If you have a residential tenant in your house and they aren’t playing the game, it’s going to cost you alot of time / money and stress. That’s a given. Your question really is how do you limit the damage.

Best place to start is to very much lower your expectations and forget about the lack of money or “fair” or “justice”…just throw them all away before you start. Ask your Lender to do the same and see how they react. It’s called the meat in the sandwich….all investors thrive on it.

This isn’t the best place to pick up info on how to quickly get rid of recalcitrant tenants…especially if it is residential. There have been numerous posts about this before – if you are looking for a quick cheap solution you are out of luck. The law and RTA is very heavily weighted against you. You are only the Owner and therefore, you and your economic dilemma rank very low on the priority scale…despite you thinking that it is important.

For industrial places it’s easy peasy…but that doesn’t help you.

If the tenant has been a few rounds of the tribunal and knows how to play the game…you are in for even a longer and more stressful build up.

What’s the solution you ask to your problem. We struggled for years on this one but finally came up with a permanent solution. Our struggle took so long because we didn’t want to accept that as Owners of residential property, we weren’t considered the top priority. We now know we aren’t.

We now only purchase places where people don’t live…mothers and screaming children aren’t involved…and everything can be shifted in 12 hours from 7pm to 5am with a forklift and truck and a locksmith loves working at 6am.

We charge 1 months security bond and 2 months ‘bank guarantee’, as well as keeping the rent monthly in advance, automatic by direct debit. We therefore get 4 months buffer up our sleeve if they start playing silly buggers. I’m thinking of upping the bond to 3 months in future, as 4 months is pretty slim.

This RTA which restricts ressy Landlord’s to 4 weeks bond and maybe $ 100 for a short list of some animals is outrageously too low…as you are about to find out. Try giving your tenant a free plasma TV or some movie tickets or a free night out or a free roof over their heads or something….that might bring them around. Works for heaps of people apparently – haven’t tried it myself.

As a last resort, there is a guy here on the forum’s…Richard something, I think who has some advice for residential disputes. He works primarily for the tenant though, so you’d better hope and pray that your tenant isn’t also talking with him – otherwise it’ll get a whole lot messier and your hip pocket will need to step down another peg or two on the heirachy of importance.

Or maybe join all the optimists out there and think of it like this ;
1. It’s great experience for you.
2. Perhaps you are being too harsh and the tenant needs your understanding.
3. Just think of the great big tax deductions – wacko !!
4. You’re still getting some capital gains on the dirt, unless you live in the Eastern States.
5. Just think of the balance and Karma involved – you’ve enjoyed higher returns than bank interest and this little incident is balancing that up with some realised risk.

Good luck with it all, send another post in December when you finally get them out and have cleaned up the damage.

Cheers,

Dazzling

“No point having a cake if you can’t eat it.”

Excellent Martin…[biggrin]

Glad that last line wasn’t at me…[chill]

Cheers,

Dazzling

“No point having a cake if you can’t eat it.”

Thanks Kay,

This one is easy for me….not the socially correct or aware right answer – but…definitely the money.

When in Oz, the life option kicks in.

When out of Oz for the majority of the time, life gets put on hold.

Songs like the previously mentioned Cats in the Cradle, Time by Pink Floyd, Money by Pink Floyd etc come to mind.

Sad but true I know. I take inspiration from a chap I met last month, he was 71, introduced himself as much and said that he was 2/3rds of the way thru his life. A big inspiration for me. Very alert and positive. Can’t spell computer. He asked me how old I was and I said 35. He said “What the hell was I doing at his stage in life financially”…I shrugged my shoulders and thought of the next 70 odd years I’ve got to look forward to.

The sacrifice has probably been worth it. I can’t travel down both paths, so I’m not really sure…

Cheers,

Dazzling

“No point having a cake if you can’t eat it.”

Yeah that makes sense GR…??

Jenny is having trouble renting out her IP.

