Hey everyone.
My lease for my display home is ending soon and the company wants to extend the contract for another year and for the same rental as 2.5 years ago. I want a higher amount and my logic is house prices and rentals have increased since.
The company is refusing the deal. Has anyone received a higher rent when they renewed their lease? Do you think it's fair for me to ask for a higher rate? Property is in South Adelaide.
Thank you.
The agreement doesn't state anything about the rent amount if they renew the contract. My options are rent back to the company with the old rate or get tenants (usually lower rental rate). I cannot move in the house as I live interstate now.
you have answered your own question i.e. rent back to the company with the old rate or get tenants (usually lower rental rate)
My options are rent back to the company with the old rate or get tenants (usually lower rental rate).
Well, do you want old rate or "usually lower rental rate"? Ball's in your court.
what does your title of the post, have to do with renting out the property?
You buy a display home from a building company then you rent it back to them.
Op changed the title.. it previously said "has anyone purchased a display home before"
Psst… you're replying to OP =P
You will have way less headaches renting to the display home company compared to tenants who could trash the place
my logic is house prices and rentals have increased since
Do you have evidence to back this up for your area, or are you just stating it as fact because it suits your purposes?
Also an increase in house prices is not really relevant to how much rent they should be paying.
This, prices have generally fallen across the board over the last since 2 and a half years ago
Really? I thought that they have only dropped in the past 12 months, if you compare now to 2-3 years ago they seem to be the same/slightly up.
Can’t you compare what your neighbours are renting out for and use a guesstimate?
How much rent are they paying? What are similar properties renting for nearby?
Are they currently using your house as a display home? If so it's going to cost them a lot less to pay you a bit extra rent than to build themselves a new one. They might be bluffing on not wanting to pay the rent.
Fair has nothing to do with your negotiation.
If they're not willing to pay more and there's no legal obligation to do so, they are free to renegotiate.
Guaranteed rent and known tenant for another 12 months in these market conditions? No brainer.
Plus - a tenant with a vested interest in keeping the property in decent shape because it's being used as a display home. Other than wear-and-tear on the carpets which these agreements have provisions to replace on move-out anyway, there's literally no better deals out there.
You’ll get a showroom quality house at the end of the lease. If you get private tenants they won’t look after it as good, and you would have to pay agent fees
Plus there'll be a one-off "tenant finder" fee levied by the agent, together with the hassles of open houses, vetting new tenants, etc.
If you overpaid for the display home, then it's a sunk cost and shouldn't enter this current decision process.
If the best outcome is to renew with the builder at current rent, then this is the one you should take.
What's the ROI on this type of investment? I've never heard of it before
The builder will guarantee rent for X years at above market rates.
Like any guaranteed min rent/rental period, you receive above market rent because you paid above market for the property.
Be very careful with the term “guaranteed”.
If these builders fail then your guarantee is worthless.
Usually if you have leased it back to the builders, they pay you above market rates.
So if you rent it to anyone else, they are going to you lower.
Also, it's in the builders interest to fix any issues themselves and will keep the place clean.
Under the current rental / lease agreement, what are your options at this time?
Can you increase the rent?
If they don't agree to the increased rent, what will you do with the property?