I Don't Understand

Generali

Can anyone help?

I rent a large house in one of the nicest suburbs in a good area of Sydney (not the nicest but probably #2 or 3 in the North Shore). It has a reasonable sized garden, 3 bedrooms, garage etc. It's like the houses you see on the Aussie soaps, i.e. huge for the UK but pretty standard for Aus.

The only reason I can afford to live here is because my landlord doesn't keep the place up. I pay $800/wk. Houses that are the same but in really good nick go for up to $2,500/wk around here (although they'd need to have a river view for that) and they do rent for that price.

I reckon if the landlord painted inside and out (cost $5,000 if he gets a painter in), put new fancy worktops in the kitchen (cost perhaps $2,000), put in reverse cycle air con rather than split system.(about $8,000 for a 2 zone system), new flooring and spent a couple of grand tidying up the place a bit he could make $1200 a week easily. For a spend of $20,000 he could make an extra $25,000 a year, an awesome rate of return, well over 100%.

I've been renting since selling my house about 8 years ago and it's the same everywhere so it's not like this guy is uniquely idiotic. I was in a lovely flat in the Barbican in London and a few grand would have put the rent up from the £250-ish I was paying to more like £500 or perhaps even more. It was the same with the house I was renting in Kent too.

So why do landlords do this? I can see the appeal of being a slumlord where you pack out a house with immigrants or students but I just don't understand why people don't spend a few bob and clean up.

Don't get me wrong, it's great for me. I get to live in what would be a multimillion pound house in London for a lot less than millionaire rents. I don't see why landlords across the world (UK, France and London) sell themselves short when they have a nice property in a good area.

silvercar

Hassle free tenant?

Generali

silvercar wrote: »

Hassle free tenant?

I am but so would a family paying 50% more. Also, the LL had no way of knowing that prior to me moving in.

Anyway, I'm not that low hassle. Mrs Generali is a ferocious negotiator: we always pay well below advertised rent. Also, I'm looking to buy in a year or so and won't be there that long as a result.

It just seems to me like not cleaning the car before you sell it. Like people are throwing money away out of laziness.

As I say, I understand the slumlord and took advantage of their services in my younger days. When you're broke you still have to live somewhere and I bet those guys make some serious money. It just seems strange to me.

vivatifosi

I don't know why Gen, but I don't think the comparison with car cleaning is a fair one. Not cleaning your car before selling it is down to use of own labour and whether or not people want to/need to/can be bothered to do it. In terms of the repairs, there is a capital cost involved.

Questions I'd want to ask: have they tried to raise the capital but been unable to do so? Is there a tax ceiling over which they would need to pay more that falls in that band, so they would be paying more tax and don't want to incur the cost, or some impact on superannuation funds if you have over a certain amount of income (I'm thinking here of the impact on someone already being paid a pension)? Alternatively they could just be happy with what they are getting and not particularly interested in profit maximisation.

Brallaqueen

You and your lovely wife are really good bargain spotters!
I'd say laziness, coupled with no real need for more money. Some people don't want anything more than to cover the basics and forget all about it.

Wookster

I think a lot if landlords think tennats will mess up the place therefore wont spend money doing it up.

andy.m_2

apathy, they have their bills and aspirations covered, why rock the boat?

Why pitch at a higher rental market, which for all we know is saturatesd already?

RenovationMan

Generali wrote: »

Can anyone help?

I rent a large house in one of the nicest suburbs in a good area of Sydney (not the nicest but probably #2 or 3 in the North Shore). It has a reasonable sized garden, 3 bedrooms, garage etc. It's like the houses you see on the Aussie soaps, i.e. huge for the UK but pretty standard for Aus.

The only reason I can afford to live here is because my landlord doesn't keep the place up. I pay $800/wk. Houses that are the same but in really good nick go for up to $2,500/wk around here (although they'd need to have a river view for that) and they do rent for that price.

I reckon if the landlord painted inside and out (cost $5,000 if he gets a painter in), put new fancy worktops in the kitchen (cost perhaps $2,000), put in reverse cycle air con rather than split system.(about $8,000 for a 2 zone system), new flooring and spent a couple of grand tidying up the place a bit he could make $1200 a week easily. For a spend of $20,000 he could make an extra $25,000 a year, an awesome rate of return, well over 100%.

I've been renting since selling my house about 8 years ago and it's the same everywhere so it's not like this guy is uniquely idiotic. I was in a lovely flat in the Barbican in London and a few grand would have put the rent up from the £250-ish I was paying to more like £500 or perhaps even more. It was the same with the house I was renting in Kent too.

So why do landlords do this? I can see the appeal of being a slumlord where you pack out a house with immigrants or students but I just don't understand why people don't spend a few bob and clean up.

Don't get me wrong, it's great for me. I get to live in what would be a multimillion pound house in London for a lot less than millionaire rents. I don't see why landlords across the world (UK, France and London) sell themselves short when they have a nice property in a good area.

Apathy. They probably have their costs covered with some profit left over, why rock the boat?

Why pitch at a higher rental market, which may be saturated already, trying to attract the smaller pool of tenants who can afford that level of rent?

michaels

I gess the question is why is renting still largely dominated by private individuals rather than supplied by companies. The private individual may be short of investment capital, risk averse, unaware of the full market situation and also probably a long time owner thus able to make a return on the amount of capital originally invested that seems reasonable even though based on the current valation the return is poor. Given all this surely in a market economy the private landlord should be replaced by professional companies who can make more profit?

JonnyBravo

Brallaqueen wrote: »

I'd say laziness, coupled with no real need for more money. Some people don't want anything more than to cover the basics and forget all about it.

Couldn't agree more.
Laziness.
Amazed you haven't worked that out.
So many people want to have stuff handed to 'em on a plate.
Lets face it, it's not exactly hard to get into BTL, so it's not like most landlords have had to prove themselves with sharp decision making skills, astute business brains and an eye for the bottom line.

chewmylegoff

RenovationMan wrote: »

Apathy. They probably have their costs covered with some profit left over, why rock the boat?

Why pitch at a higher rental market, which may be saturated already, trying to attract the smaller pool of tenants who can afford that level of rent?

That is oddly similar to andy.m's answer, have you been copying his homework again?