Requesting: Landlord Tips & Tricks for Young Players

[kmor110]

Hi all,

We have an opportunity to house sit long term so we are going to try renting our house out. I have read through the resources on DBH website but would value some more advice from those who have done it before!

So far I am carrying out this plan:

- List privately, already have 10 people get in touch for a viewing as there is high demand and short supply in our area.
- Pre-tenancy form to screen (credit/references) then interview references and prospective tenant.
- Fixed term tenancy of 1 year
- 4 weeks bond (max)
- 2 weeks rent in advance to be paid on signing the agreement (not refundable if they are a no-show)
- I will maintain gardens/lawns so will agree access to do this every couple of weeks.
- Add conditions for pets, # of tenants, reimbursement of recovery costs.

I am wondering:

- Do I need to specify rent day/frequency/amount and method of payment on tenancy agreement?
- What is a 'right of renewal' option? It's mentioned on the tenancy agreement form on DBH website.
- Should I include whiteware i.e. fridge/dishwasher/washing machine if they want it (i.e depreciation of chattels tax deductible, worth it?)

Any other tips for young players? I am listing/managing myself as I want to learn about the process first hand. FYI financials bought the 2 bedroom house for 380k June '13, spent $50k renovating, likely to rent for $450-$470 per week.

[SometimesSane]

How cool for you to have this opportunity.
You have done well going to the DBH site and reading carefully.
reading some of the issues that people have in tenanting here can be helpful too.

The tenancy agreement does give you a place where you specify how and when rent is to be paid.
A right of renewal is when you have a fixed term tenancy rather than a periodic one. Read up about it. There are pros and cons for both.

Good Luck

[kmor110]

How cool for you to have this opportunity.
You have done well going to the DBH site and reading carefully.
reading some of the issues that people have in tenanting here can be helpful too.

The tenancy agreement does give you a place where you specify how and when rent is to be paid.
A right of renewal is when you have a fixed term tenancy rather than a periodic one. Read up about it. There are pros and cons for both.

Good Luck

Cheers! I read up on both types, and I decided I have a preference for fixed term 1 year as it will give us some security then it rolls to periodic once they have settled in anyway unless either party gives notice otherwise.

I am wondering then, why does a right of renewal clause exist? To give the landlord the option to say that it will not roll to periodic, or not automatically continue i.e. they need to apply to renew at the end of fixed term?

[skid]

Hi all,

We have an opportunity to house sit long term so we are going to try renting our house out. I have read through the resources on DBH website but would value some more advice from those who have done it before!

So far I am carrying out this plan:

- List privately, already have 10 people get in touch for a viewing as there is high demand and short supply in our area.
- Pre-tenancy form to screen (credit/references) then interview references and prospective tenant.
- Fixed term tenancy of 1 year
- 4 weeks bond (max)
- 2 weeks rent in advance to be paid on signing the agreement (not refundable if they are a no-show)
- I will maintain gardens/lawns so will agree access to do this every couple of weeks.
- Add conditions for pets, # of tenants, reimbursement of recovery costs.

I am wondering:

- Do I need to specify rent day/frequency/amount and method of payment on tenancy agreement?
- What is a 'right of renewal' option? It's mentioned on the tenancy agreement form on DBH website.
- Should I include whiteware i.e. fridge/dishwasher/washing machine if they want it (i.e depreciation of chattels tax deductible, worth it?)

Any other tips for young players? I am listing/managing myself as I want to learn about the process first hand. FYI financials bought the 2 bedroom house for 380k June '13, spent $50k renovating, likely to rent for $450-$470 per week.

If you are going for a fixed term there are existing rules on carrying over to another fixed term--i would just rely on that-After 1 year you may be more than happy to let them go --no point obligating yourself to a longer period.--Many here think that there are less advantages to a fixed term in the first place as it tends to benefit the tenant more than the landlord.

[kmor110]

Thanks Skid, yes I had thought about this... what would the main benefits to the landlord of a periodic tenancy versus a fixed term in your opinion? The obvious one I think would be 180 days after commencement you could review rent, are there any differences in notice periods?

