How do I get new tenants or new tenancy agreement?

[ianhoolihan]

Hi all,

I am a first-time landlord, having bought a 3bd state house in Fairfield, Hamilton. I took over the property with the existing tenants. It still seems like a good investment, though I am heading overseas for four years in September, and I want things hassle-free by the time I go.

So, the problems:

1. The existing tenants are untidy, and unclean, e.g. sleeping on mattresses without sheets, fires on lawn, mould on ceilings. I think there are two adults and 4 (5?) kids, which is probably too much. Unfortunately, I am unsure of the condition the house was in when they first moved in, as I was not the owner then.
2. The previous property managers did the lawns, so I do too, even though it is not in the TA.
3. The rent is $290pw, and I want to increase it, but don't know the details.

On one hand, I keep the messy tenants with slightly lower rent, but who are likely to stay longer term (kids in nearby school). If I keep them, I was wondering if I can

1. create a new tenancy agreement (the current one is for previous owner)
2. clean the house beforehand, and take photos etc such that I have a record for how clean I expect the house to be.
3. stipulate in it that the tenants must mow the lawns
4. increase the rent in it without waiting 180 days

I am heading overseas soon, but my parents may be able to manage the property, as really, all we are doing is mowing the lawns, which we need not be. Or, I could get a property manager to save myself the hassle --- however, I can't justify the 8% fee for them doing nothing. Thoughts?

On the other hand, I move in to the house (42 day eviction), clean it up, and get in new tenants. This way, I have the aforementioned problems sorted out, and get the new rent quicker. I'd also be able to choose more suitable (and clean) tenants. The only problem, of course, is how long it takes to find new tenants --- does anyone know if there is a resource telling me about this?

I realise I've got quite a few questions in there, but any responses would be most appreciated!

Regards,

Ianhoolihan

[PC]

Getting stuck in and sorting out the problems will be great training for you as a land lord.
Pretty quickly you'll discover if herding cats & cleaning (lots of cleaning) is worth the meagre returns.

You're on shaky ground using a 42 day notice to re-rent the place.
Issue 90 day notice to vacate.
Tidy the place up.
Up the rent.
Re-let to new tenants and include they must do the lawns.
Find a local tough as nails PM - shout them lunch - and ask for more specific directions.

Get a PM whilst away overseas.
Grow a pair - don't dump your problem on your parents.

Good luck!

[Maccachic]

Fully agree on getting a good property manager unless you are prepared to learn the Residential Tennancy Laws inside out (and you parents) it will save you issues in the long run.

Have a quick squizz through the forums here and the Tennancy Tribunal judgements https://forms.justice.govt.nz/search/TT/ to open your eyes in regards to worse case senarios.

[TheLiberalLeft]

How long ago did you buy this thing?

A PM doesn't "do nothing". That's a silly thing to say. A good one is worth their weight in gold. If things go tits-up while you're away, your parents will be struggling, and it'll be hard to get a PM onboard at that stage.

[ianhoolihan]

You're on shaky ground using a 42 day notice to re-rent the place.
Issue 90 day notice to vacate.
Tidy the place up.
Up the rent.
Re-let to new tenants and include they must do the lawns.
Find a local tough as nails PM - shout them lunch - and ask for more specific directions.

Get a PM whilst away overseas.
Grow a pair - don't dump your problem on your parents.

Good luck!

Thanks for the advice, but why would I be on shaky ground with the 42 day notice? The reason I ask is because I leave in 3 months, which is about 90 days, and I want it sorted before then.

As for my parents, I understand where you are coming from. But they wish to help, and they'd be doing very little --- all contact with tenants would be through me, so I'd deal with those sorts of problems. I have all repairmen sorted etc as well. So, maybe the odd inspection. At least, that is in my novice opinion.

Fully agree on getting a good property manager unless you are prepared to learn the Residential Tennancy Laws inside out (and you parents) it will save you issues in the long run.

Have a quick squizz through the forums here and the Tennancy Tribunal judgements ###can't post links### to open your eyes in regards to worse case senarios.

Hmmm, I couldn't find examples of judgements without details of a specific case. I have looked elsewhere though, and yes, it appears I am way out of my depth.

How long ago did you buy this thing?

A PM doesn't "do nothing". That's a silly thing to say. A good one is worth their weight in gold. If things go tits-up while you're away, your parents will be struggling, and it'll be hard to get a PM onboard at that stage.

I bought the place December last year.

As for PMs, it depends on the tenants. I have a 2 bedroom place on the section as well, and those tenants have been there 5 years, and are a blessing. A PM would be taking 8% for nothing. In my opinion, PMs are useful for solving/preventing problems.

However, as mentioned before, I realise that I have a very limited knowledge of what constitutes a "problem" and how to solve it. So, it probably is time to look at a PM, for the 3 bedroom place anyway. I guess that solves some of my problems anyway --- the PM will ensure it is clean, and I'm getting the correct rent. And that the tenants do the lawns.

Cheers all.

[TheLiberalLeft]

Yeah, I used to think it depends on the tenants as well. Boy, was I wrong.

[TheLiberalLeft]

How is "good for solving/preventing problems" the same as "8% for nothing"?

[PC]

http://www.dbh.govt.nz/tenancy-notice

"A landlord must generally give a tenant at least 3 months’ (90 days’) written notice to end the tenancy. However, there are some circumstances where the landlord is not required to give as long a notice period.

