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Finding a tenant before settlement

Discussion in 'Property Management' started by fattyman, 18th Oct, 2016.

  1. fattyman

    fattyman Member

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    I've just purchased my first property (for investment purposes) and want to rent out the property.

    Settlement is on 8th December.

    I want to start looking for my tenant now, however, given settlement hasn't occurred I don't think I'll be able to conduct inspections without the agent there.

    Is it best to leave this to the Real Estate agent that I've purchased the property through to manage this?
     
  2. Mavis

    Mavis Well-Known Member

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    Are you happy for that real estate agent to manage your property?
    If you are, then they can manage the property for you. They may have potential tenants on the books - we once had a tenant signed up very close to settlement of the actual property.

    If not, don't leave it with then just for the sake of ease. You will need to deal with the real estate agent on an ongoing basis. There is nothing to stop you from seeking and engaging the real estate agent to manage the rental property. Depending on where the property is, it may not take long from settlement to securing a tenant. (Assuming, you need not do any work to it ?)

    Also, you could potentially use your pre-settlement inspection for the appointed real estate agent to come through for assessment / photos, etc.
     
  3. kierank

    kierank Well-Known Member

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    Do you have a clause in your Contract specifying that you can do tenant inspections prior to settlement?

    If not, the seller probably won't allow it.
     
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  4. Ashby

    Ashby Member

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    And ideally you can get permission from vendor/photographer to use the campaign photos in the rental listing.
     
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  5. fattyman

    fattyman Member

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    They are a new agency part of Harcourts. I don't think I want them to manage it but it may make sense if they can secure a tenant with no gaps in settlement period.

    Ideally, I'd like to be able to self manage this to save on costs. It's a 2 year old house and shouldn't need any sort of maintenance.

    If I managed the process myself, what kind of deductions would I be eligible for apart from advertising?

    @kierank I don't recall seeing a clause specifiying whether I can or can't. Excuse my ignorance, but is there generally a particular section this is in?
     
  6. Mavis

    Mavis Well-Known Member

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    Hopefully someone will help with deductions... I've always used real estate agents but I keep a close eye on things. I don't know enough and I don't have enough hours in a day to manage a property if **** hits the fan (and it doesn't have to be anything to do with the building) :)

    If you've not had an investment property, perhaps it's not a bad idea to go through an agent at the start to get an idea of what needs to be done/what things are the norm, what to do and what not to do, etc?
     
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  7. kierank

    kierank Well-Known Member

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    I don't think you will find it anywhere. It is a Special Condition I always add to the contract when I am buying an IP.

    If you haven't added it, I am guessing it is probably too late. You could always ask the seller via the REA but don't be surprised if the tell you to "PI$$ Off".
     
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  8. MyPropertyPro

    MyPropertyPro SE Qld Property Management & Investor Services Business Member

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    Hi fattyman,

    I'm not sure if this is your first purchase, but in that post alone I can see you're already about to embark upon a few classic and crucial mistakes that get investors into trouble all the time! A good start might be to read this thread....

    Where is the property located?
     
  9. fattyman

    fattyman Member

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    The property is in Forest Hill (Melbourne).

    Given I work full time, I think it's definitely worth going down the track of having an agent do the work for me.
     
  10. MyPropertyPro

    MyPropertyPro SE Qld Property Management & Investor Services Business Member

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    I can recommend a fantastic agent down that way but it might be a little outside their zone. There's no financial or commercial benefit to us, they're just great property management. I would caution against just going with the sales agent PM without any due diligence for a number of reasons. It's by no means required and as has already been mentioned, the only advantage may be that they'll let you show the property prior to settlement if you haven't listed that as a special condition.

    I will check with my agent and send you a private message.

    - Andrew
     
  11. thatbum

    thatbum Well-Known Member

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    Am I the only person here that thinks its a bad idea to try and find a tenant before settlement? At best maybe start advertising just before settlement, but to sign someone up seems to be just asking for trouble.
     
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  12. larrylarry

    larrylarry Well-Known Member

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    Your first property - use an agent and learn. You need to know tenancy laws well and have a system. Just my opinion.

    An experienced agent can tell you if there are potential tenants.
     
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  13. MyPropertyPro

    MyPropertyPro SE Qld Property Management & Investor Services Business Member

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    There's nothing wrong with advertising for a tenant prior to settlement but in Queensland (and I believe in most states) you cannot sign a tenancy agreement until the property has settled. The landlord is able to sign a management agreement with the agent prior to settlement and commence advertising.

    Yes, this could possibly be a waste of time and money (advertising) if settlement falls through for any reason, but this risk is offset with reduced vacancy risk as if the property is unconditional, it's rare for settlement not to proceed.

    It's unlikely a prospective tenant is going to view the property and want to sign a tenancy agreement on the spot and move in the next day. There's usually at least a week's turnaround and more often than not quite a few which is why it's good to get ahead of the game and start the process to get some lead time. The time frame would vary but better to have the process commenced than wait until settlement and then start as you are guaranteed to get vacancy.

    Keeping in mind that usually for a purchase some minor (or possibly major) maintenance items will need attention so it's prudent to plan on a couple of days of vacancy to allow that to proceed anyway.
     
    Last edited: 18th Oct, 2016
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  14. fattyman

    fattyman Member

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    Thank you all. Appreciate the comments and feedback.

    Andrew, looking forward to hearing from you regarding your property manager.
     
  15. kierank

    kierank Well-Known Member

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    With our last purchase, the REA found us a tenant even before we had signed the sale contract or the management agreement.

    We had verbally agreed the price with the vendor, had verbally agreed to give the property management to the REA and had verbally agreed to rent it to the tenant (after settlement was completed).

    It motivated everyone to get the contract signed, the management agreement signed and to accept the tenant's application the day after settlement.

    The tenant moved in 10 days after settlement as we had some maintenance items that needed addressing plus it allow us to stay there for a few nights rent-free :) :).
     
  16. Toon

    Toon Well-Known Member

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    Lucky I never thought it through too much as I had tenants move in on the day of settlement in my last IPo_O

    I used the PM from the same agency, but only because they were recommended by someone on SS. There were a few things that needed attending to, but nothing too major.
     
  17. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    I've done this a couple of times.

    On both occasions it was inserted into the contract - and I used the REA's PM.

    Cheers

    Jamie
     
  18. dabbler

    dabbler Well-Known Member

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    I would use an PM even if retired, they are a filter. Also they keep up with legislation of doing job correctly.
     
  19. DiligentPM

    DiligentPM Well-Known Member Business Member

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    There are a few of our boutique agencies as members on this forum for you to choose from...its about working in with the tenants/owners packing to leave and scheduling an Open Home pre-settlement - all can be managed. Ensure there is a clause in the contract to enable you to market a week before settlement - be sure not to go to market too early otherwise the leads dry up. Congratulations on your new acquisition!

    There are many fantastic boutique agencies around - choose an agency that works for you and with whom you build a like-minded connection with particularly expectations
     
  20. SeafordSunshine

    SeafordSunshine Well-Known Member

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    Early December
    would be a good time to get a tenant in, simply because 'few people' moves house just before Christmas and agencies tend to close,
    Between Xmas, New Year.
    I wouldn't like it to be vacant for the first eight weeks of your ownership.
    A la 'That Bum,'
    I would ask permission to advertise before settlement, and inspect before settlement, and sign the lease when you own it.
     
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