Proof of income for new tenants - is it still a thing?

[absoluteproperty]

Hi all,

Just wondering if proof of income was still a thing that would normally be on the "to do list" of a PM prior to tenancy agreement establishment?

I have engaged one of the larger property management co's here in Wellington and have never let out any of my properties in Wellington with a PM before - I have always done things myself.

Have a couple wanting to move in.

No previous NZ residences shown, they appear to have relocated from the US in March and seem to be living in an AirBnB for now. Stated income is nearly 3K per week for the primary applicant, secondary applicant is unemployed. The primary applicants employer is offshore (US based) and appears to he in the process of liquidating assets in the US to make a new start here.

6 month fixed stay, which is what I had asked for.

No proof of income provided, I asked the agent for this and assume he passed this on to the tenant who wrote back explaining his financial and working situation but no pay slips, bank statements or anything have been shown. I still rent, and have always had to provide some sort of income verification (a letter from my employer, pay slips or bank statements).

Is this still a thing? I do not want to annoy the agent, but am very cautious considering the current approach by the TT and government on rent arrears during lockdown in terms of landlords being able to act, and at a later point actually retrieve arrears.

[Sanya]

Have you / your PM checked / sighted their Visa status? Working holiday visa, a temporary work visa, skilled migrant visa, investment visa etc? Where no proof of income or references are available its dicey. In this situation (which is rare) if my PM still likes them, then visa type may provide some additional insight to help with the determination.

[absoluteproperty]

Have you / your PM checked / sighted their Visa status? Working holiday visa, a temporary work visa, skilled migrant visa, investment visa etc? Where no proof of income or references are available its dicey. In this situation (which is rare) if my PM still likes them, then visa type may provide some additional insight to help with the determination.

The PM did some further digging at my request in terms of income, the employer is offshore but income appears to be a real thing.
The tenants do have references, however they are all friends and ex landlords in the US, nobody at all local.

We have not checked the visa status as far as I am aware, thank you for the advice.

I was looking to sell off this particular property but got caught out a few weeks too late as COVID hit, so looking to rent it out and let the wave of lowballers and any potential distressed sellers move through the market before I look to move it off.

The property managers contract I rec'd today seems even more complex than conveyancing the property that I did a few years ago, and certainly more complex than my own experience of managing most tenants. Lots of fish hooks that should I not have the right note on the calendar on the right day, I will end up paying continuity of service fees, full occupancy management fees even though the apartment is empty, several months notice period to terminate the contract even when the lease ends etc.

I am now thinking of just sacrificing some of my own time and managing the property myself prepared to do the hard work if necessary, as I always have.

We certainly live in times to challenge us all, so thank you for the advice.

[Don't believe the Hype]

I was looking to sell off this particular property but got caught out a few weeks too late as COVID hit, so looking to rent it out and let the wave of lowballers and any potential distressed sellers move through the market before I look to move it off.

I doubt any wave of distressed sellers will come before 6 months... we have
> 13 wk wage subsidy meaning tenants can pay rent (at least partially) through to July before the business they used to work for makes them redundant - assuming no extension to the wage subsidy.
> 6 month mortgage 'HOLIDAY' - which investors who have issues can use to relieve cash flow pressure through to Oct/Nov

If this thing drags on and we don't see a pick up in employment I expect there to be a lag of distressed sales that will start to hit coming into the summer months.

[PC]

Make sure they don't have diplomatic immunity!
That was an expensive disaster for a LL recently.

[Perry]

No bank statements? Not even USA-based banks?

Or Cayman Islands?

If the plethora of fish hook Ts & Cs in the PM contract are giving you pause for thought, the lack of bank statements should perhaps do the same?

[absoluteproperty]

No bank statements? Not even USA-based banks?

Or Cayman Islands?

If the plethora of fish hook Ts & Cs in the PM contract are giving you pause for thought, the lack of bank statements should perhaps do the same?

After quite some "fishing", income was submitted to the PM in the form of US bank records and confirmed money is coming in sufficient to meet rents. I have cited these, they seem OK.

The PM's contract clauses that concerned me were that although I have been very clear and stipulated the property would be managed specifically for this one lease, a clause of the contract notes a significant notice period must be worked through if the PM's contract is to be terminated, even if the lease has expired.

A second clause quite a bit further in the contract then states that should the property be left empty at any time, the landlord should expect to pay full property management fees reflective of if the property was still occupied.

So, I guess to make things legal the procedure would be an email 12 weeks out from lease end to let the PM know our date with destiny is over, and a second letter to the PM to be forwarded to the tenant 91 days out (giving them a day to process) formally advising I will shoring up the property on the market.

[PC]

Cross out those clauses in the contract. Or just say "No thanks".
Are tenants or capable PMs that hard to find?

[Perry]

Agree with PC. Cross out and initial the unwanted / inappropriate clauses.

[Sanya]

Agree with PC. Cross out and initial the unwanted / inappropriate clauses.

+1.

There is no shortage of property managers out there and many are hungry for new business because the number of rentals they are managing has declined. With COVID-19 some landlords have seen a reduction in rental income and retaken management of their properties to save management commission and fees.

I think your contract is completely unreasonable. Fees should be linked to rental income. No income, no fees.

[absoluteproperty]

Cross out those clauses in the contract. Or just say "No thanks".
Are tenants or capable PMs that hard to find?

Thank you PC, I should have read your comments before proceeding - it is a contract I do not intend on continuing with, but a contract I went ahead with to make things work.

We are heading into week 4 of the tenancy now, I have seen one week of rent come through from the agent, it took almost a week of chasing with repeated follow-ups to get this first rent payment from them. They explained it was because they took payment for the tenancy on credit card, I have explained to them that the tenants delays are not my concern and they need to ensure payments are made early if necessary to avoid default.

They have said rents only come through from the PM to the landlord twice monthly for ease of accounting, despite the lease agreement stipulating the tenant is to pay weekly into the PM account. So, it appears once Wednesday rolls around that they will have 3 weeks of my rent sitting comfortably in their accounts while I continue to fund the mortgages off the income of other properties.

I am keeping a hands off approach to attempt to allow things to pass painlessly, perhaps my management style does not fit with an external PM relationship.

After managing my own properties these past 6 years this is my first experience with a PM, and has definitely demonstrated that it is far far less stress most of the time to deal with things myself - things get rough and tumble if the tenant plays up or things break and need to be repaired, but at least I have a real-time open and honest view of what is going on without a middleman obstructing fast answers and keeping the business from its' money.

Lesson learned - and yes, I know there are some fantastic PM's as I see on here with Keys and others, but it appears the PM I am working with is not an informed contributor to this forum.

[Perry]

I know there are some fantastic PM's as I see on here with Keys and others, but it appears the PM I am working with is not an informed contributor to this forum.

Perhaps we should all be grateful for that?