If the owner of the property or a member of the owner’s family requires the property to live in, or there is an agreement to sell and the buyer wants the property empty, then the notice period is 42 days.

If a landlord regularly uses, or has purchased, the property for their employees to live in, 42 days’ notice applies. However, the tenancy agreement must clearly state that the property is generally used for this purpose.

If 42 days’ notice is given, the landlord must include the reason in the notice to end the tenancy.

If a landlord gives a tenant notice to end the tenancy, then the tenant is entitled to continue possession of the property until the termination date. "

So give 42 days notice, move in yourself for a week or two to renovate, re-rent it then go overseas.
Tenant sees property for rent shortly after being kicked out - takes you to TT.
Guess who will win that one?
Maybe you get away with it...

[flyernzl]

A 42 day notice is only valid if you are going to sell the place or move in yourself (or some of your family do).
You will not get the existing tenants to just accept a new TA. What have they got to gain?

Issue a 90-day notice immediately. Don't give any reason (very important).
A bit further down the track you can (a) either offer the existing tenants a new tenancy on a new TA with your terms and rent, or (b) have the remedial work needed assessed prior to your departure, the tradespeople lined up to carry out this work, and a Property Manager organized to install a new tenant if the work is completed after you have left.

I would go for the second option.

[Maccachic]

Is it a fixed term or periodic term?

[ianhoolihan]

Firstly, thanks for the extremely prompt replies!

How is "good for solving/preventing problems" the same as "8% for nothing"?

If there are extremely low chances of problems occurring, which depends on the tenants.

"If the owner of the property or a member of the owner’s family requires the property to live in, or there is an agreement to sell and the buyer wants the property empty, then the notice period is 42 days."

So give 42 days notice, move in yourself for a week or two to renovate, re-rent it then go overseas.
Tenant sees property for rent shortly after being kicked out - takes you to TT.
Guess who will win that one?
Maybe you get away with it...

OK, it depends on the definition of "live in", as it does not specify a minimum time period. But you're right.

A 42 day notice is only valid if you are going to sell the place or move in yourself (or some of your family do).
You will not get the existing tenants to just accept a new TA. What have they got to gain?

Issue a 90-day notice immediately. Don't give any reason (very important).
A bit further down the track you can (a) either offer the existing tenants a new tenancy on a new TA with your terms and rent, or (b) have the remedial work needed assessed prior to your departure, the tradespeople lined up to carry out this work, and a Property Manager organized to install a new tenant if the work is completed after you have left.

I would go for the second option.

To be clear, no tradespeople will be needed --- I literally mean clean and untidy, so all that is needed is a day (or more) of elbow grease removing the mould from the ceilings, cleaning the window panes and frames, giving the carpet a clean etc etc. In fact, it is possible that I could clean if while the tenants are still there.

I like your suggestion to have the property manager ready to go once the current tenants are out. I will talk to some and see what they're comfortable with.

As a final note, say the tenants have to move out by September. Would I be allowed to advertise the property in August, for tenancy beginning September?

Cheers.

Is it a fixed term or periodic term?

Periodic.

[skid]

Just a note--the mold will most likely return if the ceilings are not insulated

are you getting current market rent for your other place? that can be one advantage of PM who makes sure rent is up to date with current value.

[flyernzl]

As a final note, say the tenants have to move out by September. Would I be allowed to advertise the property in August, for tenancy beginning September?

Cheers.

Yes you are.
Of course, in practice, the existing tenants are likely to turn uncooperative when they have received your notice.
This means that they will probably activly work to prevent any cleanup work or inspections by prospective tenants while they are still living there.


Don't take this personally, but from your comments I would say that you are paddling in a shark infested pool with little knowledge of the sharks.
Proceed very carefully, there is a chance that this could turn nasty.

I am not a fan of Property Managers (don't use one myself) but I really think you should talk this over with someone who has an indepth knowledge of the RTA and can advise you, before you step firmly on a banana skin.

[Keys]

I forsee angst and many tears on your part.

Spend the money and get a competant PM. You'll regret not doing so,

[rueben]

Hi all,

I am a first-time landlord, having bought a 3bd state house in Fairfield, Hamilton. I took over the property with the existing tenants. It still seems like a good investment, though I am heading overseas for four years in September, and I want things hassle-free by the time I go.

So, the problems:

1. The existing tenants are untidy, and unclean, e.g. sleeping on mattresses without sheets, fires on lawn, mould on ceilings. I think there are two adults and 4 (5?) kids, which is probably too much. Unfortunately, I am unsure of the condition the house was in when they first moved in, as I was not the owner then.
2. The previous property managers did the lawns, so I do too, even though it is not in the TA.
3. The rent is $290pw, and I want to increase it, but don't know the details.

A good property manager would have advised you take over the property with vacant possession - that way you could have signed a new tenancy agreement with the existing tenants on your conditions - i.e, a higher rent and they look after the lawns, and could have spoken to them about their expectations of cleanliness - your property would have had at least 2 inspections since then, and you could have probably been receiving another $30 per week rent, (quick look on trademe - 3 bedroom properties in Fairfield). Or you could have some other good tenants..

Management fees are tax deductible - don't make the mistake of letting your parents manage it while you are away - this is your business, they can still keep an eye on it for you, but give the property to a good manager to safeguard your investment.

my two cents...