Hi everyone,
what is reasonable?
My tenant is always around 4 weeks in arrears, he eventually pays but naturally always late. He has been renting my property now for 2 years. He ticks me off every month and he phones me with many excuses etc.I have a managing agent who has stated that he is at his wits end with him. The obvious is to get rid of him. But he does eventually pay and maintains the property well. What is your opinion on this??? Am I giving him too much slack ?
Hi Marisa,
Yep you are giving the tenant too much slack. Rent is payable in advance so effectively he can be up to six weeks behind depending on how the days and weeks line up.
For me the issue is the property manager is not doing their job. No wonder the tenant is a late payer with a PM who doesn’t apparently know what to do and who seems unwilling to earn the good money that you are paying them.
Start getting on the phone (keep a diary)and writing letters to the PM and principal so that you complaints are recorded and then you have proof inefficiency if (when?) you change managers.
Some PM agreements have a little clause that says you will pay them their due management fees even if you move agencies so you will need to establish an underperforming track record in case the issue becomes messy.
Notwithstanding my earlier comments I would be looking for a new PM as a matter of priority – it is your money they are not collecting and this is affecting your cashflow.
How good are the inspections?
I would guess by your comments that these are not up to scratch either due to the inefficiencies of the PM. It could be possible that when the tenant leaves their bond money will not cover overdue rent and any damage or cleaning required.
Methinks it is time for action Marisa.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
You could always offer them something if they pay on time or before the rent is due (free movie hire, etc), rather than just getting the stick out and trying to beat them with it (I know it feels good sometimes!). Or put in your next rental agreement that any monies payed late will attract interest. See a solicitor about this before hand though (you don’t want it to be seen that you are doing anything illegal).
Or send him a letter saying that the rent has been 4 weeks late now 3 times, next time it becomes this late you will have to remove him from the property for non-performance.
Just a few thoughts… Get some more (and a legal opinon at least) before doing anything.
Rgds.
Lucifer_auI agree with Lucifer – the stick is a bad idea…offer him/her incentives such as movie tickets or vouchers…don’t be slack with the manage as well – your paying him to do his job – he should do it well. It’s your money!
Kind Regards,
George.“If You never never ask, you’ll never never know”
Hi Marisa,
I am sorry but I really disagree with Lucifer and Geo on this one.
Assuming weekly rent is $180 (current Perth median rent) and he is four weeks behind – that is $720 of your money – and that is without the two weeks in advance he should be.
On re-reading your post – I am amazed the tenant rings you directly – what on earth is your PM getting paid for? How did the tenant get your number?
I like to keep an arms length from my tenants – treat them with respect, both of you fulfil your obligations and there is no issue. This guy is taking you for a ride.
The time has come for a line to be drawn in the sand – primarily with the PM and through them the tenant.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
If you’ve got a mortgage to pay this would make things a lot harder for you. My girlfriend and I were in the same situation last year. We had a tenant who was always late in paying rent and making up excuses.. we were up front with her and told her that we had a mortgage to pay too and if she didn’t pay the rent on time it caused us major problems.. sometimes late fees from the bank. We were hoping she’d be understanding and start paying regularly again.. but she didn’t. She left without paying one month’s rent and left our unit in shocking condition. Now, you could be all sweet and offer incentives for paying the rent on time.. but why should you reward them for doing something they should be doing in the first place? It’s more money out of your pocket for something your PM should be taking care of.
Sometimes it’s better to be safe than sorry. If the vacancy rates aren’t too bad in that area I’d probably be looking at getting new tenants. I hope the lease has expired or is nearing expiration! Goodluck, hope it all works out.
At the cost of regretting any “knee-jerk” reactions here Marissa; my advice is DITCH THEM BOTH (tenant and PM) !!! It is your money, sure and your mortgage which can be at stake here, but trust me, better to be a bit down on cash for a month (if need be) than have the tenants from hell.
I know…I had them (or their relatives anyway).
I had tenants who were ALWAYS LATE, until one day they just stopped paying, and to add insult to injury they invited outsiders to join them; they moved out, and more came along, my PM was unable to contact them…in the end, they the property was riddled with ferrals (virtually squatting, as no money was ever paid).
I tried to have them evicted (police involved) and out of anger and retaliation THEY TORCHED THE PROPERTY….YES, BURNT IT DOWN !!!
Get them out, fire the PM and re-lett the property.
Hot Property huh Monoply..WOW !
Hmmmm Usually seems to be the case with tenants ‘once a bad payer always a bad payer’
We have a tenant continually late, on the + side he keeps the Unit in *Immaculate* condition, like a showroom..he’s just a typical young guy, i was like that once, hang on , ok i’m still like that !REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorI would start the eviction process asap. Read up on the rules and process for your state (look for the tenants union site – some good info for tenants, but you will also find this useful). Maybe you could get your agent to send them a notice to vacate (do it all properly), this may shock them enough to bring them up to date.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Maybe look into getting landlord / property insurance too. Keep us up to date with it!
