Have just put an offer in on a IP with a periodic lease in place (which is currently at a rate approx $30pw below market value). My intention would be to increase the rent to market value and fix it with either a 6 or 12 month term.
Is there anything i need to be aware of with the current tennants on the periodic lease? I assume that if they don;t agree to the $30 increase and fixed term then they would just need to give 30 days notice to vacate?
My aim is to put a clause in the property purchase contract allowing me access to the property during the contract period to conduct tennant viewing sessions (in case the current tennant vacates during the settlement term)… is there anything else i should be doing?
Cheers,
dtrumptenant viewing session??? sounds a bit bizarre.
You can't do anything about it if they vacate. It's nothing to do with you. You have nothing to say about the tenant until you actually own the property. You can't MAKE them stay. The vendor can't give you permission to access the property so it can't be put in any contract. The tenants have rights. You can't just go in and check on them.
AFTER you own i you can issue a notice to increase the rent. 64 days later the increase will come into effect. If they don't give you notice they must pay the increased rent by the due date. You can ask them to sign a new lease at the same time. If they don't want to pay the increase or sign the lease they can give notice (14 days) or you can give them notice (60 days) to vacate.
Hate to say i disagree.
You can certainly put a condition /s in the purchase contract that the Seller serve the appropriate period of notice on the tenant to allow you access to the property for whatever reason.
As long as the required period of notice has been given there is nothing the Tenant can say or do.
Also you could include a condition that the Seller serve the appropriate notice to end the periodic tenancy under the term of Contract (In Qld it would be 60 notice).
The condition could read that the Seller agree to offer the existing tenants a new Tenancy at a given rent and if they dont sign the amended lease within a given period of time the seller agrees to serve the appropriate notice to end the lease agreement.
Done 101 times for all sorts of reasons.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hate to say i disagree.
You can certainly put a condition /s in the purchase contract that the Seller serve the appropriate period of notice on the tenant to allow you access to the property for whatever reason.
As long as the required period of notice has been given there is nothing the Tenant can say or do.
Also you could include a condition that the Seller serve the appropriate notice to end the periodic tenancy under the term of Contract (In Qld it would be 60 days notice).
The condition could read that the Seller agree to offer the existing tenants a new Tenancy at a given rent and if they dont sign the amended lease within a given period of time the seller agrees to serve the appropriate notice to end the lease agreement.
Done 101 times for all sorts of reasons.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hate to say i disagree.
You can certainly put a condition /s in the purchase contract that the Seller serve the appropriate period of notice on the tenant to allow you access to the property for whatever reason.
As long as the required period of notice has been given there is nothing the Tenant can say or do.
Also you could include a condition that the Seller serve the appropriate notice to end the periodic tenancy under the term of Contract (In Qld it would be 60 days notice).
The condition could read that the Seller agree to offer the existing tenants a new Tenancy at a given rent and if they dont sign the amended lease within a given period of time the seller agrees to serve the appropriate notice to end the lease agreement.
Done 101 times for all sorts of reasons.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
The scenario i am thinking of is the cost of not having a tennant in place when i settle. If i am going for 60 days settlement…and the tennant is on a month to month lease…then there is a possiblity that that come settlement there is no tennant in place and it is empty.
In that scenario, i'd like to have the option to show some tennants through before final settlement so that a tennant is lined up from day 1.
I would have thought it is quite common to show tennants through a property sometime between going unconditional and final settlement?
Qlds007 wrote:Hate to say i disagree.You can certainly put a condition /s in the purchase contract that the Seller serve the appropriate period of notice on the tenant to allow you access to the property for whatever reason.
As long as the required period of notice has been given there is nothing the Tenant can say or do.
Also you could include a condition that the Seller serve the appropriate notice to end the periodic tenancy under the term of Contract (In Qld it would be 60 days notice).
