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I'm scared to increase the rent

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Your Investment Property | 26 Apr 2012, 12:00 AM Agree 0
I’ve had the same tenant for three years and haven’t increased the rent since he’s been there. I’m starting to feel the pinch financially with my mortgage and need to up the rent. My problem is that the tenant said he’ll move out if I do and I don’t have a buffer in place to deal with even a short vacancy. How can I manage this situation?
  • Frank | 26 Apr 2012, 09:24 PM Agree 0
    like you, I wimped out on raising rent for years with tenants becoming friends (or were they just using me) until I finally bit the bullet and followed agents style - simply prepare a professional notice letter same time each year to deliver a bit over 60 days before end of lease (make them expire around Feb. when most people move so you'll have tenants lining up)

    - research current market rentals for comparable properties, quote a few current examples in your note, then show why yours is 10% below what they'd pay elsewhere, thank them for looking after their home, invite them to continue, and state that you'll need a new lease signed (and make sure you have the paperwork ready and follow through - they won't ask to renew), advise that they need to give you x days written notice if they don't wish to renew, then just drop it in their letterbox or slip it under their door !

    A week before the rent increase takes effect, sms them a reminder, and lo - increased rent paid into your bank account on time next week - no awkward face-to-face conversations necessary.
  • Gordy | 28 Apr 2012, 10:59 AM Agree 0
    Talk to your Bank about missing a loan payment or doing a redraw (if available)? If you have been making your loan payments on time this should not be a problem! This will give you the buffer you need should your property be empty for a few weeks!
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