[skid]

Cheers! I read up on both types, and I decided I have a preference for fixed term 1 year as it will give us some security then it rolls to periodic once they have settled in anyway unless either party gives notice otherwise.

I am wondering then, why does a right of renewal clause exist? To give the landlord the option to say that it will not roll to periodic, or not automatically continue i.e. they need to apply to renew at the end of fixed term?

That 1 year security you speak of ,in reality is a false security--most of the time if the tenants need to leave,and it gets to the tribunal ,they usually get the benefit of the doubt. You may however be able to require them to pay rent until you find another tenant.
Unfortunately ,if the tenant digs their heals in ,you usually come out with the short end of the stick--if they are the type who respect the rules however ,then you are sweet.

[SometimesSane]

Thanks Skid, yes I had thought about this... what would the main benefits to the landlord of a periodic tenancy versus a fixed term in your opinion? The obvious one I think would be 180 days after commencement you could review rent, are there any differences in notice periods?

And if you situation changes or a family member wants to move into your old home, you can give 42 days notice. Or if they just turn out to be undesirable tenants upsetting neighbours, messy, dirty or erratic payers you can give them 90 days notice.
Its a bit more difficult in a fixed term situation.

[kmor110]

That 1 year security you speak of ,in reality is a false security--most of the time if the tenants need to leave,and it gets to the tribunal ,they usually get the benefit of the doubt. You may however be able to require them to pay rent until you find another tenant.
Unfortunately ,if the tenant digs their heals in ,you usually come out with the short end of the stick--if they are the type who respect the rules however ,then you are sweet.

So am I correct in thinking that fixed vs periodic doesn't add significant 'real' security, I should instead focus on checking tribunal records to make sure I don't get a 'lemon' of a tenant and try pick one who respects the rules, good references, employed etc?

...on that note I've had a cop apply, good sign or bad? I have already been advised to stay away from lawyers ha ha

[Rosco]

Hi,

I would suggest using a property manager. If you are new to property investment and are not quite sure of the rules, it is often better to use someone who does.

Or at least use a property manager to get the initial tenant on board, checks done etc.

I would also review your structure and check it is the most tax effective long term. Linked into this is also your risk profile and where asset protection is also important. From your post I'm guessing you own the property 50/50, and this would mean you each would return 50% of the profit or loss in your personal tax returns. In most cases there is a better way to structure this! We offer an initial meeting, where full advice is given for $245 incl GST, which would be great to discuss the income, costs and overall effect, and from this the best structure going forward. Also a few great tip to maximise a tax refund or reduce tax. Obviously I would suggest using us, but definitely go for a Chartered Accountant who specialises in property!

Ross

[kmor110]

Hey Ross,

Thanks for the advice. I am interested as to why you so strongly suggest using a property manager? As I mentioned in my post I am committed to learning the ins and outs of being a landlord and I understand a lot of learning is trial and (hopefully not many) errors.

Perhaps there are some common pitfalls that you might like to share so I can be aware of them?

As for financial advice, I have spoken to our accountant. Both my partner and I work and have joint finances so we were told 50/50 should suit us fine for now. Later, when we buy another home we will likely re-structure. Does that sound like good advice?

[Keys]

So much to tell, so little time. Read the tenant forum here and the property managers one as well. A volume of information there.

Regarding right of renewal?

Read subsection 3 here.

Who, in their right mind, would ever offer a right of renewal.

[kmor110]

So much to tell, so little time. Read the tenant forum here and the property managers one as well. A volume of information there.

Regarding right of renewal?

Read subsection 3 here.

Who, in their right mind, would ever offer a right of renewal.

Periodic tenancy and tenant/PM forums here I come! Thanks for the advice Keys.

[flyernzl]

Important point - lay in a supply of asprin.

[kmor110]

Important point - lay in a supply of asprin.

Ha ha cheers Flyer, I am not afraid to fall back to Plan B if things start looking ugly.

[Wayne]

I understand a lot of learning is trial and (hopefully not many) errors.

Get a tenant who knows all the tricks and your errors could be costly indeed.