I’m sure that amply qualifies her for financially and feasibly reviewing your 250 unit development project ???[blink]

How’d ya go Jenny ?? Got it rented yet ?? What is your cut off criteria…for the IP that is ??

Cheers,

Dazzling

“No point having a cake if you can’t eat it.”

Right, that’s pretty much got rid of your dilemma then….very clear that the financial aspect is by far and away the most important and working hard doesn’t come into the equation. In that case, I’d (you asked for it !!!)

1. Move out to some one bedroom hovel, rent it for $ 80 p.w. or less if you can get it. Take out a ten year lease.
2. Sell all the excess furniture for as much as you can get.
3. Lease your place out to corporate lessee for top dollar.
4. Go immediately and purchase as much as your LVR or serviceability can handle, whichever restricts you the most.

This doesn’t sit at all well with your stated “most important”…and is causing the dilemma. It sounds as if you want a real easy life as well as the most financially “best” solution….which obviously do not match. Your working constantly has been dumped from the equation as it isn’t compatible with your number 1 stated priority.

If you truly want the top financial performance, you will do anything, sacrificing both lifestyle creature comforts and leisure time…and anything else that gets in it’s way.

In reality though, I think you’ll back off from your ‘top financial performance’ wish, as the price you’ll pay will be way too high.

However, that’s where we get into the murky waters of your personal decisions, and things like the forum contributor’s opinions and financial numbers well and truly fall off the radar and we end up full circle with…

Don’t give me the “it is up to you, and what do you want” If you truly mean this you have just yielded all financial and personal decisions from yourself to anonymous forum contributors ???? You do not mean this, I am sure.

Cheers,

Dazzling

“No point having a cake if you can’t eat it.”

We’ve kept a graph of our overall LVR for the last 11 years, tracking it every 3 months when the VGO data comes out or when either a large payment has been made or a new acquisition comes onboard.

Initially the graph is very erratic, with the first IP sending it over 90%. With a few payments this comes screaming down really quickly.

After a while the figures start evening out as the numbers get bigger and the magic of compounding takes hold.

It’s to the point now where my entire salary for a year could be dumped into the loans and you wouldn’t be able to notice it on the graph. The only thing that affects it nowadays is the rise (or fall) in property values. It’s been a slow and boring graph to construct, and to tell you the truth it all gets a bit blaise after a while.

My lender has a copy of it, and is slightly comfortable in breaking some of their “fixed rules” about LVR’s and LMI’s. We don’t know exactly where their rubbery limit is anymore, but their specific comment was “they do feel more comfortable extending us another loan rather than writing 20 other loans for people with track records they don’t yet know.”

We’ve also been tracking net worth, nest egg, cashflow, debt and my favourite the equity in each property for the past 11 years.

The vertical axis scale has had to be altered three times to accomodate the changes.

My favourite mental and visual “spur on” is to have a white survey marker on the right hand side of each property. It’s supposed to start at the front of the property when you buy it, and move along as you pay it off, reaching the back fence when it’s fully paid off. Lending 106% sometimes, it’s been on the council verge a few times, but it’s great to stand at the peg and look forward to the front of the block and see “We own this bit”…the daunting bit is turning around and saying “the Bank owns all of that” from where you are to the back fence.

You quickly appreciate that whilst you may think it is ‘yours’, really we are all just property managers and the Banks are the ones that are controlling this show.

Tenants have never noticed or said anything, but I get immense satisfaction when the VGO data comes out, to trundle along and shift the white pegs a step or two back towards the back fence (or in our latest props, bring the peg off the council verge and back actually onto the property) !!!

We sleep fine. Hi LVR’s, lo LVR’s…it all gets a bit ho-hum after a while. We find you generally extend yourself up to your capabilities. If you overextend, the Lenders generally tap you on the shoulder fairly quickly.

Cheers,

Dazzling

“No point having a cake if you can’t eat it.”

Hi Stephen,

Read your other post in the Tell Tale forum and it sounds all good.

