Are rents too low?

[chops_a_must]

I don't think young people are anything just quietly

Really?

I'm not completely sure, but I'm tipping Nokia is making a general, sweeeeeeeping, statement.. and one that I agree with on the whole.

Maybe you are getting senile in your old age?

 

[nioka]

Hey. I'm NOT complaining!

And you ARE NOT in the age bracket that I am using as an example. Clear?

Never intended my post to be directed at you individually. My comments are general and result from reading a series of posts saying rents are too high, too low etc, and house prices are too high,renting is better than buying etc. The theme is usually" we want more for less" and this is on a forum where everyone wants to get rich quick through investing. It is a great feeling to give someone something for nothing but the feeling disappears if the someone expects to get it for nothing.

 

[krisbarry]

This thread is starting to get really filfthy, members attacking other members, just like all the other property threads.

This one has gone to the dogs, yet again.


MODERATORS PLEASE CLOSE THIS THREAD DOWN!

 

[wayneL]

[On Topic] Anyone who thinks that rents are not too low obviously does not own an Investment property here in Perth.. $200 - 300 a week for a $500K property is NOT a good return.. IMHO anyway..

Cheers,

Buster

Combined with a host of other indicators of value, it shows that houses are fundamentally overpriced, rather than rents are too low.

 

[Joe Blow]

MODERATORS PLEASE CLOSE THIS THREAD DOWN!

Bah! I don't see anything worth closing the thread over! Settle down Kris.

Nothing wrong with things getting a little heated just so long as we don't start abusing each other.

Lets keep it all in perspective, shall we?

 

[chops_a_must]

Never intended my post to be directed at you individually. My comments are general and result from reading a series of posts saying rents are too high, too low etc, and house prices are too high,renting is better than buying etc. The theme is usually" we want more for less" and this is on a forum where everyone wants to get rich quick through investing. It is a great feeling to give someone something for nothing but the feeling disappears if the someone expects to get it for nothing.

Funny how you criticise others for wanting something for nothing yet does this not seem ironic when it comes to asking for more rent?

 

[nioka]

Funny how you criticise others for wanting something for nothing yet does this not seem ironic when it comes to asking for more rent?

Only if a higher rent was not justified. A rental property like everything else material is usually priced at a level which is set by the laws of supply and demand. Ask too much and you don't get a sale. Ask too little and you don't have enough product. Why should it be any different to the price of shares. You often are seen to quote a share which is a good buy because the price will rise. Shares are some peoples investment, rental properties are others. Do I have a valid point or not?

 

[Wysiwyg]

I come from an industrial town which has, over 40 years,had continuous expansion and especially now.Big companies,jobs,and more workers/people needing accomadation.Suburbia is clearing places I used to ride my dirt bike on.

Houses with a view of the industrialisation are going for half to a million.I should have bought years ago but I`m not real smart.

On the subject of rents...they are ALWAYS in line with what you want to pay.

 

[chops_a_must]

Only if a higher rent was not justified.

The problem that I see, is a lot of people can't actually handle a rising in rents. Wages simply haven't risen at the same rate as the cost of living has.

So against the "value" of property, rents are low. But against other factors they are rather high. And eventually this costs the property market, and the wider economy. People have to reduce spending which affects retailers, it also inhibits people's ability to save and stops new buyers entering the property market. And as in the stock market, when buyers dry up, prices drop.

Until we see some large real wage growth, rent value against property value will probably remain low. It's not simply a matter of supply and demand but willingness to pay and affordability issues as well.

And lets face it, the majority of renters are amongst the more disadvantaged in the community economically, so their ability to absorb rent increases without serious consequences somewhere else is severely limited.

 

[Freeballinginawetsuit]

On the subject of rents...they are ALWAYS in line with what you want to pay.

True, if youre not willing to pay the market rate, you can always pitch a tent or live in youre car.........and don't be naive enough to think that is not occuring.

 

[Wysiwyg]

True, if youre not willing to pay the market rate, you can always pitch a tent or live in youre car.........and don't be naive enough to think that is not occuring.

People can choose a more humble,less expensive abode without going to the extreme of tents and caravaning. Moving away from the HOT spots can save one several dollars.

 

[TjamesX]

[On Topic] Anyone who thinks that rents are not too low obviously does not own an Investment property here in Perth.. $200 - 300 a week for a $500K property is NOT a good return.. IMHO anyway..

Cheers,

Buster

Totally agree its not a good return, so the question then has to be asked - why pay $500k for it??

