Rent premium for increased occupancy ?

Middleage Fanclub

I have the opportunity to rent a 2 bed apartment to a family of four, wife stays at home with 2 kids under five. Given the increase in 'wear & tear' on the apartment, what % rent premium would you consider reasonable (over renting to 2 professionals). Premium aside, would you consider moving from 'professional' let to 'family' let?

Musketeer4

20% for increased wear and tear.
You'd be better off to decline and rent to professionals, its a landlords market and you can afford to be choosey here.

yqtwqxqm

Professionals are much easier to manage and get on with.
For some reason families see damage like writing on walls and furniture and p1ssy mattresses etc as normal wear and tear when you point it out when they are leaving.
Makes for too much work dealing with them.

Particularly as she stays at home and minds the kids there, the potential for a large amount of extra wear and tear is very large even compared to if both were working and the kids going to childminders.

I would avoid and rent it to a professional couple or rent the rooms separately to two professionals (which you could probably get away with charging a little more for the rooms individually than the apartment as a whole).

Ms Doubtfire1

Musketeer4 wrote: »

20% for increased wear and tear.
You'd be better off to decline and rent to professionals, its a landlords market and you can afford to be choosey here.

Love this remark. It's going to be tenants market again at some stage when the mini bubble bursts..thinking of circles and such.:D

yqtwqxqm

Ms Doubtfire1 wrote: »

Love this remark. It's going to be tenants market again at some stage when the mini bubble bursts..thinking of circles and such.:D

Thats exactly why landlords should charge as much as possible and not be letting below market rate now out the goodness of their hearts.

They should be banking as much as possible now and saving it to cover the inevitable downturn. We had one a few years ago, we will have another, be it in 3 years, 5 years or 10 years.

myshirt

Musketeer4 wrote: »

20% for increased wear and tear.
You'd be better off to decline and rent to professionals, its a landlords market and you can afford to be choosey here.

Where are your ethics or sense of decency?

Remember, this economy afforded the opportunity for second home ownership to many who never ever ever should have had that in a correctly functioning economy. Perks which the current generation are repaying now on their behalf.

Op, rather than a 20% premium, it should be a 20% discount off the baseline for less wear and tear. So in this case, leave the rent flat would be my call. Go for the quality sustainable settled tenant rather than a bump up in cash.

EagererBeaver

The usual suspects will be along to tell you you're a landlord simply trying to gouge a poor family struggling to get along in life any minute now.

Having seen the damage that kids do in their own house, never mind someone else's, I'd be inclined to put a premium of 30-35% of the standard rent on it. Lower if they're bringing their own furniture.

I'd also make sure you're very clear up front about inspections and that you make sure to follow through.

The other option, of course, is a much higher deposit than normal.

EagererBeaver

EagererBeaver wrote: »

The usual suspects will be along to tell you you're a landlord simply trying to gouge a poor family struggling to get along in life any minute now.

Oh look, they beat me to it.

Ms Doubtfire1

yqtwqxqm wrote: »

Thats exactly why landlords should charge as much as possible and not be letting below market rate now out the goodness of their hearts.

They should be banking as much as possible now and saving it to cover the inevitable downturn. We had one a few years ago, we will have another, be it in 3 years, 5 years or 10 years.

Not disputung that...but would you lower the rent for professional tenants than?

L1011

Ms Doubtfire1 wrote: »

Not disputung that...but would you lower the rent for professional tenants than?

The rent is already "lowered" to the asking price for the assumption of professional tenants.

yqtwqxqm

Ms Doubtfire1 wrote: »

Not disputung that...but would you lower the rent for professional tenants than?

I would charge as much as whoever I wanted to rent it to was willing to pay.
I i cant find someone I like willing to pay it, i will reduce it and see if I had any takers.
If I had none, I would then broaden my criteria for my preferred tenants.

Thats the market in action.

A few years ago landlords could get noone and had to reduce rents drastically to get tenants. This is the upswing of that. Plus now landlords have been bitten by the massive taxes they have to pay too, so will certainly be looking to make that easier on themselves too.

