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Buying house with tenant in place - how to go about this?

Discussion in 'Property Management' started by freyja, 18th Nov, 2015.

  1. freyja

    freyja Well-Known Member

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    My IP settles on Monday and a tenant is in place- lease ended in October and they have rolled over onto periodic. The conveyance went unconditional last Friday.

    I thought I'd give the selling agent PM a go (not the current PM though) and want to increase the rent $10 per week. I've been sent a form 6 to sign and have been told they can't negotiate with the tenant until settlement. They've also said they don't know the laws about how much notice to give about the rent increase and are looking into it.

    How does this usually work?

    I must say the fact that he doesn't know what to do about the rent increase is making me think twice about going with them...
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Have a read of this, it covers most of the things you ask - Tenancy Tip Thursday - Selling an investment property

    The management agreement doesn't carry over through the sale, so you're free to choose anyone you like to manage it.

    As far as increasing the rent - you may not be able to. You see, you inherit the existing lease and its duration which may not allow for an increase. There's also minimum duration that must be observed between rent increases.

    As an example: A property I personally bought that had a tenant paying $220 even though market rent for the area was $250. I kept them in there for rest of their lease for that amount. When it came time to renew, I presented a new lease at $250 which they declined but I was able to find a new tenant willing to pay that quite quickly.

    Edit - fix grammar :p
     
    Last edited: 18th Nov, 2015
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  3. WestOz

    WestOz Well-Known Member

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    That rings alarm bells, if a PM doesn't know something as simple as that I wouldn't be using them
     
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  4. Jamie_

    Jamie_ Well-Known Member

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    I must have been lucky with the place I purchased, the existing tenant was not on a fixed contract with the agency and was paying well under market rent (350 when market was 450), With the advice from the REA who was selling the property, I dumped the existing PM, increased the rent to 430 per week and self managed it. Tenant wasn't happy so had the agent serve them notice to get out and they folded. Tenant was great, always paid on time, left the house perfect.
     
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  5. D.T.

    D.T. Adelaide Property Manager Business Member

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    You didn't because there was no PM - you don't inherit them via property sale. You simply choose the PM of your choice or self manage.

    Since they were periodic you can legally give them an evict notice at any time and this gave you a bit of leverage it seems. You didn't legally increase the rent though by the sounds of it - a more aware tenant may have made the situation's outcome different.
     
  6. freyja

    freyja Well-Known Member

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    Thanks for your replies!

    They are currently on periodic so I believe I can increase with the correct notice. I'm just not sure why the PM doesn't know what it is....
     
  7. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Uh, find a new PM. Unless it was a communication error an, they ought to know this.

    That's like a baker not knowing when to use self rising flour.