There is no written rule that says investors are entitled to make money just because they decide to invest

Opportunites are everywhere.... they're just not there for every position in every market (some win some lose)

What is the trend in rents?
Why will rents outpace inflation (and wages)?
If they do why will this not put upward pressure on inflation and interest rates?
What is the current trend for inflation?
What is the current trend for interest rates?
What is the current trend for prices?
What happened after the last property boom?
Will this time be any different?

This is obviously looking at it from an investors point of view, but for home owners IMO in the current climate there is no 'rush' to buy property - but I do believe when you can afford it is a good time to buy.

I have a friend in Sydney who in a rush to buy in 2003/04 went halves with another person to buy a townhouse.... their friendship has now soured and they are having to sell in the current market climate... not a great result for anyone

Rents aren't too low - but that doesn't mean they won't go up :

 

[tech/a]

For PROFESSIONAL property investors none of this is relevant.

What is the trend in rents?
Why will rents outpace inflation (and wages)?
If they do why will this not put upward pressure on inflation and interest rates?
What is the current trend for inflation?
What is the current trend for interest rates?
What is the current trend for prices?
What happened after the last property boom?
Will this time be any different?

Your all looking at this from the laymans retail veiw.

All that matters for the pro is the bottomline figures on a developement.

I have one in Council for approvals now.
Here are the numbers.
2600 square meters of land. ($525,000) 7----1 and 2 bed apartments.
Av size 160 square meters. Construction costs $1100 per square meter.
Or $176,000 each.+ Land cost $75,000 each---- Sell $365,000 each.
Approx $800k in the developement.

2 now sold off plan (Awaiting approval for deposits).

3 will be held as freehold (Capital equity used for future developements).
Rent will be approx $300/week. At no cost other than out goings and cashflow is positive.

Pros are ALWAYS positively geared regardless of prices,interest rates,rents,inflation---blah blah.

We do one a year looking to up it to 2 if we can find suitable land.

 

[moses]

The problem that I see, is a lot of people can't actually handle a rising in rents. Wages simply haven't risen at the same rate as the cost of living has.

But a lot of people can. That is why many would be tennants are already bidding for properties and paying rent well above so called "market value".

Until we see some large real wage growth, rent value against property value will probably remain low. It's not simply a matter of supply and demand but willingness to pay and affordability issues as well.

Wishful thinking, not reality. You don't have to like it, but reality will win.

And lets face it, the majority of renters are amongst the more disadvantaged in the community economically, so their ability to absorb rent increases without serious consequences somewhere else is severely limited.

That argument only means that there will be serious consequences.

Go to New York and see what people are paying to live in, and you may recalibrate just how far tenants can be pushed.

 

[wayneL]

But a lot of people can. That is why many would be tennants are already bidding for properties and paying rent well above so called "market value".

Tenant will bid up to secure a place. Market power will ebb and flow between tenants and LLs. This will swap back at some stage.

... reality will win.

Indeed. The problem is in speculative booms people realize that too late.
That argument only means that there will be serious consequences.

Go to New York and see what people are paying to live in, and you may recalibrate just how far tenants can be pushed.

LOL. New York city wages are waaaaaayyyyyyyyyyyy higher than Aussie wages and NY is one of the biggest cities in the world... not directly comparable in any way shape or form. Go upstate NY and you will see an entirely different story.

As an aside, for some interesting for sale prices in upstate NY, look here - http://www.realtor.com/FindHome/Hom...bath=0&mnsqft=0&ss_mitm=n/a&sid=08114363C68AC LOL

 

[moses]

LOL. New York city wages are waaaaaayyyyyyyyyyyy higher than Aussie wages and NY is one of the biggest cities in the world... not directly comparable in any way shape or form.

In that sense, yes, but I wasn't really trying to compare.

My point was simply that tenants aren't anywhere near breaking point; living conditions can get much much worse and rents can go much much higher. And for some, wages can go much higher.

Not pleasant for tenants though I admit.

My tenants are elderly and wonderful, so I haven't raised the rent for too long...but I doubt if it can last. The moment a good tenant moves out the rent will always go up sharply, and anyone with less than ideal tenants has no motivation for keeping the rents down atm.

 

[wayneL]

Buffalo NY - $675 per month

Thats $155 per week

 

[wayneL]

A bit more upmarket in a nice area - $2600 per month

$600 week

 

[wayneL]

Actually NYC is not as exy as I thought:

http://rentals.realtor.com/FindHome...rk&Image1.y=12&primaryZp=&mnbath=0&areaid=264

 

[chops_a_must]

That argument only means that there will be serious consequences.

Yep. Overheard on the news tonight that workers will not come to Perth because rents are ridiculously high. No new skilled workers = top in economic growth.