Join our investing community

Lessons learnt from tenants

Discussion in 'Real Estate' started by Jacque, 22nd Nov, 2005.

  1. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    Thought it might be interesting to start a list of lessons we've learnt over the years of property investing when it comes to tenants....... :)
    I realise that most of us are (or were) reasonable and fair tenants, however some of the hum dingers I've had in recent times have really tested me!
    I won't bore you all with the myriad of details on each case, but suffice to say, it's all been a learning curve :)
    Lessons learnt include:

    On the MA (Managing Agreement) put a special condition that pets (should you decide to allow them in your IP) are ONLY allowed with written permission from the LANDLORD.

    Still on the MA, cross out the authorised repairs up to $200 and replace it with $0. This ensures that ALL repairs (except emergency repairs) are authorised by you first and you are aware of all costs.

    Do not authorise ANY work by any tradesmen until you have FIRM quotes, preferably in writing or at the very least an email confirming a price range from your PM.

    Do not take on any tenants who are professional skateboarders :)

    Always Always Always get the bond from all tenants on the lease.

    Check condition reports yourself and do not rely on the PM to do so. Things are often overlooked in the haste to vacate.

    Send breach notices as soon as you are able and keep tight paper trails. The RTA are very strict on this and generally more lenient with tenants.

    Reward your good tenants and let your effective PM's know what a great job you think they are doing.

    Naturally, I could go on all day but I thought it might be fun to leave a few more from other investors out there. I'm sure we all have at least one or two to share :D
     
  2. Mark Laszczuk

    Mark Laszczuk Well-Known Member

    Joined:
    16th Aug, 2005
    Posts:
    793
    Location:
    Brisbane
    Jacque,

    Why not? As a skateboarder for over 20 years as well as being (well, I like to think so anyway) an exemplary tenant, how does a prospective tenant being a skateboarder influence the decision to rent to them?

    Obviously you've had issues with a couple of skaters in the past - but landlords have had issues with people from all walks of life. I read an article in the paper quite a while back now about a guy rented to an AFL footballer - thinking he was going to be an excellent tenant - and it was an absolute disaster - never on time with rent and left the house in a shabby state.

    Does that mean that no one should ever rent to AFL footballers? How about the unemployed? Or minorities? The list could go on.....

    Mark
     
  3. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    I'm sure you could infer from my attached humorous smilie that I was not labelling all skateboarders as "bad tenants", Mark, and you guess correctly that my single experience with one has not gone smoothly!
    Let's not get too sensitive here :D
    People from all walks of life can be horrendous or terrific and I am the first to agree that we shouldn't judge tenants on the basis of what they do for a living. However, let's just say that I will be checking a little more thoroughly for consistent income from professional riders of any type of board ;)
     
  4. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
    1,172
    I know someone who once rented a very nice home to one of ASIC's very senior regional directors (no I won't say which state :) ). There were holes in the walls and other damage and the landlord had to sue the tenant to recover all the cost of repairs ... :rolleyes:
     
  5. coops

    coops Member

    Joined:
    24th Aug, 2005
    Posts:
    17
    Location:
    Brisbane, Qld
    We always cross out the 60 or 90 days notice required to terminate the agent's Management Agreement and enter 30 days. From experience, good property managers are not put off by this as they feel their service will stand up to the test of time. On the other hand when we have given notice to 2 property managers it was great not to have to keep paying them for atrocious service beyond the 30 days.

    Three of our 5 tenants are allowed to have 1 dog provided it is kept outside etc. They have all been exceptional payers and long term tenants as it's not so easy to find rentals where pets are allowed. I'm sure the pets often sneak inside and often 1 pet becomes 2 despite what it says on the lease however the fact is pet owners can be wonderful tenants.

    I agree with rewarding PMs and tenants. Flowers or chocolates once a year to the PM keeps you on the "A" list of landlords and we always keep the rent below market rent for good paying long term tenants. When the lease comes up for renewal we always insist that the PM advises them what the market rent is and points out that they are getting our property at around $10 per week less as they are valued tenants.

    High income is not always an indicator of a good tenant. Our lowest income earning tenants are the best payers !!! I don't claim that they are the cleanest tenants we have ever had but they are our longest tenants and the rent is always in advance. This property was our cheapest and has had the highest capital growth as well as the best %age rent return with a nil vacancy rate.
     
  6. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    Great additions there, Coops :)
    I would also add a tip to always ensure your leases end in peak periods of the year (usually Jan/Feb or June/July) to ensure you are marketing your vacant property to a greater pool of tenants. This way you also ensure lower vacancy periods and a greater chance of obtaining the desired rent. There's nothing to say you can't vary the standard 6 or 12 mth lease to suit yourself.
    Though I recommend this tactic to other investors, I can be my own worst enemy here, as I've recently forgotten myself to ensure this always happens.
    Consequently, I currently have a vacant property in a very difficult time of the year to find tenants- wish me luck!
     
