Tenants who Want to Rent for Forever

Discussion in 'Property Management' started by sash, 15th Nov, 2015.

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  1. D.T.

    D.T. Specialist Property Manager Business Member

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    If you do this - please consider Fringe Benefits Tax as well.
     
  2. AndrewTDP

    AndrewTDP Well-Known Member

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    I'm actually considering going down that path myself. Having a chat with him made a few things click in my mind. He's got a great landlord who gets what he is doing and gives him a fair bit of freedom now (allowed to hang pictures on the walls!)

    I was focusing on buying a place to live in. But that money might be better spent doing a nice townhouse development. Considering my consultancy costs will be next to zero, will save me around 30k compared to others...
     
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  3. Xenia

    Xenia Well-Known Member

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    This made me laugh Johnny, I'm from a Greek background and my family would have exactly the same attitude "you crazy? why you want to pay someone's mortgage" lol
     
  4. RM1827

    RM1827 Well-Known Member

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    We are doing this at the moment renting while building our portfolio... We might buy a PPOR in the future but right now we think it will slow us down from our goal... I agree that it needs commitment but I suppose it will depend on your mindset, for me our spare money is the little peaces that will get us to the next property and not just money to burn..
     
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  5. Johnny Cashflow

    Johnny Cashflow Well-Known Member

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    Yea you know how they are then.

    Another one is getting into a lot of debt. They prefer to buy one house pay it off and then buy another. Or save up and buy it in cash
     
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  6. Xenia

    Xenia Well-Known Member

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    LOL - I know, I know - are we related?
     
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  7. Xenia

    Xenia Well-Known Member

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    We once had an old Italian lady in our office as a landlord - not the type that would pay money to an agency to manage her property but her niece convinced her to give us a go - niece was already a client.

    She began by wanting us to charge our fees to the tenant, so load the price so that she does not have to pay an agency commission for managing. "I want $350 clear"....

    Luckily the property was under valued so we rented it for a higher price than she was getting and she was happy that it "included our commissions"

    The tenant paid 6 months up front so we forwarded the money to her account as she instructed us to.

    At the end of the second month, her statement said 0.00 but the tenant was not in arrears because the 6 months was paid in the first month.

    She came into our office, physically just walked in and started screaming that the tenant needs to pay every week, there was nothing we could do to explain that he was paid until the end of July and it was now February so he does not need to pay anything else.

    NO she screamed, I the 6 months is a deposit and at the end of the lease I can give it back but he needs to pay every week.

    Nightmare landlord

    We then convinced her to take the property back and self manage because that is not the way we do things. LOL - you can't convince people away from their own "right way to do things"
     
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  8. larrylarry

    larrylarry Well-Known Member

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    Most Asians think like that, like my parents.
     
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  9. Johnny Cashflow

    Johnny Cashflow Well-Known Member

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    Oh no not the nonnas! They know a thing or two about scrimping money.

    Would love to get paid 6 months upfront!

    Another good one is trying to pay trades people with food instead of money. Here's a jar of olives I made myself lol
     
  10. Xenia

    Xenia Well-Known Member

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    I just love them, they have worked so hard to purchase rental properties, paid them down and just have this view point of saving money. It's not wrong, it's just different and it obviously works for them.

    One of my greek clients will get a quote from a plumber and then will reduce the quote by $30 by digging the hole himself to expose the pipes so that the plumber can just do the plumbing. The plumber would use power tools to dig but this guy wants to sit there for an entire day digging with a shovel to save the money.

    I have another greek client with a 4 bedroom 3 bathroom house. The tenants used the bathroom upstairs and it started leaking through to the kitchen at the bottom. I told him I would get some quotes to waterproof the upstairs bathroom and he told me that he would do this himself at the end of the lease and to tell the tenants to not use that bathroom and use either the ensuit of the other bathroom downstairs instead. LOL
    It took me over 15 minutes on the phone to convince him that it HAS TO be done NOW and tenants cannot be left with one nonfunctional shower.
     
  11. teg499

    teg499 Well-Known Member

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    Renting sounds OK, however you give up your control to the landlord who can chose to sell or move into the property whenever he chooses. This lack of control leaves a bad taste in the mouth. No thankyou. I will stick with a mortgage and no worry that anyone will kick me out.
     