I’d be wary of jumping into the blue chips if your goal is to buy an IP at 18. What’s your idea of a blue chip anyway. I suppose a Federal Finance Minister backed Telstra 2 blue chip issue at $ 7-40 a pop is the sort of thing you’re referring to ??

I’d stick with the slow and steady savings regime you already have going. When I was your age I was jumping around like a f*rt in a bottle as well. The whole process seemed to be so pedestrian and I just wanted it to speed up. Jumping around from one thang to the next rarely gets you along the track any faster than “sticking to your knitting”.

Here’s to great success with it all Stephen.

Cheers,

Dazzling

“No point having a cake if you can’t eat it.”

Hi Luci,

We went down this road for a while with our extended family. It’s a can of worms wrapped up in a messy parcel of misaligned goals and conflicts of personalities.

The biggest two stumbling blocks we found were control of the JV and common lenders security.

1. Control

It made sense to have the most experienced PI’s ‘in charge’…but then all the minor players wanted to have their say. That’s fine up to a point, but inevitably there will come a time when forces pull in opposite directions. It always boils down to the old “when push comes to shove”…the minor parties never wanted to be overruled, they couldn’t see why 5% of the JV didn’t have the same stroke of the 60% partner ?? Egos and personalities get caught up in this washing machine of emotions and then all hope is lost. If anyone gets emotional…run a mile.

2. Common Lenders Security

We found that most parties in the JV had existing properties that were invariably sown up tighter than a drum with existing lenders. When the lenders were approached, they all commented that there was little to no point in leaning against the property as there was little free equity. Once again, no JVP was prepared to shift to the other lender as they would incur cost, and no lender was prepared to stand second in line when it came to security issues.

Unfortunately, the whole thing melted down to a “nice idea but won’t work”. I believe family is probably not the best arena to try this out on.

So – what’s the solution you ask ??

I haven’t given up on the idea, and wish to emulate the little soiree Warren Buffett started up in the mid 50’s. He held 6/11ths I believe and had 5 partners holding 1/11th each.

I believe the only way it’ll work is to have one experienced partner “in charge”, and the other partners equal silent financial partners who are prepared to back the guy “in charge” to the hilt. The ‘guy in charge’ needs to be renumerated for his time and effort also.

Equity rich / income poor JVP’s mixing it with equity poor / income rich JVP’s would not cut the mustard IMO. How could one possibly deem what is fair, or more valuable at a particular point in time ??

I’d steer well clear of both handicapped investors and shoot for the equity rich / income rich type every time.

Cheers,

Dazzling

“No point having a cake if you can’t eat it.”

Good morning Jenny1,

Maaaaaaaaate !!! I’m a bit confused with your HB pad.

So what was the lesson learnt that you speak about in the title of the thread ?? More to the point…what solution do you think will stand up to harsh tenant scrutiny.

What happened to the tenant you signed up ?? Your last post on the subject you were tossing around whether to get rid of it or….something else. Apparently a tenant came to rescue just in time and all was happy days ??

Looks like it’s back to not so happy days ??

I’m totally confused…not to put too finer point on it Jenny – your place in particular and HB in general sounds from your description and data like “Pittsville for Investors”.

My suggestion from your last thread still stands…pull the plug – take the fin. hit, bank the lessons learnt and move on to far greener pastures. It’s been 4 months now…how long can you sustain this situation ??

What exactly was your error of judgement ??

(I’d rather shock you into action – any action at all – rather than sugarcoat the response and kowtow to tenants free wishlists and whims).

Cheers,

Dazzling

“No point having a cake if you can’t eat it.”

Good job Rick.

The figures look a damn sight better than the place we bought in ’95. Why did you sell it ??

I hope that you and Mr Carmody enjoy your windfall. What do you intend to do with the bit left over that Mikey lets you keep ?? (Don’t take that the wrong way, I always analyse things from the standpoint of what I am entitled to…not what I and the Govt are entitled to.)

Well done anyway.

Cheers,

Dazzling

“No point having a cake if you can’t eat it.”