  7. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    Interestingly, if you are in a market where the vast majority of properties are indeed let in Jan/Feb or June/July (particularly near universities and such), you might find when the rental market is pretty tight that there is simply nothing on the market to rent around spring time, or the period leading up to Christmas (eg, Oct Nov).

    We have an IP in this situation, and a combination of nothing available for rent at this time of the year, plus a tight rental market anyway, means that I was able to increase my rent 15% with no problems when one of my tenants moved out - especially since most people want to be moved in and settled before Christmas. There's much more competition in Jan/Feb.

    I'm not suggesting it as a strategy overall - and it really depends on the state of the rental market, but it did catch me by surprise when I investigated the state of the market and found there to be very very few rentals available.
     
  8. Mark Laszczuk

    Mark Laszczuk Well-Known Member

    Joined:
    16th Aug, 2005
    Posts:
    793
    Location:
    Brisbane
    That's weird Sim'. I'm in the market at the moment (have been looking at shares for the last week or two) but just the last day or so have been looking at straight rentals.

    Geez, I wish I'd started looking at these a few weeks back! There's HEAPS up here in Brisbane in the 'close to the CBD' market at least and very cheap too (but then I'm used to St Kilda rents).

    Jacque, that property you have available - it doesn't happen to be in Brisbane within walking distance to the CBD does it?

    Mark
     
  9. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    Actually Mark it certainly is :)
    Check it out here
    http://www.realestate.com.au/cgi-bi...0&p=10&t=ren&ty=&snf=rbs&ag=&cu=&fmt=&header=

    You don't still skate in the house though, do you? ;)
     
  10. Mark Laszczuk

    Mark Laszczuk Well-Known Member

    Joined:
    16th Aug, 2005
    Posts:
    793
    Location:
    Brisbane
    Hahaahahaha Jacque, I have that on my short list from realestate.com.au! Such a small world we live in! I *may* be putting an application in on that one. Hoping to get a look at it in the next few days.

    Mark
     
  11. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    It sure is :)
    Be interested to get some honest feedback on how it compares to what else is currently out there. PM me if you like. Happy hunting!!
     
  12. Mark Laszczuk

    Mark Laszczuk Well-Known Member

    Joined:
    16th Aug, 2005
    Posts:
    793
    Location:
    Brisbane
    No worries Jacque, I'll be sure to do that if I end up looking at it.

    Mark
     
  13. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
  14. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
    1,172
    Jaq

    If I was living in Bris vegas I'd look at it seriously...altho lack of 2nd bathroom is a drawback.

    At $395pw what sort of yield are you achieving?

    N.
     
  15. Mark Laszczuk

    Mark Laszczuk Well-Known Member

    Joined:
    16th Aug, 2005
    Posts:
    793
    Location:
    Brisbane
    Hi Jacque,

    In case you hadn't guessed yet, I found something else. Pretty handy having someone with lots and lots of connections in RE for a boss! Never did get a look at your place. I even got an email from Jarrod asking if I was still interested! Good luck finding someone.

    Mark
     
  16. MichaelWhyte

    MichaelWhyte Well-Known Member

    Joined:
    5th Oct, 2005
    Posts:
    798
    Location:
    Sydney, NSW
    Jacque,

    I smiled when I read the ad for your rental property though. It says that its in a "quite" street in Petrie Tce. Now, which forumite started that thread on words spelt incorrectly by REAs??? ;) Or maybe this was the catalyst to you starting that thread...

    What's with these guys!

    Cheers,
    Michael.
     
  17. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    4.7% gross- not great but then again I didn't buy it for the cashflow at this stage :)
     
  18. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    Thanks for that, Mark :)
    I gathered you had found something by now anyway. You'll be able to put up Xmas lights now!
     
  19. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    Hehe Michael- well I can blame Jarrod for that- despite his slight misspelling, I can vouch for the property's "quietness".
    Would you believe I saw the following advertisement sign in Myers today?

    "Get your photo's taken with Santa"

    This world seriously needs some higher paid copywriters!
     
  20. MichaelWhyte

    MichaelWhyte Well-Known Member

    Joined:
    5th Oct, 2005
    Posts:
    798
    Location:
    Sydney, NSW
    Jacque,

    You're going to have to help me with this one. :confused: I must be having a vague moment...

    That statement works for me. "your" is correct not "you're" as in "you are". "photo's" works too as in the correct way of representing an abbreviation for "photographs". Most people incorrectly abbreviate it to "photos" but "photo's" is actually more correct, like "can't", "shouldn't" and "reg'd". Its plural, but maybe people want multiple photos. Santa is a capital as its a name... OK, I give up. :eek: I think maybe you were referring to the "photo's" and I can understand that "photo" is almost an acceptable noun in its own right now so the usage of abbreviation from "photograph" might be seen as unnecessary...

    Cheers,
    Michael.