Forum Replies Created
Marisa,
We are going through the exact same thing with two of our tenants – except our tenants don’t live in the units, but work out of them.
They have both never paid us rent since we bought the property, other unit lessee’s are flabbergasted….anyway.
This Thursday, after 3 notices over a period of 6 weeks, they shall be ‘moved on’ with a bobcat and truck outfit…we shall be using the term ‘abandoned’.
I just read Rob’s attachment for the Tenants Union of Victoria and was horrified at what advice they have outlined on how to string out hapless ressy Landlords…what a legal farce…if you go down that route good luck – you’ll be there in 6 months with not a jot in rent.
All this ‘legal’ advice is outrageous…dealing with people who do not respect any agreement or written request and take no responsibility whatsoever, yet expect every right to be extended.
In my book, rights and responsibilities go hand in hand.
I feel sorry for anyone going through this with residential tenants who take no responsibilities.
I do not have a solution for you, except don’t buy these types of props.
Do you know any big Maori tow truck drivers ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
I agree with Kay – tenants are way shrewder and smarter than LL’s give them credit for, and frankly most of those ‘tips’ are very Mickey Mouse, and hence will fail miserably. When discussing initially, the residential tenant will simply want all of that and more thrown in for the normal “what’s the lowest rent you’ll accept”….
No – my favourite tip for raising the rent on residential tenants goes something like this in a standard letter format ;
“Dear tenant,
The rent shall be raised by $ xx per week. If you are unwilling or unable to afford the increased rent you have xx days in which to vacate the property. The increased rent shall commence on xx/xx/xx.”
No mucking around, no gimmicks….and if they move on, no tenant and no rent !!!
Which brings me full circle yet again, as with most of my posts – playing these Mickey Mouse rent games with flighty “I’m not paying more rent and give me everything for free…and right now” residential tenants is a mugs game….best left to Landlords who have oodles of time, money and patience to play them.
We don’t play those games any more and that has made all the difference.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Ridi,
I applaud your idea but feel it is reactionary to an endemic problem with RIPs of hoping the tenant simply does what they legally obligated themselves to do when the lease was signed.
Of course, many residential tenants aren’t used to being legally obligated, and the lease is simply something you squiggle on before someone gives you the keys.
If you have non-res props, the tenants signing are usually Directors or Ministers of Companies and Govt Depts respectively…and hence when they sign the lease they mean it…and not only are but ‘feel’ legally obligated to conform to all that is written in the lease.
Anyway, the underlying reason why you are offering the Pizza or other incentive, is one of a myriad of reasons why we departed the RIP scene.
Unlike Steve, and similar to surreyhughes19905 but flipped around, I couldn’t give a stuff about the Tenant or their little whinges and problems. They are to punctually perform and duly complete all obligated actions as written and signed off in the lease or they get their **** dragged into court. Sounds harsh – but it works.
Maybe most people will disagree – but then most people don’t deal with tenants like I’ve got.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Ally,
I find having all of my loans with the one institution gives me leverage against them, and also shows a bit of loyalty….a two way street if you will.
I suppose when the 5th of 6th institution sees themselves at the back of the “security queue”, they get a little hesitant.
Have you thought about going with one Lender – bulk numbers talk the Bank’s language.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Shawn,
They used to cost $ 9-00 for a big A0 sheet with Buukuu information on it…great value.
Now GST has come in, they are $ 9-90…or at least they are at the VGO here in Perth…my personal little Gold Mine in Mount Street Perth (think it’s # 18)…
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Rob,
Our group have very little nice to say about Kevin’s Investors Club. Have a read of page 2 of the standard handout and how tightly the whole show is wrapped up legally…don’t even think of taking part of the action. Forget the actual company name that runs the show really…it’s on page 2 anyway. Think it begins with an L.
We’ve been to about 5 or 6 meetings now, in 3 different locations around Perth run by varying people over a period of about 4.5 years now. I went 2 months ago and took the wife along, and we both commented that the guy up the front speaking dolling out the advice had been in the game half as long as we had and had only just cracked the 1 MM mark – gross not equity…
To tell you the truth the last couple of times we’ve gone to give ourselves a little boost and pat on the back, thinking “Thank God we aren’t investing this way”. Although, I shamelessly admit to enjoying the free cup of tea and cream bikky provided at the end when the hard sell is put on. With a mouth full of biscuits I seldom have the opportunity to put my foot in also.
The message is the same every time and you get the feeling sitting in the audience of being condescended to by people who have far less experience. You also get the feeling of being part of a big revolving door, where fresh meat is brought in and sifted for the few who take a bite. All done very nicely of course…not saying they aren’t all lovely ‘nice’ people…by sincere Mr and Mrs Averages who stand up and say upfront they aren’t clever, aren’t trained professionals or salesman and don’t have any relevant qualifications and none of the following is advice….following which is a mountain of legally non-binding advice !!!!
Being a ‘Support Member’ after purchasing 2 units over a time period of 9 months worth a total of $ 180K does not make me warm and fuzzy.
