Buying IP with existing long term tenants? Any advice?

ok – which state? In NSW you cannot increase the bond & must also give 90 days notice of a rent review. Why would the tenant be required to stump up the entire bond? Would yurt not have the previous owner transfer it from the bond board? You can’t personally hold the bond in any case, it must be lodged with the RBB.

Alrightey.

Firstly, if she has already paid some kind of bond, you can't ask her to top it up.  Sadly it doesn't work that way.  Eventually the bond held for a long term tenant looks so small it would struggle to buy a Mars Bar.

Secondly.  I agree – don't subsidise people.  I'm happy to be flexible on perhaps 5 or 10 dollars per week to save myself the headache of changing tenants to an unknown person, but that's it.  Remember that $10 a week is $520 a year.  You get the idea.

Thirdly.  Department of Housing.  I'll tell you right now that this lady could stop paying rent, trash your place and sell drugs from it, and you will never ever get to keep a penny of it if she has gone through Department of Housing.  It's yet another crappy outcome of VCAT. 

The above doesn't really matter anyway – if someone trashes your house a lot, the bond would not come close to covering it anyhow, and it would become an insurance claim regardless.

Bottom line is, yes, if you have a genuine great tenant on your hands excellent, but don't reward too many dollars per week for such greatness.

Damages will be covered by insurance provided you're suitably covered, so don't get sucked into the thinking of "oh my word, if the tenant doesn't pay rent I'll get no money" line of thinking.

You are a business, not a charity.  If this lady is in a spot of bother financially, newsflash, she can get Newstart Allowance and Rental Assistance money from Centrelink.  Get online and find out how much, and you'll see how comfortably a person can live even on benefits.  No need to discount your property a great deal.

Cool.

Get yourself suitable building and contents insurance and also the tenant protection extra to cover you for malicious damage, failure to pay rent and so on.  I use AAMI for this.

I haven't used RACV for IP insurance so I couldn't comment.  I've used AAMI and have had caused to make a very large claim and they were fantastic.

Always have the landlord insurance with tenant protection.  Murphys Law says when you don't have it you'll wish you did.  A tenant can do an enormous amount of damage.  They can leave you holding the hat with $50k of damages without even trying.

Hi Energy4.
As has been mentioned, the rental history is a pretty good indicator that she is stable, and as long as you have it managed a nd a proper leas in place and insurance you can't do much more.
I will disagree a little with some of the comments re 'not subsidizing' tennants. One house I have, that I was getting market rent in (and 'managed') I had to repaint, and re carpet when she /it vacated. $5k allowing fo time, travel etc.
The current tennant is paying marginally less when you take everything into account, as yes, being an elderly widowed pensioner my soft side came into action. I recently signed her up for another 2 year lease, and winced when I did not put the rent up again, but really, when you inspect the house she treats it liek her own, has spent her own money on improvements, gardening etc, and while I could get another $10-$30 a week extra 'at market' I think to have & keep a stable tennant that looks after a place is worth a few bucks a month under 'market' if you weigh up the pros and cons. Sounds like you've reached a happy medium, so hope it all works out, and congrats on what sounds like a good deal,

As a sidepoint re insurance, a lot of the mainstream insurers only cover $10k as the max for deliberate tennant damage. Again, another trade of between premiums, risk, and price.

Cheers