The condition could read that the Seller agree to offer the existing tenants a new Tenancy at a given rent and if they dont sign the amended lease within a given period of time the seller agrees to serve the appropriate notice to end the lease agreement.
Done 101 times for all sorts of reasons.
Cheers
Yours in Finance
Thanks that is really helpful
Hi all,
The vendor may not accept terms like the ones above, just because they will want as close to unconditional contract as possible.
You will need to give the tenant 60 days notice of rent increase after you take possession of the property (have done it before). You may want to get them to resign a 6 month lease and get half the amount extra ($15) and then have another rent increase in another 6 months so as to keep the long term tenant. If they vacate after you put the rent up you will need to front up with costs to find another tenant.
Have you asked the property manger about the tenants and about the rental increase you are planning. They may think the rental increase too high at once or may be able to guide you on the best way to put the rental increase to the tenant.
I understand what you are saying about having inspections to try and find a new tenant but if they are the midst of leaving they may cause problems with getting viewing times etc.
You catch more flies with honey than you do with vinegar.
Maybe you can get the rental manager to speak to the tenants to try and gauge their intentions and even to reassure them that they do not have to move out so you can try to plan out all the scenarios.
Good luck, I have bought with tenants and put the rent up straight away ($5 p/w
) and still have those tenants.D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeDWolfe wrote:Hi all,The vendor may not accept terms like the ones above, just because they will want as close to unconditional contract as possible.
You will need to give the tenant 60 days notice of rent increase after you take possession of the property (have done it before). You may want to get them to resign a 6 month lease and get half the amount extra ($15) and then have another rent increase in another 6 months so as to keep the long term tenant. If they vacate after you put the rent up you will need to front up with costs to find another tenant.
Have you asked the property manger about the tenants and about the rental increase you are planning. They may think the rental increase too high at once or may be able to guide you on the best way to put the rental increase to the tenant.
I understand what you are saying about having inspections to try and find a new tenant but if they are the midst of leaving they may cause problems with getting viewing times etc.
You catch more flies with honey than you do with vinegar.
Maybe you can get the rental manager to speak to the tenants to try and gauge their intentions and even to reassure them that they do not have to move out so you can try to plan out all the scenarios.
Good luck, I have bought with tenants and put the rent up straight away ($5 p/w
) and still have those tenants.D
Thanks for the advice. Its a private let so no PM in place, however the selling agent has advised that the tennants like to stay on and that their preference is at the same rental price (of course that is their preference) however he has suggested to them that they may need to pay more. The tennants have had the same price for approx 2 years with no increases so i think they have had a quite a good run. Currently they pay $35 less than a same unit in the complex.
I would consider staging it in 2 steps like you suggested. My preference is to get the rent price up to a decent level and then keep it there with a long term tennant. I'd be willing to take a hit in the first case ( i.e. potentially lose the current tennant) to get the rent up to market value and write it off as part of the 'acqusitions costs' of the property.
Cheers
Hey dtrump,
Just do the maths on how much it will cost to make sure there is no false economy with this. $15×52 = $780, $30×52 = $1560. As long as the costs of replacing the tenants don't exceed the rent you will make you should be ok. Don't underestimate the value of a tenant that has been in a long time, they are often unwilling to move and will wear rent rises well. Also sometime, it is better the devil you know
Just opinions as always,
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeKeep in mind that let's say you have to give the existing tenant 60 days notice, there might be little point in showing new tenants through that early. Ask some local agents how quickly tenants in the area are aiming to move in. If it is "I have to be able to move in within 3 weeks…." then showing people through 60 days in advance might be pointless.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks for all the advice.
If it is 60 days notice required, then realistically i probably wouldn't need to show tennants through during the settlement period. It seems like it would if any thing 'fine tune' the timing.
Appreciated.
I just put a special condition on my contract for sale recently that if the existing tenant did not agree to a rent increase of $90 per week, that I require vacant possession upon settlement, with a settlement of 45 days.
) and still have those tenants.
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