Ms Doubtfire1

I'd call that discrimination...just my 2 cents. Just something I'm wondering about: I am renting and I have plenty (PLENTY!!!!) of animals. I pay market value rent but I have a 'renovation agreement' with my LL. That is an x amount that is paid into a separate account I have visibility to. It's not part of the rental income, and as such it's not taxable. ( I think-I was told that) Any damage above normal wear and tear will be paid out of that at the end of a rental cycle, the remainder will be refunded to me. I find that works extremely well as it's nice to get a chunk of money back if you look after your rebted property.it takes a lot of stress out of the tenancy for both my LL and myself as we know everything is covered and I know if I do well, i have a nice chunk of money to go on holiday with...:D

Ms Doubtfire1

Ms Doubtfire1 wrote: »

Not disputung that...but would you lower the rent for professional tenants than?

The market rent (i.e. as much as someone is willing to pay me) is the baseline, it should be raised above this if the op takes on all the extra damage, wear and tear kids will do to the place being in it all day every day.

As I said easiest option is not to rent to them and find two professional tenants for the rooms who have no kids and no pets.

Mrs OBumble

Forget premiums. Just charge the market rent.

Yes, families are more wear-and-tear. But they're also likely to stay longer, so you'll have on average less re-letting work to do.

I do agree with the higher deposit and regular inspections, though.

Michael D Not Higgins

Ms Doubtfire1 wrote: »

I'd call that discrimination...just my 2 cents. Just something I'm wondering about: I am renting and I have plenty (PLENTY!!!!) of animals. I pay market value rent but I have a 'renovation agreement' with my LL. That is an x amount that is paid into a separate account I have visibility to. It's not part of the rental income, and as such it's not taxable. ( I think-I was told that) Any damage above normal wear and tear will be paid out of that at the end of a rental cycle, the remainder will be refunded to me. I find that works extremely well as it's nice to get a chunk of money back if you look after your rebted property.it takes a lot of stress out of the tenancy for both my LL and myself as we know everything is covered and I know if I do well, i have a nice chunk of money to go on holiday with...:D

Sounds like a possible tax dodge from the landlord to be honest.

Mrs OBumble

Mrs OBumble wrote: »

Yes, families are more wear-and-tear. But they're also likely to stay longer, so you'll have on average less re-letting work to do.
.

Probably have a higher chance of over holding etc too though or not paying rent in the event of a job loss as they would be more desperate. I think young professionals who will only see it as a place for a few years at most are the ideal tenant to aim for (preferably two unconnected people also paying their rent separately to further reduce the risk of lost rent).

NinjaTruncs

Mrs OBumble wrote: »

Forget premiums. Just charge the market rent.

Yes, families are more wear-and-tear. But they're also likely to stay longer, so you'll have on average less re-letting work to do.

I do agree with the higher deposit and regular inspections, though.

They may stay longer in a house, but not in a 2 bed apartment, imo they will be looking to get out as quick as they can.

irish_goat

Interesting thread. I live in a 2 bed apartment with one other fella. We spend about half an hour awake in the mornings each and then roughly 5 hours in the evenings. So let's say 11 hours a day total tenant activity in the apartment. A stay at home mum would in theory be up 9am-10pm (erring on the side of caution there). That's 11 hours straight away. Then factor in what hours the kids might be up. It's quite an increase, and that's not even counting the dad. Over the course of a year you're looking at well over double the amount of wear and tear 2 working professionals would do.

Could in theory factor in increased use on the washing machine, dryer, water boiler if these are all included too.

Mindset

If there is wear and tear that would cost you money to fix take it out of their deposit at the end of the lease. I don't think its fair to charge extra premium just because its a family.
You can protect yourself by adding a clause in the lease agreement to safeguard you against pissy beds and marked walls.

McGrath5

Simply charge the market rate - though in this market professionals are more desirable since they will spend far less time in the property compared to a couple with kids.

Ms Doubtfire1

Michael D Not Higgins wrote: »

Sounds like a possible tax dodge from the landlord to be honest.