Everyone has a bunch of questions from the audience always probing the “What’s the catch”, which are dealt with by their standard list of published answers…but I always cringe when they all stand up the front at the end and say “If you can all just turn to the second last page which is the ‘Finance Enquiry’ page”…everyone in the room eagerly turns to it and then the pitch is made.
They continually repeat that there is no “Pressure”, but it is applied, and the serious ones who stay for a chat after get the Finance Enquiry form shoved down their neck.
Oh, and forget about 2nd hand properties – i.e. not brand spankers straight from the developers mill…very small cut for Club and strongly discouraged…even though that’s where, IMO the growth is due to the larger land content. You’ll be convinced to buy new and take the depreciation benefits – hence the “Never never sell” mantra as all of the Dep. benefits are lost if you do.
I am yet to meet a IC member (and I’ve met 100’s over here in the West) who is truly wealthy…maybe they all live in Qld where big Kev and Kathy are.
Having said all that, if you are a complete novice and have not a clue about PI and want to be lead by the nose all the way through the maze of PI, it may have some merit…but…after a few years you’ll probably look back on your Club properties, with a wiser eye and realise they weren’t the best thing going at the time.
Anyway – nuf said…I’ll get down off my soapbox.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Terry,
Six months ago, on the recommendation of my accountant after much researching, I sold a proportion of an IP (our former PPOR) that was in my name only to my wife for the main purpose of reducing my exposure and increasing our asset protection measures. Large stamp duty impost on title transfer was incurred.
It just so happened that, subsequent to the funds I received from the wife, I prudently paid off the debt on our new PPOR.
Having read the legislation governing the “intent” of such an arrangement and gaining a second opinion before acting, we both feel comfortable with this step of asset protection.
With what I have read and been advised, I believe this to be lawful and we both sleep comfortably at night having done the groundwork.
A nice side benefit, but not the main reason, is that our tax deductible interest bill has increased and our non-tax deductible interest bill has been eliminated.
If I am reading this thread correctly, that is the thrust of your question – is it not Terry ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Not sure I’d agree that the property game is a ‘volume’ business….more accurately I’d describe it as a ‘big $ value game’.
Give me just one prop worth $ 10 MM, renting at $ 1 MM p.a. nett, [biggrin]- nice…..as opposed to one hundred little houses or flats at $ 100K each, renting @ $ 120 / week gross, producing one hundred and one little headaches – what a nightmare !!
Sure – all the eggs in the one basket – but what a basket…
What do the presenters do at these seminars, ask for a show of hands who owns IPs and then asks how many each person has – and leaves it at that. Someone who has 50 little dogboxes worth $ 50 K each is seen as a guru and the chap with 3 office blocks at $ 10 MM each is classified as relatively green. My radar goes up instantly people start talking about the # of IP’s they own…my instant thought is “So what – what are the total funds under management – that’s what counts”
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
sis,
Seems a bit dramatic over a couple of FF points.
I lost over 80,000 of ’em when Ansett went belly up, I think the Administrators said they were worth about 8c in their eyes….
I quite enjoy saying to the Coles check out chick every week that I most definitely do not have any fly buys.
Lotsa grief for very little reward…from where I’m sitting of course.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Thanks Jenny,
Yes you are right…these things don’t just land in your lap…it’s the culmination of many hours sacrificed researching, preparing and working instead of being with the family – along with patiently waiting for the equity to grow over the years…you can’t just jump into these deals.
We’ll have to sit down with a cup of tea and have a jolly good chat one day.
Thanks Terry,
As I said, 7 brokers were approached as part of the due diligence to check the Bank wasn’t rolling us – time got to us I suppose, as there are a myriad of things to check and perform during the pre-offer stage. I normally give my contractors one ‘crack at it’, I don’t have the luxury of toing and froing…
Happy and comfortable that the Bank won’t lend the group any more at this stage – we are out of our comfort zone right now (which hopefully is a good thing as we expand it) and need to consolidate cashflows / tenants / Leases.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
I’ve had a great run with the CBA and still do to this day.
Service is outstanding for our group and their rates for what we are doing are the best of anyone.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
John,
Surely it depends on the size of the numbers.
The last agent I dealt with just recently when we bought our latest acquisition did it for 0.88%. Vendor showed me the cheque split from the funds I paid him and we had a chat about the fee as we literally did the deal without the agent – he was in hospital at the time and when he got out, was given a pleasant surprise.
1.5% on a $ 10MM deal, and there’s heaps of those in the CBD’s and industrial complexes around Oz, which is 150K, you’d get a few agents taking that on…no problem.
On the other hand, if you are selling a $50K ressy unit, the % would have to be thru the roof for the agent to make a quid.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Good afternoon Scissors,
Congrats on your detailed post. You seem to be headed down the right track. It sounds as if you are looking for some reassurance as this is your first non-res prop, so if I may pose a few comments to help you on your way ;
1. Go to the VGO and buy a tax map of the area where the prop is located and find out when and for how much the Vendor paid for it.
