Tuesday 19 June 2007

Update: Property Portfolio

After a couple of months of exceptional gains in the reported average sales price for the suburbs our houses are in, this months figures show a drop back to the long-term trend (as I'd expected). This won't be reflected in my net worth figure until the end of July, but will knock about $30K off my net worth figure at that time.

It's been twelve months since our last annual review of the amount of rent being charged for our rental property. But the "new" tenants have only been in the house since last December so I think I'll wait until the end of the year before increasing the rent. We had raised the rent from $400 per week to $410 late last year, but this encouraged the previous tenants to move to a nearby house that was available for a similar amount (but also had a pool). As we had trouble quickly finding a new tenant just before Christmas, we decided to advertise the property at the previous $400 rate in order to find a tenant as soon as possible. This means that come December we won't have raised the rent for two years, and during this period rents for houses in this area have increased by over 10%. On the one hand if you don't raise the rent for a long while it's very hard to increase the rent back up to the market rate if your tenants stay on. On the other hand if you increase the rent every year and tenants are encouraged to move out, you can easily lose more rent from the vacancy rate than you get from the rent increase. Rents in Sydney are fairly low as a percentage of the property value, although with vacancy rates very low at the moment, rents have started to rise quite rapidly.

Enough Wealth

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