How much bond to collect?

[spurner]

When I increased the required bond from 2 to 3 weeks, problem tenants dropped dramatically. A few prospective tenants complained why it wasn't the 'standard' 2 weeks, but most people were fine. Is 2 weeks still 'standard'?

Would be interested to hear how much bond people like to collect, or any tips to avoid problem tenants.

[BusyLizzy]

If anything, I would have presumed 3 weeks is normal.

I now make it my policy to ask for 4 weeks bond, and two weeks' rent in advance. I will consider negotiating the rent in advance down to one week, but will ask for fortnightly payments from then on.

Due to a previous bad experience, I have learned that I should maximise the bond so that if things do turn belly-up, I have an extra week of bond that I can (hopefully) count on.

[hawkeye]

We usually take three weeks bond but increase that to four if there is a higher 'risk' factor, such as an overseas student with no family ties in NZ.

Basically if a tenant doesn't have enough money behind them to fund the bond then they are always going to have problems paying the rent when anything untoward happens in their lives.

We always get the bond paid in cash prior to handing over the keys. This sometimes causes some questions but I've never had anyone pull out because of this condition.

[Marcus]

4 wks bond, 1 wks rent in advance, all in cash at signing of agreement, then the keys are handed over.

Weekly APs are a must for me also.

[xris]

I now make it my policy to ask for 4 weeks bond, and two weeks' rent in advance. I will consider negotiating the rent in advance down to one week, but will ask for fortnightly payments from then on.

Hello Lisa,

Could you expand on this?

It looks as though you may be doing what I once used to do many moons ago and what I believe many people do today.

Perhaps an example might help.

xris

[xris]

4 wks bond, 1 wks rent in advance, all in cash at signing of agreement, then the keys are handed over.

Weekly APs are a must for me also.

Yes, I think this sort of thing is becoming standard now.

However, I wonder if insisting on an AP can be enforced. Has anybody tried it?

xris

[BusyLizzy]

Xris,

I now always ask for 4 weeks rent rather than 3 to ensure I have just that much more protection if something goes wrong.

I also ask for two weeks rent in advance. However, I know that asking for a total of 6 weeks is a big ask for some tenants, so I am happy to settle for one week. I would rather have the extra money tied up in bond.

Both rent in advance and bond must be paid before they get the key.

I always ask them to pay fortnightly thereafter, but again would be happy to settle for weekly payments if they pushed for it. I would prefer fortnightly as it means that I only have to check the bank accounts fortnightly rather than weekly - although that's not really a major problem anyhow.

In reality, I will push for two weeks on the smaller 2 br place, and will settle for one week on the larger 5 b/r place, with the higher rent (both in South Auckland).
Funnily enough, the tenants in my 4 b/r place (who are long-time friends) want to pay me 3 months in advance!!

Like Marcus, I always ask for AP's - but as you mentioned, I don't believe I can insist on it. One of my tenants pays by internet banking each week - sometimes a day or two late which is a bit of a pain. I wish she would set it up as a regular payment!

[xris]

Lisa,

I probably misunderstood. I thought you were asking for a week's rent when there was still a week's rent left in the account. In other words, the rent account was always anywhere between fourteen and seven days in credit.

xris

[aaronwell]

My PM asks for 4 weeks bond and 2 weeks rent in advance. When properties are let early we get the bond on signing and rent-in-advance AP'd into bank account from the day before they move in. They get the keys on the day they move in (when PM goes to do inspection). My PM can negotiate on the above but thus far hasn't had to.

[brendan]

We ask for 3 weeks bond (4 weeks if you have dog at properties where dogs are allowed), and one weeks rent paid to secure the property.

In the last week we've just rented out two properties which have fix term tenancies are expiring in a month, and we've already got the bond and a weeks rent in advance for both.

Oh yeah, and we don't ever accept bond transfers. What guarantee do we have that they will get their bond back? NONE.

If they can't afford to have two bonds out standing for a bit, we probably don't want them as tenants.

[Alec]

Take your 4 weeks bond,Careful with Bond Tranfers ive been caught out, No $$ to Transfer wont go into that but we missed out

[spurner]

I am sure a clause freak such as yourself would know this would breach the RTA?!

s23 Rent in advance
(1) A landlord shall not require the payment of any rent—
(a) more than 2 weeks in advance; or
(b) before the expiry of the period for which rent has been paid already.

I thought you were asking for a week's rent when there was still a week's rent left in the account. In other words, the rent account was always anywhere between fourteen and seven days in credit.

Interesting points made about not accepting bond transfers, I have always wondered how often the bond transfer which tenants refer to doesn't exist, or even if it does exist what if their landlord claims it for themself.

I've always given tenants the benefit of the doubt with bond transfers and had no problems so far (touch wood).

[xris]

I am sure a clause freak such as yourself would know this would breach the RTA?!





Interesting points made about not accepting bond transfers, I have always wondered how often the bond transfer which tenants refer to doesn't exist, or even if it does exist what if their landlord claims it for themself.

I've always given tenants the benefit of the doubt with bond transfers and had no problems so far (touch wood).

Hello spurner,

Let me clarify,

In the dim distant past, in another by-gone decade, I did it once without thinking properly. The tenant was good and gave me no cause to question my actions so I mechanically just ticked off his rent every week as it came in. Only later when it was all over did I realise what I had done, in a momentary flash of enlightenment. By then the act had occured and passed into history. It has never happened since and never will.

Your resident clause freak.

[Marcus]

Yes, I think this sort of thing is becoming standard now.

However, I wonder if insisting on an AP can be enforced. Has anybody tried it?

xris

Enforced?For existing tenants, so long as rents are received on time, probably not. I often have the odd manual payment come through for what ever reason and I have no objection to this.

For applicants, I explain my stance during the interview process. If they state for whatever reason that they prefer another method of payment (cheque payments, cash paid weekly etc), their chances of becoming successful applicants becomes seriously limited.

In saying that, I have yet to have a tenant (or applicant) object to paying by AP.

I find the toughest pill to swallow for some is the 'all cash' bond/rent part. Particularly if they already have a substantial amount of bond lodged at the bond centre.

I have also picked up a few little tricks from Glenn Morris along they way.
Some of these include;
- Using a thorough application form that ask the right questions.
- Insisting on photo ID and checking this information against the application form for correct spelling and date of birth. This is vital for credit checking purposes with Baycorp. It is so cheap through the NZPIF that there should be no excuse for not doing it.
- Having the applicant/s agree to having their photographic image being taken (for ID purposes) upon being granted tenancy.
- Being aware of market rents and making sure that you are fairly priced. It's better to have your pick of the bunch rather than picking through the scraps. There is probably good reason why they can't get tenancy somewhere else and are prepared to pay (on paper at least) higher than market rent.
- And the most logical (but not necessarily the most practiced), having the property in a presentable state.

Cheers,
Marcus.

[Traff]

Hi

I agree with you all on the Bond Transfers - i myself have also been caught out and when trying to confirm if the bond is there at Tenancy Services they are very reluctant to tell you anything. I've also just encountered a problem with a tenant re an AP. He completed the form and i dropped it off to the bank myself only to find that the first rent payment never went through - he cancelled the AP. I've just issued him with a 10 day notice for short payment of rent (this is the 2nd time he's done it). There seems to be nothing you can rely on other than the amount of bond you have taken and the credit checks. I will next time look at putting them on a fixed tenancy for a short period of time. The first few weeks of tenancy usually tell you what the tenant is going to be like.