Hi all[biggrin]
I have seen the term “vacant possession” used a lately. I assume this means that when the property is settled it is to be vacant. What I am wondering is can this clause be added if the tenants that are in there have a lease agreement that runs past the settlement date?? I have just purchased an IP and I know that the rent that the tenant is paying could be a lot higher but I have been told that there is nothing I can do about it because their lease agreement over rides everything else. Any info would be great.
Thanks[blush2]
Residential leases usually only run for 12 months max. If you take 3 months to buy and settle. Just sit back for the remaining 9 months. After that its a month by month lease and you can raise the rent or give them notice. Note you should understand their motive first as they can contest raising the rent!
If you want to break the lease early, talk directly to the tenant you may find they dont really like the place but cant afford to move or something like that. You may be able to negotiate them vacating!
I would not try legal avenues to break a lease. IMHO a waste of time.
Note if you do break the lease you may find the property vacant for 2 or so weeks so would it really be worth chasing the higher rent or keeping a sure thing?
Thanks for that mate you make a good point about it being worth it if you are going to loose rent for 2 to 3 weeks anyway.[biggrin]
Hi Brad,
Where is your property?
Vacancy rates (the market) will largely determine what you can do after the expiry of the lease.
Leases can also have 6 monthly reviews written into them.
If you do decide to keep this tenant ensure that you are ratcheting up the rent in line with market forces. If they are a ‘good tenant’ then maybe slightly less than market rates is a happy medium.
Bear in mind that some property managers seem to forget who is employing them – it is you not the tenant.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113Originally posted by Derek:Hi Brad,
Where is your property?
[biggrin] Thanks for the info Derek. This unit is 10 minutes form the city centre of Perth in W.A. The lease is up in August anyway but my plan is to stick a couple of overseas students in there similar to another place I have. Yes this bloke does seem to look after the place and that is always worth something but the rent is about half what I could be getting. [confused2]
Are you managing this property yourself as vacancy rates in Perth are currently running at ~1.2% – at this point the ‘advantage’ is all yours.
Under WA legislation you are entitled to raise the rent by 10% or up to market rates. It would seem that this tenant is almost on a subisidised rent scheme, and you are subsidising him.
I would not be overly concerned with losing this tenant and not being able to find someone else. Even if the property is vacant for 2 weeks (which it won’t be in Perth at the moment) you need to consider the lost income not just now but into the future if you retain this tenant at the current rent.
You may want to write a letter to your PM telling them that the rent will be increasing at the end of this lease by $X/week up to $Y/week and can they inform the tenant now. You may find the tenant comes to you and asks to be released from their lease early as they have found something more suitable.
Be wary of your PM they can be a fly in the ointment.
On more than one occasion we have had PMs tell our members that their existing rent is as high as it can be and that no body will pay the new asking rent. More often than not this is proven to be false.
A case in point – a complex of villas in SE area of Perth. Some PMs are sayign maximum rent is $175/week – I am getting $205/week with more than enough enquiries.
Another example members have two units due to settle this week – two applications taken sight unseen and another 40 people on the waiting list. And that is only with one PM.
The key message is do not believe that your property will be vacant for a long time in Perth at the moment. Here we often talk about dropping rents to get a tenant due to demand in the area, it also works the other way at times like this.
Now all of that is not to say be heartless and lack compassion – what I am saying is make decisions based on sound business principles. It is your pocket.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113Thanks again Derek for your help it is great when you find people who know so much more about this stuff than me and are willing to share their knowledge[biggrin]
To answer your question no I dont have a PM I am looking after them myself I am just going to see how busy I get with it. Like I say I am hoping to target the students I know that there is probably a bit more work involved but I think that the return will be greater. It’s good to know that in Perth we dont have to worry too much about having vacant houses for long.
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