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True Story - Even Good Tenants Can Go Bad

Discussion in 'Property Management' started by kierank, 28th Feb, 2016.

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  1. kierank

    kierank Well-Known Member

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    Background - Good Tenant:
    1. In June and July 2013, we spent $50K doing a full reno on our 3Bed, 1Bath, DLUG house
    2. In August 2013, we signed up a tenant for 6 months - single lady, early 60's, nurse, good rent references, etc (we considered her a good tenant as she was mature, had income, wear-and tear on reno would be low, ...).
    3. In February 2014, we renewed the lease for 12 months (as the tenant looked after the place). She did miss one or two rent payments over Xmas but caught up when requested.
    4. To our surprise, she unexpectantly paid 12 months rent in advance, without asking for a discount (we started considering her to be an ideal tenant).
    5. In February 2015, we renewed the lease for another 12 months (place was being maintained perfectly, rent paid 12 months in advance,...).
    6. She paid the rent on a monthly basis for the first 6 months and then she unexpectantly paid the last 6 months rent in advance, again without asking for a discount.
    7. Last December, she signed a third 12 months lease renewal.
    Bad Tenant:
    1. About a week before the third renewal kicked in, she phoned our PM to advise she was vacating our property. Our PM advised that this was a 'break lease' and the ramifications of doing that.
    2. Our tenant told our PM that she was vacating and we couldn't stop her. Also, she advised that she was going to QCAT so that she could break the lease due to hardship. Apparently, she has lost her job and is finding it difficult to get another job (I thought there was a nursing shortage in Brisbane).
    3. Our instructions to our PM were:
      1. To follow through with QCAT to get a ruling (I know, we are relying on the tenant to make the application),
      2. To get the property ready and advertise it for re-rental asap at the same weekly rent,
      3. To get as much money as possible from the vacating tenant via QCAT, bond return, etc,
      4. Claim the balance on our landlord insurance.
    4. On 24th February, she vacated the property and handed in the keys. Our PM went around and did an Exit Inspection.
    5. On 25th February, our PM called the vacating tenant into their office to advise her on the items from the Exit Inspection. Mainly minor cleaning things plus some of the tenant's property (a chair, some large pot plants, etc) were left behind. The vacating tenant told our PM to stick the list 'where the sun don't shine' and stormed out of the office.
    The QCAT hearing is on 29th March. We had our second rental OFI yesterday and we dropped in to check the property and to chat with our PM. The property is in very good shape with hardly no wear-and-tear. There are some cleaning issues such as the oven is dirty, carpets need vacuuming, etc but nothing major. We had 6 groups go through the property ; one group submitted their application at the property and the other 5 took applications. So, we are hopeful for new tenants in the next week or two.

    I know this is a bit of a long post and I know that it could have been a lot worse. It is amazing how quickly a good/ideal tenant can go bad. I did not see this coming.

    I don't know what else we can do/could have done?
     
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  2. Hanison

    Hanison Well-Known Member

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    Unfortunate situation.
    Your making a mountain out of a mole hill in my opinion.
    So you lost a tenant under unusual circumstances.
    Find a new tenant.
    Your in the business of property investing and not psychology I am assuming.
     
  3. HUGH72

    HUGH72 Well-Known Member

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    Doesn't sound so much like a good tenant going bad but rather someone who is under a lot of stress.
    Losing your job in your 60s without significant assests and a safety net would be highly stressful.
    I would imagine being told that they left a few pot plants behind could seem a little picky when your under stress.
    Depending upon how the pm handled the situation I don't see it as unusual.
     
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  4. teetotal

    teetotal Well-Known Member

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    Tenant didn't go bad their circumstances did.
    And anyone under that situation can end up acting like that.
     
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  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I would have just let her break the contract considering she had paid large.amounts of rent in advance.

    Do you think you will have a hard time renting it again?
     
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  6. kierank

    kierank Well-Known Member

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    For the tenant. Not me, as I have insurance.

    I think your mis-interpreted my post. I was just sharing my experience with the PC community, especially for the newbies on here. In recent years, I have helped a number of newbies (some on PC) to get started or to keep moving forward. I find real life stories a big help.
    The lesson here is:- even ideal tenants can go bad and quickly. It is just part of the business of PI. That is why we have landlord insurance.

    Certainly am and totally enjoying it.
     
  7. skater

    skater Capitalist Premium Member

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    I am sorry that things didn't go as you expected, but I seriously think that you are wet behind the ears if you think this is a 'bad tenant' scenario.
     
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  8. kierank

    kierank Well-Known Member

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    I don't know, to be sure. One can only go on with what they are telling you but:
    • I understand there is a nursing shortage in Brisbane. I understand Brisbane hosipitals are copping it because there is a shortage of beds, staff, etc.
    • The tenant would be close to 65 now if not older. One would have thought she would have Super, etc.
    • One would have thought that, given she paid rent in advance (more than once), she must have access to funds. When I was renting, I have never had so much money that I could pay rent in advance.
    I will leave it to QCAT to make a ruling.
     