That I don't know. It's the LL business but it has worked well so far for both sides. Maybe it's different if Ll resides in the UK?IN addition, the is the security deposit taxed ? It is not income in the real sense of the word?

L1011

Ms Doubtfire1 wrote: »

That I don't know. It's the LL business but it has worked well so far for both sides. Maybe it's different if Ll resides in the UK?IN addition, the is the security deposit taxed ? It is not income in the real sense of the word?

If the landlord lives in the UK you need to be either paying an Irish agent or submitting withholding tax to Revenue.

The deposit is not taxed - as it has to be either returned or spent on real expenses.

yqtwqxqm

Gracelyn Silly Fumble wrote: »

Probably have a higher chance of over holding etc too though or not paying rent in the event of a job loss as they would be more desperate. I think young professionals who will only see it as a place for a few years at most are the ideal tenant to aim for (preferably two unconnected people also paying their rent separately to further reduce the risk of lost rent).

True. And a picture of the evil landlord and two innocent children with tears in their eyes, whos mother wont pay the rent beside it, on the front of the indo too. Or worse all over the internet. :eek:

Less likely to be such drama with professionals.
Even less likely with Airbnb.

ted1

yqtwqxqm wrote: »

Professionals are much easier to manage and get on with.
For some reason families see damage like writing on walls and furniture and p1ssy mattresses etc as normal wear and tear when you point it out when they are leaving.
Makes for too much work dealing with them.

Places should be painted every 4 years or so and families tend to stay longer. So writing on walls should not be an issue.
Mattresses can be depreciated over 8 years, so if they stay for 4 you can throw out the mattress and deduct 50% of the mattress price from the deposit and so on

Ms Doubtfire1

L1011 wrote: »

If the landlord lives in the UK you need to be either paying an Irish agent or submitting withholding tax to Revenue.

The deposit is not taxed - as it has to be either returned or spent on real expenses.

I'm aware of the upper re tax-I leave that to my LL but he provides me with proof annually that he has paid the tax.

So, if a deposit is not taxed, that the renovation money shouldn't be taxed either as it's proven to be spent either in repairs or returned to me?

ted1

ted1 wrote: »

Places should be painted every 4 years or so and families tend to stay longer. So writing on walls should not be an issue.
Mattresses can be depreciated over 8 years, so if they stay for 4 you can throw out the mattress and deduct 50% of the mattress price from the deposit and so on

You will travel far and wide to find a LL who paints anything near every 4 years, even owners wouldn't do it so often in their own house. What about furniture, washing machine dryer and dishwasher which probably get 10 times more use with a two adults and two kids compared to two professional adults thus failing much sooner and needing replacement. If you want to maximise you profit you want to minimise unnecessary expenses.

Musketeer4

If you ever need the apartment back it will be much easier to get rid of two independent professionals than get rid of a family with ties.

rawn

As a soon-to-be mother struggling to find accommodation at market rate (never mind this "premium rate" I'm hearing about here for the first time), i genuinely feel like crying. I know it's a business and all that, but this adds a whole new level of difficulty into finding a home. Couldn't you just charge a fair market rate and tell the tenant to replace dirty mattresses and paint the walls if necessary, which to be fair most decent tenants would do before moving out?

Musketeer4

On the painting thing, I would never entertain a tenant's request that they do the painting themselves - you'd end up with some slap dash amatuer effort with runs in the paint, paint on the skirtings and carpet etc. No, I'd be getting a professional decorator in and recover the cost from the tenant.

L1011

rawn wrote: »

As a soon-to-be mother struggling to find accommodation at market rate (never mind this "premium rate" I'm hearing about here for the first time), i genuinely feel like crying. I know it's a business and all that, but this adds a whole new level of difficulty into finding a home. Couldn't you just charge a fair market rate and tell the tenant to replace dirty mattresses and paint the walls if necessary, which to be fair most decent tenants would do before moving out?

Because most of them won't, and the deposit won't cover it. You have no way of knowing at the start whether the tenant will or not.

Also, as has been said, parents idea of fair wear and tear (or pet owners, not that its on-topic) vs people without is completely different.