Keeping existing tenants

[Charms]

Hi everyone,

Thank you in advance for any advice on this.

We are thinking of putting in an offer on a property that has existing tenants that want to stay. They have been there 4 years and apparantly have been no problem (this is from the owner). We are quite happy for them to stay but need to know how to safeguard ourselves. It is a private sale, no agents involved.

What sort of wording should we have on the S&P agreement? I did read on one of the other forums about making sure that it was vacant possession but signing the tenants up on new TA before possession date etc? Need clarification on this.

How do we go about getting the bond transferred etc?

Also think the tenants are paying less than market rent for the property. 4 beds, 2 baths in central Upper Hutt. How do we go about making sure the rent is increased when we take possession?

Anything else we should be making sure happens?

Thanks again.
Charms

[Keys]

Vacant possession. (that little dot at the end of the sentence is a period, means the end)

[Keys]

So, you want to keep the tenants? Ensure that the wording of the S&P agreement reflects this: Vacant possession. Ensure that the tenancy terminates at least 24 hours before the possession date.

When the property is unconditional, approach the tenants with your application form and let them know that you would be prepared to consider them for the tenancy. The rental rate for the tenancy when you take possession is $x per week and, should they wish to apply, the rent is that rate. IF the tenants are up to your standards you could offer them a tenancy and they can stay on after the termination date which the vendor has set. That is catered for in the RTA. Bond would need to be surrendered to the tenants and reissued by the tenants to you before you allow them to stay. Safest way. In the meantime, you can choose the tenants you want all the way up to the formal offer to the sitting tenants. Remember, the vendor says they are good tenants for a reason.

[flyernzl]

The reason is possibly the low rent?

[essence]

Being the cynic that I am (Oh no, essence!! Not you!!! - I hear you cry) I'd check out the Department of Building and Housing Tenancy Tribunal website, to see if there has been problems with the tenants.

Of course the tenants want to stay ...... they're paying under market rent and they know it.

I always go for vacant possession. It allows the tenants to make a decision about whether they want to stay at an increased rent or not. If not, get new tenants who will pay more. It's legally sets a starting point for THIS tenancy, not the one you've inherited from the ex-owner (and with all it's problems, perhaps).. A property inspection can be taken and absolutely attributed to the tenants. They can't then say, "Oh it was like that when we moved in".

Listen to Keys' advice, he's been in the game quite a while and he knows what he's talking about.

[Charms]

I really appreciate all the advice and thank you all again. It all sounds so "common sense" but I just needed to see it in black and white.

[Perry]

The temptation is quite understandable. Buy an IP and
have cash flow from day one (so to speak), with vendor-
recommended tenants of 4 years standing. Take care.
Even though it sounds great, heed the advice of the
hard-bitten ones, hereabouts.

[Ahar]

The temptation is quite understandable. Buy an IP and
have cash flow from day one (so to speak), with vendor-
recommended tenants of 4 years standing. Take care.
Even though it sounds great, heed the advice of the
hard-bitten ones, hereabouts.

Charms, don't let the cynics here scare you too much

Most tenants are great most of the time ....of course there are always exceptions

As to your "sitting tenants"....use your common sense here

Think back to how the property was presented.....nice and tidy... or strewn with dirty clothing, unmade beds, unwashed dishes and general rubbish?

If the latter, then give them a big miss....too many good "clean and tidy" types are out there

And how accommodating were they in viewings etc?

If difficult, then again give them a miss.....difficult tenants who "know their rights" are a pain in the posterior

Now I'm not saying don't do any checks.....that's silly....but if they've presented themselves as the aforementioned "clean and tidy" types, then that is a huge plus in their favour. Also enquire again about any problems there might have been....such as late payments etc.....if all is ok then they probably will be great tenants

But given that the property is being underrented, then vacant possession will allow you to increase the rent immediately

Otherwise you will have to give notice

[drelly]

Easy peasy. Vacant posession and talk to the existing tenants as soon as possible, explaining that they will need to have a new tenancy agreement with you and that the rent is going up. Do the usual application process same as any other tenant.

[Wayne]

All of Ahar says is true - taking vacant possession and then choosing the current tenants after doing due diligence yourself is the best option. The current state of the property (if tidy etc) works in the current tenants favour but do your own checks!