Hm, new tenant or keep current tenant?

So

I want to renew the current fixed term rental and increase rent to market (currently under market)
Current tenant doesn't want to sign the fixed term unless the old carpet in living area is changed
Options:
1. let rent roll to periodic (and increase will still apply)
cost: $0, waiting time 2 months (in Brisbane)
potentially unhappy tenant and risk of not having fixed rental in place

2. let them out, redo carpet for entire place and rent it out
cost: letting fee $500 + downtime assume 2 weeks if PM is on the ball + replace carpet cost I reckon at $3K (haven't got quote yet)
Market rental would be about the same

3. redo carpet in living room and hallway to vynil plank
cost: $1800 (assuming tenant will remove their stuff from living room)
no downtime, fixed rent in place

What would be your suggestion?

Tenant has always been on time with rent, so no issue on that front at the moment, they signed lease with previous owner early 2015
Suburb vacancy rate per sqmsearch is 1.3%
Per PM note, the carpet is old (cream carpet and it's dark and dirty) and will need to be replaced when the property is empty

 

If the carpet is old and dirty, then a request to replace it seems entirely reasonable. Why risk losing a good tenant over some necessary maintenance?
Marg

 

If you are going to have to change the carpets at tenant changeover anyway, I would just do it now and lock in the tenant.

 

@Marg4000 have no issue in replacing as long as they agree to remove their furniture from living room. Some of my consideration would be whether it's better to have the entire house done all at once (which is not possible with the tenant inside), I also incurred some unexpected expensive maintenance so was hoping to delay some cost if possible.

 

Carpet guys can move tenants furniture around for additional 200

 

I think redoing the carpet (if its as old as you say) in exchange for a fixed lease and a rent increase is a pretty good deal.

 

Approx $20-30 per week under market @wylie

 

EN
Here are my ideas which off course have to be different to everyone else.

I would do the bare minimum required by the current tenant to renew the lease. Ensure that you are renewing it at current market rate and for a further 12 months.

I would do the rest of the house once the property is completely vacant and that would be when this current tenant decides to move on. In 12 months, 24 months, whatever it is.

If I was going through the expense of recarpeting a house or repainting or doing some other improvement I would want the benefit of being able to advertise that feature and use it for premium rent and also new marketing photos. If you do it all now it will not be new in 12 months and you cannot advertuse it as newly laid carpet and cannot get the benefit of attracting a better tenant later.

It's my own personal choice but I like to take the opportunity to improve properties between tenants for the benefit of attracting higher rent and better tenants.

I would not recarpet an entire house for a lease renewal. Just the minimum negotiated amount to get it over the line.

 

got it Just need another quote to compare then we can chat with the tenant on how it can be done

 

Definately do not just let it go to periodic, get fixed term lease or terminate.

 

Also don't forget advertising for new tenants is done before current tenant leaves so vacancies can be minimised this way.

 

This. Learnt it the hard way with tenants deciding to move out in the middle of December

 

Thanks peeps,

@wylie thanks yes i should request this to be part of their future process

 

Correct. Tenant can choose not to renew and they go into periodic. This is the same across all states.

The amount of notice / deadline for renewing varies across states. Its 28 days in SA so we negotiate and juggle this process very carefully so as not to let an investor find themselves on an unstable cash flow.

 

This is so similar to what happened to us!
Current tenants "hold us ransom" to say the previous PM promised them new carpets, which Owner denied, but agreed to give in because they are long'ish term tenants. As new PM we were quite taken aback because the carpet is not so bad; we have other units much worse than this. Also we feel the tenants' behaviour is not quite pleasant.... Anyhow, carpet done, 6-month lease signed, but 3 months later, they want out! Will spare you the other details but just thought we would share this with you.

 

That is not very fun ... did they break the lease?

 

Nope not fun at all. They just casually have the Notice and the Owner is not going to release them from the Lease.
Another problem is carpet clean. In all our leases, tenants need to have professional carpet cleaner. Since the carpet is so new, they are resisting but we still need to have some standard for the next person.