First tenant eviction; comfort/advice appreciated

[nicsa122]

Hi all,
We own one rental that we have recently switched to a property manager, we had had a couple of issues with missed rent that was being paid back slowly but since we switched to the PM, have had NO rent paid, now over two weeks in arrears. PM says they will be filing for 21 day vacant possession. Have not been impressed by them so far at all, though they came with good references. Apparently the main PM is sick and now someone else is helping and has promised to up date on Monday, hoping that its just a coincidence its all turned to s#!^ as soon as they took over and not an example of whats to come! We have rentsure insurance and pretty nervous about the whole eviction process and claiming insurance...anyone give me some guidance on what to expect?

[Bobsyouruncle]

Where is the property? Sounds like you need a better PM. Expect the worst but hope for the best. Worst case you kiss the rent arrears and have learned to not let it happen again. Best case they will get it paid off. Either way it's just part of the joys of real estate. Console yourself by thinking of the equity you have and the long term benefits of the passive income :-).

[MikeC]

And next time let the property manager select the tenants. Assuming the property manager is half decent.

[BDM - Elders Ipswich]

My understanding is................
The day after payment is due, the tenant should have been issued a 14 day notice to remedy the breach. If the entire amount was not paid within that 14 days (which would be up now), the property manager can then apply to the TT and go through a mediation process. The tenant and property manger can come to an agreement of how they are going to pay the outstanding amount. This is often the best way to proceed as 1) often speeds up the process and 2) you can request for a 'consequential clause' to be put in the agreement. This means that if the tenant fails to pay the agreed upon amount (obviously including any future rental payments) within 48 hours of the agreed upon date then you have the right to terminate the tenancy effective immediately.
I am not 100% sure on what they mean by '21 day vacant possession' as it is only that they can apply to the Tribunal when the tenant is 21 day in arrears (if they have failed to issue the original 14 day notice). They will still have to wait for a court date and even then it is not a given that they will rule to terminate tenancy.
If in the worst case scenario the tenant does not pay and the court rules to terminate tenancy and bond amount does not cover what is outstanding to you, as you have landlord protection insurance it should be a pretty simple process to recover that money (and then let the insurance company chase them for the money).
My suggestion would be to call a few property management companies and ask what their process is regarding rent arrears, this will give you an idea if your current property manager is approaching this issue correctly.

[Glenn]

Hi all,
we have recently switched to a property manager, we had had a couple of issues with missed rent that was being paid back slowly but since we switched to the PM, have had NO rent paid, now over two weeks in arrears. PM says they will be filing for 21 day vacant possession. Have not been impressed by them so far at all, though they came with good references.

Don't get upset about the PM. It is very common for tenants to refuse to pay the rent to a new PM. I have had this many times. The tenants say they are not required to pay. Even MBIE has often advised the tenants not to pay quoting the section of the RTA that refers to the sale of a property as apposed to change of landlord / property manager. There are different conditions for the two.
The most common refusal to accept the new PM comes from tenants just like yours that are in rent arrears. This after all was probably why you changed. They want to hold onto the soft old owner.
Again I can see you might not like the thought of evicting someone. That is the outcome for tenants who do not pay. The tenancy adjudicator does not have an option. They must issue a termination notice if the rent is 21 days in arrears unless the landlord says give them another chance.

[nicsa122]

Don't get upset about the PM. It is very common for tenants to refuse to pay the rent to a new PM. I have had this many times. The tenants say they are not required to pay. Even MBIE has often advised the tenants not to pay quoting the section of the RTA that refers to the sale of a property as apposed to change of landlord / property manager. There are different conditions for the two.
The most common refusal to accept the new PM comes from tenants just like yours that are in rent arrears. This after all was probably why you changed. They want to hold onto the soft old owner.
Again I can see you might not like the thought of evicting someone. That is the outcome for tenants who do not pay. The tenancy adjudicator does not have an option. They must issue a termination notice if the rent is 21 days in arrears unless the landlord says give them another chance.

Damn...so I should have expected this? Oh well, fingers crossed its smooth sailing now-I just hate not being in control of the process, but when the house is in a different city to us we have no option. Think once we get them out will offer it for sale and for rent at the same time and see what happens first.

[Glenn]

Damn...so I should have expected this? Oh well, fingers crossed its smooth sailing now-I just hate not being in control of the process, but when the house is in a different city to us we have no option. Think once we get them out will offer it for sale and for rent at the same time and see what happens first.

Goodness do not do that. It is hopeless trying to let a property that is on the market. The choice of tenants is very poor. You will get less rent and lower quality / desperate.
You might also get less sale price because believe it or not some silly buyers think an empty rental indicates a hard to let or problem property.
A "good" PM should bring in more rent per year than an owner manager can do. This is because they know the rent level and should have less vacancy gaps.
However no all PM's are in the category of "good". On the basis of the few crumbs of information supplied by you I think your PM is doing everything correctly.
Just sit tight and enjoy the ride.