  9. kierank

    kierank Well-Known Member

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    I would if I can convince the bank to give me a payment holiday without penalty until I find a new tenant, if I can get the cleaner to do a bond clean for free, if I can get the PM not to charge me a reletting fee, etc. I know I SHOULD get all except the bank interest back on insurance but I am in the business of PI so I don't understand why I should a cashflow hit.

    Hopefully not. Vacancy rate below 2%. It would be nice to have it rented before QCAT hearing on 29th March. Will the new tenants be as good as the previous one was (initially)?
     
  10. Hanison

    Hanison Well-Known Member

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    @kierank

    You are making a mountain out of it as you are essentially dragging a little old lady to a court hearing over the breaking of a lease. Move on. And move on quick.

    Find a new tenant and stop wasting energy and effort on a decision that is worth a fistful of dollars.

    Be a nice human being and discard the pot plants that she no longer wants while your at it.

    Need I say little old lady again.
     
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  11. teetotal

    teetotal Well-Known Member

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    Its not about what they have access to or what they used to do. Human psychology work in a very strange way.
    When in such situation, one can easily panic.
    They would try to reduce expenses and will rethink what their strategy is and how they need to approach things going forward.

    I think what you tried to say in the original post was meant to be about tenant breaking the lease earlier because of their circumstances and being a good learning story for newbies.

    However how you written it down was that they have turned bad from being a good tenant. And all the things you have mentioned about property being in an almost schmick condition with minimal wear and tear plus no major damage when they left, suggest it otherwise. That the tenant didn't go bad afterall............
     
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  12. 2FAST4U

    2FAST4U Well-Known Member

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    A bad tenant would be someone that completely stopped paying rent, trashed the house/broke things (she left the place in good condition, and was a complete pain to remove. She lost her job and wanted to break the lease because she realised she couldn't afford to live there- an unfortunate situation for both parties.

    Being "close to 65 now if not older" she is going to struggle getting a job as a nurse no matter how many supposed skills shortages there are. Employers see her as a liability due to her age. Being in her 60's and still renting indicates that she most likely isn't that good with money. Perhaps that' why she paid in advance along with a multitude of other possible reasons. It sucks that you lost a good tenant and got put out of pocket, but it's time to move on.
     
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  13. kierank

    kierank Well-Known Member

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    I didn't say this was a 'bad tenant'. I said a very good tenant (for two and half years) went bad, in a very short time (a week).

    I have been in the PI business for nearly 25 years. Our whole approach to provide very good rental accommodation at market rental. For this, we expect all of our tenants to look after our properties and pay their rent on time. Nothing new here.

    This is the first time such a situation has ever occurred to us. I put this down to our strategy and our good management.

    Off now to get a towel and dry behind my ears :) :).
     
  14. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Maybe you could have negotiated her to pay a small fee to cover those expenses.

    I think the tribunal will be harsh on you.
     
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  15. kierank

    kierank Well-Known Member

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    Our PM is a lovely lady. She manages multiple properties for us and has been doing so for at least 15 years.

    I wasn't there but I would have at a guess that our PM would have raise the personal property items with the tenant to give her the opportunity to collect them before they ended in the bin and the opportunity to address the Exit Inspection items before we contracted someone to do them.

    From our phone conversation, I gathered our PM was surprised, even shocked, that the tenant responded the way she did (our PM has been dealing with the tenant for more than 2 years). Was it stress, was it staged, who know?
     
  16. Ambit

    Ambit Well-Known Member

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    Many older women have had to go back to work after divorce, and years spent out of the workforce raising a family means they will have nothing like the amount of superannuation required for a comfortable old age, and yes at her age she will struggle to find employment more than likely. I should imagine she is stressed to the max.
     
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  17. kierank

    kierank Well-Known Member

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    Not true. Read my initial post. The tenant is going to QCAT. I understand she submitted her application before she told our PM she was vacating. That was her call.

    We have. Read my initial post. In a week, we have had two OFI. The first one did not yield any applications due to the short notice (one or two days at most). The second OFI should yield some applications and hopefully at least one will be suitable.

    She is slightly older than me. Are you saying I am old? :) :)
     
  18. kierank

    kierank Well-Known Member

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    That's why we have insurance. When I called the insurance company, they said we are doing the right thing. That is, go to QCAT, get a ruling, put a claim in for the amount you are out-of-pocket including costs for attending QCAT.

    This is new territory for me.
     
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  19. BigKahuna

    BigKahuna Well-Known Member

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    @keirank I haven't read all the previous posts, so forgive me if I repeat what they've said.

    I'm actually pretty shocked. She is a good tenant. I would NOT go to any tribunal or QCAT to get her to pay rent. She has hit hard times. She is in her 60s. Who wants to employ a sixty year old? I imagine not many people.

    Let her break the lease and find yourself a new tenant. She's left the place in good condition. You are very lucky to have had her as a tenant. Let her go. I feel sorry for her. You've lost nothing.

    If you wanna know what a bad tenant is, I can tell you a story ... but that's for another thread.
     
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  20. BigKahuna

    BigKahuna Well-Known Member

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    I kind of hope they are harsh.
     
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