Marisa,
There is just no reason for you to have any contact with the tenant whatsoever as you pay your PM who should print off and check the incoming rents at least weekly. That is how they know to send out letters as soon as a tenant is behind. As Derek said, your tenant always seems to be 6 weeks behind, not 4, as he should be 2 weeks in advance.
Check with other agencies in the area and get in writing what they offer as far as their commission and what they will do for you, even ask other owners you may know who manage their property. It’s easy to notify your PM that another agent will be taking over the management and collecting the keys on …date.
Bad payers usually don’t change. Our PM recently took a tenant to the tribunal for non payment of rent. They were continually behind, always making promises that they would catch up and now to their disadvantage, are on TICA. According to the 3 monthly inspection reports, the house was always tidy, but it was a hell of a mess when they were forced to vacate.
Our PM in another state sends a letter if the rent is 10 days behind and sends a copy to us to keep us up to date.
Anna
Wow, thanks for all the great comments & useful information.
It sounds like I definately need to be a tad FIRMER with PM and tenant.
This has been going on too long the situation does not change. [medieval]
Somehow I really dont think the Movie ticket would work, not with this guy anyway.
Thanks to all
NEVER offer a tenant who is constantly in arrears a bonus to pay on time.
You’re training them to lag behind because they’ll then get a bonus to catch up.
Wrong message.
Only reward tenants for paying ahead & maintaining the property above & beyond the call of duty.
Or to say thank you to a long-term good tenant.
Marisa, tell your PM that as it’s their job to ensure the tenant pays on time, if they can’t do their job you’re happy to take your business elsewhere.
See if you can get the tenant on direct debit. It’s much easier to ensure rent comes in on time using this approach.
Cheers,
Aceyducey
Thanks Aceyducey, tried direct debit, tenant promised this countless times.No luck
Derek, thanks also I am currently drafting a letter to my PM. Movie passes over my dead body[evil4]
One simple suggestion:
CHANGE your PM and do not allow the tenant to pass over the PM by phoning you. None of my tenants have my phone number and if they would ever call me I would say not to do so and to refer ALL matters to the PM. I had tenants stopping me in the mall for some comments on the property. I politely say to them that everything must go through the PM and that I have a contract with the agency for this purpose.
Furthermore I make a point NOT to have the tenant phone number either. If I ever need to contact them I do so through the PM, and NEVER call the tenant direct.If you have filantropic inclinations and want to manage your properties yourself, don’t have a PM at all, you will save some commision money, and probably lose a lot of rent money plus your hair or have some early grey one . . .[biggrin]
May God bless you
and prosper you.
MarcThanks Marc, appreciate your comments.
Kind regards, MarisaWhy do wha anyone else would do in this situation…..send in the TERMINATOR[skull][skull][skull]
Yeah, I agree with Marc, if you love the tenant, then get a new property manager. but then stay more at arm’s length than you have been and let them do theirr job! I.e. let the PM make the decision, and inform you they’ve given the tenant notice, rather than you taking responsibility for that which you obviously feel uncomfortable about.
However having said that I had some tenants that were in arrears suddenly after a spotless record. Death in the family. So after discussing it with my PM who knew the full story I decided that as the tenants both happened to be professional gardeners that I would be prepared for them to pay back the rent in gardening if they got back on track. So apparently the place is just looking gorgeous now, OK I lost $115 per week for four weeks but adding value to the outside is more what I need now as am about to get the place valued. So I guess in certain circumstances you can make it a win/win, if you feel that way inclined.
cheers-
MiniHi Marissa
I see you have had lots of great replies to your problem and hopefully have done something by now.
However, one question I would like to ask before you rush into getting rid of the tenant, “is the rent he is paying a good rent in the current market and are there lots of properties like yours looking for tenants at the moment?” If this is the case, maybe not the best idea to ditch this tenant if he eventually always pays up – you could be left with a vacant property or end up having to lower the rent to get someone in.
I would certainly change agents though, and let the new agent know that the tenant must be up to date at all times and action taken as soon as he is late otherwise you won’t be keeping them as an agent!
Shar
its important for tenants to pay rent on time, i would find a new property manager ASAP.
perhaps with your next tenants and properties, as part of the agreement with the tenants you could try this….
say for example the property is worth $100, and that’s what u want to rent it out for, $100…
you should advertise the property on rent for $100… but in the contract specify that the price of the property is to be rented for $110 (tenant subject to a 10% discount if rent paid ahead of time)so technically its for $100…
and if the tenant says “why is it advertised for $100, but here it says its for $110”
you can just say “it is $100, you are planning to pay on time aren’t you”and if they say no. then u know well in advance that they are not going to be paying rent on time
good luck
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