2. Calculate the cap growth from this data w.r.t. both the 150K and the 170K asking price.
3. Does the cap growth compare at all to the res numbers ?? If not – you may be buying a purely income stream. If yes – happy days.
4. My intuition tells me the answer to 3 is probably not as the prop does not have significant land content.
5. If the Vendor is also going to be the tenant, move ahead with caution…what is the origin of the lease that shall govern the arrangement ??
5a Do you have your own lease drawn up which they must sign, or
5b Do you have access to a solicitor to draw one up for you and force them to sign, or
5c Have the tenants drawn one up and they are going to make you sign it…perhaps even tie it into the Contract of Sale as a condition ?? If 5c is the case, be on your toes big time !!!
6. Try and get 2 or 3 months Bank Guarantee signed over to you…this negates the need for LLI.
7. Be wary of the 2 yr option…it is to the benefit of the tenant – not the Lessor. Banks do not recognise it as having any value.
8. Try and get an escalation clause in there. At the very least CPI – best if a fixed 4 or 5% p.a.
9. If the bank is using your res equity, make sure you squeeze them for a good rate.Overall, I believe you shall enjoy more income and suffer less headaches with your choice of prop than going down the 3×1 house route.
Good luck with it all.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Saul,
I’ve just picked up a crusty, wily ol’ Industrial and Commercial Property developer as my mentor for the next phase of growth here in Perth.
They are worth their weight in gold.
As a tip, make sure your mentor is someone who is about 2 or 3 steps in front of you, both in terms of size and property experience.
If you get someone who is light years in front of where you are currently, their advice and type of property will most likely be out of your reach and therefore of little benefit.
Hope that helps. [blush2]
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Fellas,
No thanks – have no interest in posting actual documents…blanked out or not.
No need for a broker any more, we have reached the level we wished to attain and now want to simply bed down the acquisitions and get our overall LVR down into a more comfortable region.
I suppose there is two sides to the broker aspect, obtaining the money and at what rate.
So far we have been happy with the CBA’s decision’s on what to loan us – they rejected one application earlier in the year…that one really was more than we could handle and they prudently said no…
In terms of rates we are getting at least 0.5% better than what the best of 7 brokers could achieve (including a couple from this forum who formally advised me they couldn’t compete and recommended I stick with the Bank’s deal)…so really don’t see the need for brokers at this stage.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Cheers guys,
Our plate is well and truly full at the moment.
The bank has rightfully placed a “Don’t ask for any more” sign on our folder.
Happy to oblige them really until we bed down all of the acquisitions and let the equity grow a bit more. We’ve now got the scale up to where we wanted it, to a point where just a few % points of growth is more than what we can physically earn p.a. It’s now a case of sitting back and letting the tenants pay for the holding, whilst we hang on and collect the growth. {The flipside to that of course is if the whole show goes down, we are snookered…high risk high return I suppose…but with rates locked in and tenants paying our way, we feel buffered somewhat…jump in any time Foundation !!}
Biggest lesson I’ve learnt from this recent round is we’ll probably move towards the CBD comm. props which attract tenants that are used to signing and commiting to leases.
Having tenants that do not feel obligated under the terms of the lease is very difficult. It’s all there in black and white, but if the tenant doesn’t ‘buy into it’ or feel fully obligated – regardless of what is written down, you’ll struggle. You need to be dealing with people who are used to signing and committing to contracts.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hi kid,
I use the CBA directly and find they are able to deliver loan products at an interest rate that all broker sourced products are not able to compete with.
With banks….scale helps.
I’ve also been told by my Mentor that the NAB is also good, although they stiff him a bit on the ‘line fee’ they charge, which he is actively rectifying now he knows my rate….bit of quid pro quo I suppose.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Rob,
I’ve read quite a few…and I can guarantee you that’s exactly how they work.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
If you are paying around $ 68.8 K p.a. in rent for a place up for sale at $ 625 K, that’s a pretty sweet deal – over 11% yield.
I’d seriously look at negotiating the price down hard and have a crack at it yourself.
Of course, having 1ROR, you have the luxurious position of sitting back – doing no work whatsoever – waiting for a chump buyer to come along and negotiate the best deal he can, wait for the Seller to agree, and then when the Seller officially notifies you of the impending sale, exercise your 1ROR and pounce on the deal.
It’s 11% at full asking price, so it’ll be higher than that….
I could think of worse things to pump your money into.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Marisa,
Received my copy yesterday and had a jolly good read. I’ve had personal dealings with the author, and as such my view is somewhat clouded due to those very negative experiences.
Be careful about the ‘free’ info on the big A3 map that shows the different industrial areas around Perth with historical land rates for only 2,000m2 and 4,000m2 blocks. I read all the fine print and nowhere does it quote the source of the data.
I bought more detailed data from the VGO at a cost of $ 380, with block sizes of 1,2,4 and 10,000m2 for all industrial suburbs over a 25yr period and the data is different that on the BR map.
Having seen both sets of data, I’m very happy I paid for the data off the VGO.
I guess you get what you pay for.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