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  12. Fargo

    Fargo Well-Known Member

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    I used to work with 5 Greek migrants they would work from daylight to dark each day, they would pool their earnings, each year one would pay cash for a house in Adelaide , they planned to all own houses after 5 years.
     
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  13. D.T.

    D.T. Specialist Property Manager Business Member

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    Did they end up doing that?
    Works well until you get to the 5th guy and the first four say no :p
     
  14. DanW

    DanW Well-Known Member

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    This was us when renting our last place, happened to be with our Sydney PM. Got nice treatment as we are a good long term client. Our new place is through a different agency but no issues whatsoever.

    We love renting, where the yield is 3% and the strata costs a fortune.

    Another great thing is we don't have to pay stamp duty every time we move house.

    The flexibility is great and due to changing life circumstances have changed homes 3 times in last 5 years.

    Had 2 PPOR before, still got them as IPs. It gives me good perspective that I'm happy with renting and the grass is not always greener on the other side. In fact I learnt that I don't like cutting grass at all :) now my tenant or PM cuts it and we rent an executive apartment for half the rent of that house.

    Another plus is servicability. We have supercharged our portfolio by renting instead of paying out a PPOR as an expense.

    One downside is land tax, but it's manageable.

    Some worry about security but it's easy to get a new place if you get notice. Just show them all your rental statements as income verification and they are happy to accept a fellow landlord. If you can manage several mortgages you can manage rent.
     
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  15. wylie

    wylie Moderator Staff Member

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    I understand it can work, makes sense financially (especially if you are a landlord and receiving rent on your own IPs)... but I would still hate paying rent.

    I don't need anyone to point out the math - I get it ;).

    But we love our house. We've made it just how we want it.

    Also, just thinking some more. Someone renting an expensive house in a way nicer area than they can afford to buy into would still have to tip in more then they receive in rent each week. Sure, they claim their IP loan interest and costs, don't pay rates on the nicer house they are renting but to not slide backwards each week wouldn't they have to have two IPs (or more) of lesser value to balance out the higher rent they are laying in the flash suburb.

    So they need a high income and/or some time to get a few properties together before the rent in the flash palace is countered by rent on a few regular IPs. I wonder how many really do this (outside of this forum).

    Anyway, not for me no matter how much financial sense it makes.
     
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  16. DanW

    DanW Well-Known Member

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    Wylie, living in a way nicer area than your IPs of course will be more expensive. But so will buying in an area way nicer than your IPs.

    It can go the other way too. I actually rent a cheaper place than my old PPOR but get better income this way and also large tax refund due to depreciation.

    But I understand it's not all about money. There is intangible benefits to both arguments too.

    And if you're going to live in 1 place for a long time like 10 years or you have kids then the owning of home can be nice and is good to get stability for kids schooling etc.

    Just like if you don't want to feel tied down by a large non deductible debt, the intangible benefit of renting is really nice knowing you can leave your home or change jobs at any time.
     
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  17. Casteller

    Casteller Well-Known Member

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    This is a problem in Australia... the lack of tenants rights. An owner should not be able to kick out a tenant so easily. Except for some years in London, I've always rented, I prefer it. I lived beachfront properties in Bronte and Mosman in Sydney for a fraction of the ownership costs. In Switzerland (and Spain to some extent) I could leave when I wanted.. but it is much harder, often impossible, for the owner to force me to leave if the rent is up to date. This is the way it should be, it is the tenants home, not the owners.
     
  18. Ozzie in Texas

    Ozzie in Texas Well-Known Member

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    I had a tenant for 10+ years and they eventually bought the property from me. They were great tenants, however, I was always concerned about how to best time and organize ongoing maintenance while they were living there. I think there are pluses and minus to short / long term tenants equation.
     
  19. AndrewTDP

    AndrewTDP Well-Known Member

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    It's interesting to see the huge difference between renting in Europe and Australia.

    As renting becomes more and more of a norm (and renters become a bigger voter block) I can see there being a move towards the European approach.
     
  20. Xenia

    Xenia Well-Known Member

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    I agree and that's the way it is, a landlord is not able to terminate a lease if there are no breaches.
    They can however choose to not extend the lease.
     

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