Tuesday 21 July 2009

Looking for new tenants

The tenants of our rental property have bought their own house, and are moving out at the start of next month. They gave us more than one month's notice, and we have engaged the estate agency that sold us the property to find us new tenants. It costs a bit more than one week's rent to use the estate agent rather than advertising and screening potential tenant's ourselves, but I think it's worth the expense. In any case the fee is tax deductible against the rental income. The estate agent also has the benefit of being able to access the database of "bad" tenants - those who have a history of not paying rent, damaging properties etc. - although the privacy and tenant's rights laws make the database of limited practical use.

We had the first 30 minute "open for inspection" session last Saturday, and the estate agent phoned DW afterwards to report that their wasn't much interest yet from potential tenants. Apparently there has been some damage to the carpets (a burn) and the garden is a bit overgrown. I suspect that the agent would like us to lower the rent in order, although the amount we're asking is already in the bottom 10% for a three bedroom house in the area, and is a lower percentage of the average rent than it was when we bought the house nine years ago.

Of course the agent would prefer to quickly sign up a new tenant for less rent than have trouble leasing the property. A quick $750 for two half-hour inspections and some advertising is preferable to spending more time and effort to earn a $1000 fee. While we also don't want to have the property sit vacant for an extended period, lowering the rent from $500 to, say, $400 a week would cost us over $5000 a year ongoing, as it's very hard to raise rents for sitting tenants by more than the prevailing market increase each year.

Coincidentally the hot water tank at our rental property had rusted out and started flooding the laundry last week, so we had an unexpected $1,000+ expense. If we have to pay for gardening and carpet repairs/replacement to attract new tenants my cash flow for the rest of this year will take a hit.

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John said...

The lack of interest could be a sign that the supposed rental crisis (aka bubble) in Sydney is cooling off.

enoughwealth@yahoo.com said...

The agent held a second "open for inspection" 20-min session yesterday and not a single prospective tenant showed up to view the property. Aparently the vacancy rate in the NE region of Sydney is quite high (somewhere around 5%?), but is much lower in the western suburbs.