you expect it will get a tenant in its current state at the current rent once you get through the Christmas lull. Given you are now talking about renovating and renting out at the same price, you will not only have lost the rent, but also will incur the cost of the renovation putting you further behind.

        So the question is why is it not tenanted? If it's just because of Christmas, just cop the lack of rent for a few weeks. If the property has some maintenance issues that are causing it to be untenanted (i.e. the price asked is too high for the standard of the property) then by all means attend to those while it is vacant.

        You just need to be clear with yourself about why the property is vacant and whether or not renovation works are warranted at this stage of the property's lifecycle.

  • snook on 08/12/2016 - 10:58
    +1

    renovating is a waste of money if it doesn't need to be done to rent it.

    I do short term type rentals and my place is never vacant longer than 2 weeks. Last time someone offered me more than I was asking before inspections.

  • xssive on 09/12/2016 - 23:04

    Hey OP

    I run an agency in the cbd. As above a few of your options are:

    1. offer a weeks free rent if leased by x date.

    2. Take a lease for 6 months only, and ask your agent to serve a rent increase in 4 months time. If the tenants aren't happy, they will vacate or they will just pay it.

    3. Ask your agent to drop 50% of the let fee, if you wanna reduce it further.

    4. Have a Personal inspection yourself, if you haven't already, could help your decision on a small Reno. Paint and carpet can do wonders for an apartment.

    5. Consider finding tradies to paint and carpet at this time of year, unless your going to do it yourself.

    6. I imagine your agent will have an open for inspection tomorrow, if any interested parties apply, ask for a minimum 14 month lease.

    7. I wouldn't look at furnishing it, and hoping for a short term rental. As if you keep it furnished you will be liable for maintaining those items in the future if you leave it furnished.

    8. I understand people saying don't spend money on it. But also consider a better presented property attracts better tenants.
      New paint, new carpet, ask the agent to get professional photos, should cost approx $150 for 5 hi res. re list early next year.

    9. Contact me to manage it for you. 🤗

    • Euphemistic on 11/12/2016 - 08:59
      1. Don't think you'll find anyone to do the work this time of year. 'Everyone' wants their work done before Christmas and tradies are rushing to get it done, then go on holidays for a few weeks IME?

      You'll probably wait longer for tradies than tenants.

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