Hi,I am not happy about something our property manager has done.We signed a property managers agreement with the R/E with a rental amount of between $280 – $295 about 3 weeks ago before our property was finished.They listed our property on their website for $280.They rang my husband about 4 days ago to tell him they had offered our property for $275 (I have been doing all the organising)I thought they must have had the figure mixed up and sent them an email to confirm price.They told me on the phone (after all this hoo-ha about how good the tenants are) that the tenants only wanted to pay so much and they would have to ring them back to see if they will pay more.Who do these PM's think they are working for and what gives them the right to tenant our property for what ever price they like.Just waiting to hear back now – the tenants are probably not happy now & will go elsewhere.Anyone else had this happen to them, and what have you done about it.NOT HAPPY
Looks like your pm is working for the tenants
What they should have done would be to ring you to say that they found some tenants who are only willing to take $275 then seek instructions from you to go ahead with them or not. I would have done that even before looking at the tenant's application form. Infact, I would have said, the landlords want $280 at least and we feel that this is the cheaper end of market rent for this property, I can present this $275 to the landlord but I don't like your chances".What to do now? I would definately remind the property manager that you are their client and they should seek instructions from you before making any descison.
Who is listed on the management agreement as being the owner of the property? They make the descisions. If your husband is listed on there then they are within their rights to take instructions from him. Otherwise you have a course of action!
A couple of things on this that it pays to keep in mind such a situation.
You're talking about $5.00 a week or $260 a year. Leave the property vacant for another two weeks waiting to find a tenant who'll pay $280 or $290 and you'll be out of pocket $520.
Happy now that the property manager has saved you from…………….
Not sure what state you're in but the basic premise of the standard authorities is that the property should be let at market rental. If the tenant is the only tenant offering $275 this is a pretty accurate measure of what the market rental of the property is.
Don't rev the property manager they've just saved you a couple of hundred bucks in the shortfall you would have incurred for what an extra $5.00 a week.
Try this with the property manager. I appreciate that you've found me a quality tenant but I would really appreciate more if you kept me informed a little better in the future.
The basic principal is that sometimes you'll get a poor quality tenant who'll pay a higher price or a great quality tenant who will look after the property and cost you less in the end that'll be paying $5.00 a week less. The truth is that the tenants who pay the higher market rentals are always the first on the phone when something goes wrong and they are the ones who treat properties like hotels.
Most importantly ask this one question of your property manager. Do they own an investment property? If they say yes you can be sure that they understand the importantce of getting some cash flow happening and that $5.00 today can cost you $520 over the next two weeks.
Asking the property manager to consult you with regards to every decision is great, if the property manager tells you thats fine sack them immediately. The best property managers are busy property managers.
Hello Tara30
I agree with both the views above.
With this I mean that the PM should have asked you whether you would accept $275 before he rented it out rather than renting it for this amount and then advising you. That's standard practice and I would certainly tell him/her, in a nice way, that this is what you would like in the future.
However, opportunity in everthings maths is spot on. If you reject this tenant if may cost you more in lost rent.
Personally I would sort out the situation with the PM but keep the tenant, specally if they have a good rental history. I don't kow how long the lease is for but you can fix the situation at the next rent review.
Cheers
ElkaOne of my PMs talked me into dropping the rent recently to get a tenant in quick. I was then shocked to see she has signed them up for a 1 year lease – I had assumed it was 6 months. I checked the contract I had signed with the agent, and in the standard provisions it includes a provision that the agent has the ability to sign the lease on behalve of the owner.
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
Terry, it is common for pm's to sign leases on behalf of the owners, that's their job. It must be within owners instructions however!
I would have thought 12 months is better than 6? If you are worried that the rent cannot be increased within that time, it can! We do rent reviews every 6 months and if the market has moved, we up the rent even if there is a fixed term lease in place.
Thanks guys for your comments – I have calmed down now.I do realise that it is only $5.00 but that is not the point. I had a great experience using this PM on my last IP and wanted to continue to use this person & trust them. I was advised yesterday that the Tenant that applied was not going to sign & pay until almost 4 weeks time (Last week I was advised they were signing a 12 month lease and paying last Friday) So I am going to advise them (nicely) to find another tenant at the price stated on my agreement.I also have not instructed my PM to sign the Lease on my behalf.
Also Terry, before this happened my PM had also talked me into dropping the price $15 per week & then told me later the Tenants had been watching the house for ages and waiting till finished until they applied. I wonder how much they REALLY would have paid. hhhhmmmmmmm
Hi Tara,
thats really frustrating when they dont consult you and go aagainst yr word! That is more the point than only taking $5 less per week.
As for me i would rather lose 2 more weeks rent but keep my cashflow on the books as the $5 to $20 higher amount per week as this is what the bank looks at each time i re fi to buy another property . My main income is the rental income so there are definately other factors to consider than just getting some one in the house asap.
I actually just had an experience in america with one of my rentals where i told the PM i am looking at selling 2 properties in particular that he manages and to keep an eye out for buyers. Then the next time i spoke to him acouple of months later i find he had put the new tenant on a 18 month lease???? The problem with this is it closes off the property to the market for a home owner i can only sell it to an investor. So this becomes quite an issue and shuts alot of opportunities.
This is just another example of how important it is for the PM to listen to the owner and for the owner to keep on top of things constantly.Luke Taylor | Hope Property Investing
http://hopepropertyinvesting.com
Email MeProperty Support,Strategist and Buyers Agent
Another thing worth mentioning is that any extra rent also increases the value of the property for lending purposes. It may not be that much in this case, but could be just enough for a bank to decline a loan application for your next place.
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