Market forces that drive up rent prices

MARKET FORCES THAT DRIVE UP RENT PRICES

By FOX PM

As a landlord, rent increases are something you need to think about as it comes time to offer your current tenants a lease renewal. While it can be tempting to increase the weekly rent for your tenants, there are market forces you need to consider when you’re determining if it’s suitable to increase the rental price for your properties. Here are the factors you need to consider and eliminate when you weigh up whether to make a rent increase.

Specific property costs don’t count

If you’ve had to spend money on your property in recent months, this isn’t a strong reason to increase your rental prices. This is because property-specific costs don’t reflect the wider market which is what creates the basis for raising prices in the first place. For example, an expensive repair to plumbing or structural elements of the property isn’t a wider market factor such as vacancy rates. This is where it’s essential to make sure you have a cash buffer for unexpected repairs and maintenance.

Vacancy rates

The warmer months in Australia are the most popular time for tenants to look for a new property. The new year, in particular, is popular so if you’re listing one of your properties for rent, this could be an excellent time to increase the weekly rental price for your properties. Just beware if you’re increasing the rent with current tenants, you have to be prepared for the possibility that they may find another property. This is why it’s essential to consider the broader market and consult with your property manager and other trusted advisors.

Market performance

Beyond vacancy rates, you should also take market performance into account when you’re deciding whether to increase the rental price for your properties. To do this, do some research on the property’s suburb and surrounding areas. You’ll need to look at factors such as the median rent, median house price and average rental yield.

Finally, when you decide on increasing the rental price of your property, weigh up the cost of vacancy against the rental increase. For example, if your property is currently rented at $750 per week to rent and you’re considering a $10 increase to $760 per week with the current tenants, do your calculations. Just one week of vacancy will eliminate the potential gains from a rent increase and leave you out of pocket by $230 compared to if you’d kept the rental price the same. Again, this comes back to having an adequate cash buffer set aside in case of extended periods of vacancy at your rental property.

There are a lot of factors you need to consider when you’re deciding whether to increase the rental    price of your property. The most important factors to consider are market factors such as vacancy rates and market performance as these are things that other landlords will consider too.

 

Winter Reading For Savvy Investors

WINTER READING FOR THE SAVVY INVESTOR

By FOX PM

As the winter days come to an end but it’s still not quite warm enough to venture outside fulltime just yet why not spend your spare time enhancing your investor skills with a few top pick reads. 

The Barefoot Investor 2019 Update by Scott Pape  
If you’re looking for simple ways to get your finances in order, The Barefoot Investor 2019 Update will get you on top of things. This updated edition, published on 1 July 2019, features recent updates that are relevant whether you’re saving for your first investment property or you’ve built up an extensive portfolio. It includes information about the Banking Royal Commission, a look at Afterpay, recent federal budget changes, and managing your finances as property prices decline.

Happy Money by Ken Honda
Happy Money by Ken Honda shares how to transform your relationship with money so you can cultivate more prosperity and reduce your stress around personal finance. Written based on the principles of Japanese Zen, Honda explains how to examine your feelings around money and whether they are holding you back from your desired level of financial success.

Principles by Ray Dalio
One of the most profound investors of our time, Hedge Fund Manager Ray Dalio shares his unconventional principles that have led to his business and personal success. Dalio is well-known for his business success, starting his investment firm, Bridgewater Associates out of his two-bedroom apartment in 1975.With approximately USD150 billion under management, Dalio shares the personal and professional questions you should constantly ask yourself to reach greater levels of success.

The Untethered Soul by Michael Singer
While it’s not specifically a book about money and investing, the Untethered Soul includes several valuable lessons on letting things go. Delving into the question of who we are and what our identity means, this book will help you examine how you view yourself and the world, and whether you’ve become fixed in your views. As many of the world’s greatest investors will tell you, learning to detach and being open to new views and ideas are crucial to investment success.

Lily

LILY

By FOX PM

 

We had the pleasure of having Lily from Melba Copland Secondary School undertake her work experience with Fox PM. 

Three things Lily found surprising about the property management industry:

  1. How much work there is to do with all the different emails, messages and phone calls.
  2. The background of Allhomes.
  3. The organisation of forms and apps etc.
We also asked Lily if she felt this work experience could lead into a job in the future and her response:
Yes, I do. After learning a lot about the procedure of the industry, I have found many reasons that I feel will contribute to leading into a job.

 

The three things Lily enjoyed most about her work experience or the industry were:

  1. Learning about the procedures, reading emails and preparing work.
  2. Getting to know the professional way of interacting with tenants.
  3. Feeling professional and capable in this industry.

We loved having Lily in the office. She attended routine inspections, completed emails, sat in our meetings, wrote an ad for an upcoming property and contributed to a couple of internal projects. She is an amazing young woman who had lots of great questions and we think that she would make a great addition to the property management industry. Thanks for being part of the Fox family Lily, you will be welcomed back once you finish highschool! 

ACAT

ACAT

By FOX PM

ACAT is the Australian Capital Territory Civil & administrative Tribunal. The Tribunal’s jurisdiction powers and procedures are defined by the ACAT Act, other authorising laws and its Rules and Directions. 

When there is a dispute between a property manager and a tenant that cannot be resolved, the members of ACAT hear these cases via mediation and provide rulings on matters to do with tenancies in the ACT or proceed to the court for a full hearing. While the ACAT is not a court, their rulings are legally enforceable. 

Many property managers regularly find themselves at ACAT as unfortunately, it is a fairly standard event to happen. However, when a tenancy is managed well, the tenants are respected and the lines of communication remain open and all parties are reasonable, the services of ACAT should not be needed. Since our very first day of trade, Fox PM has never had cause to be taken to ACAT or to take tenants to ACAT. 

Best time of year to rent

best time to rent

Our market has historically been quite stable but there are some trends when it comes to the best time of year to rent out your property.

SUMMER: Canberra has a very fluid population and the Nov – Jan period is always a busy time with lots of tenants looking for rentals as they come into Canberra for work or study. 

WINTER: Always a slightly slower period of time, the cold tends to see fewer rentals on the market and slightly longer vacancy periods.