[Nick G]

Good advice Glenn

[nicsa122]

Goodness do not do that. It is hopeless trying to let a property that is on the market. The choice of tenants is very poor. You will get less rent and lower quality / desperate.
You might also get less sale price because believe it or not some silly buyers think an empty rental indicates a hard to let or problem property.
A "good" PM should bring in more rent per year than an owner manager can do. This is because they know the rent level and should have less vacancy gaps.
However no all PM's are in the category of "good". On the basis of the few crumbs of information supplied by you I think your PM is doing everything correctly.
Just sit tight and enjoy the ride.

Hrmmm even if we say in the ad it's either going to be sold or rented not both? Is it worth attempting to sell? We don't have much equity at all but might be worth getting rid of it to get rid of headaches. How long should we have it advertised to rent before moving on?

[Glenn]

Hrmmm even if we say in the ad it's either going to be sold or rented not both? Is it worth attempting to sell? We don't have much equity at all but might be worth getting rid of it to get rid of headaches. How long should we have it advertised to rent before moving on?

The problem is as a fellow property manager / landlord / investor wrote to me yesterday from Wellington. Everyone from the politicians to MBIE staff, to media, even central bankers are all saying the same thing. They are all assuming and calling us investors scum. Sure when you only mix with fellow investors and family members you might not hear that but sorry that is what we are painted with. Actually if I think about it even before the howling of the wolves could be heard back .... bugger I am sure there must have once been a time people thought we were good!
No basically always tenants / prospective tenants really do not believe us. So making some sort of promise about not selling, fixing up the hole in the bathroom floor, offering to give them a Christmas present if they behave themselves and so on is always taken with a grain of salt. The more promises landlords make the more prospective tenants worry and suspect what you are saying is just to induce you to rent a property. Goodness I have even heard the "induce to rent" mantra chanted by an adjudicator.
Tell them nothing and make your decisions on what is best for you.
But as I originally said for goodness sake make one decision not two and sit on top of a sharp pointy fence. When the forces of society pull sharply on each leg at the same time you will figure out what I am on about.

[Glenn]

Is it worth attempting to sell? We don't have much equity at all but might be worth getting rid of it to get rid of headaches. How long should we have it advertised to rent before moving on?

Oh yes to answer that question. No one knows the answer to questions like that. Once when I sold real estate the mantra was no one knows when a property will sell.
There is only one way to deal with not enough equity / too much money borrowed. Do what all the experts say not to do. Pay some principle off from external sources. Oh course the other thing we all hope is working for us is time. Time will either save us or kill us.

[nicsa122]

Don't get upset about the PM. It is very common for tenants to refuse to pay the rent to a new PM. I have had this many times. The tenants say they are not required to pay. Even MBIE has often advised the tenants not to pay quoting the section of the RTA that refers to the sale of a property as apposed to change of landlord / property manager. There are different conditions for the two.
The most common refusal to accept the new PM comes from tenants just like yours that are in rent arrears. This after all was probably why you changed. They want to hold onto the soft old owner.
Again I can see you might not like the thought of evicting someone. That is the outcome for tenants who do not pay. The tenancy adjudicator does not have an option. They must issue a termination notice if the rent is 21 days in arrears unless the landlord says give them another chance.

I have no issues with evicting them, I need to put the insurance claim through. What I do have issues with is a lack of communication from the PM-I know there has been illness but they are a company! They have other people that should be taking over. It's bad enough to go from receiving rent each week to getting absolutely nothing but not having any communication and now not having the power to issue the notices or call the tenants ourselves is driving me a bit beserk...PMs are meant to take away the stress but now it's just 100X more stressful. 😡😡

[Perry]

. . . and now not having the power to issue the notices or call the tenants ourselves is driving me a bit beserk.

Is that correct?

Haven't our resident PMs often said that whether or not the owner's name was on the TA, the TT Kangaroo Kourts classed them as equally liable with the PM for any RTA breaches? If that's the case, it seems to be a precedent for the owner taking (what might be called) direct action with the tenants.

[nicsa122]

Is that correct?

Haven't our resident PMs often said that whether or not the owner's name was on the TA, the TT Kangaroo Kourts classed them as equally liable with the PM for any RTA breaches? If that's the case, it seems to be a precedent for the owner taking (what might be called) direct action with the tenants.

I'm not sure-I assumed it was un-professional to go over their heads. We had a really good relationship with the tenants and now apparently all has turned to s#!+ so I'm very confused...kinda want to contact them ourselves and get their side but I don't think at this point it's a good idea to over ride the new PMs-gotta give them a chance to do their jobs I guess.

[Perry]

As you have described things, it would seem that some personal communication with the tenants is likely to be beneficial. Even if you are only making the point that you are concerned with the problems and hope that they can be resolved without undue delay or distress to the tenants.