When to ask tenant if they are renewing the lease ?

Discussion in 'Property Management' started by Hodgo, 14th Mar, 2017.

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  1. Hodgo

    Hodgo Well-Known Member

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    Hi all,

    I've got 3 units in Nollamara WA up for lease renewal in May. My PM just asked me if she can ask them now if they are going to renew the lease.

    Do you think it's too soon? I'm worried that we'll come across as desperate and they'll ask for a reduction (due to the Perth Market).

    Is this common practice to ask 2 months out? I suppose it would help if we had to find a new tenant.

    thanks
     
  2. Xenia

    Xenia Well-Known Member

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    We ask them in enough time to terminate the lease if they are not responding so that the lease does not revert to periodic. That means 2-3 months out is reasonable
     
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  3. Anthony Brew

    Anthony Brew Well-Known Member

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    I am leaving Ray White today due to incompetence.
    I was silly enough to give them a second chance after they let the first lease slip into month-by-month without even a word to me.
    When I finally enquired when the lease was up they said already and then the next day I was told that the tenants have given notice to leave in 2 weeks. Thanks Ray White for doing a bang up job of representing the interest of the people paying you.

    My thought now is that at 6 weeks out the tenant should be told that if they want to renew, they will need to sign a new lease no later than 4 weeks out, and if they have not signed it, we will assume they are leaving and start advertising very soon to minimise the amount of time between tenants.

    I am not sure about the legality of having them sign a new lease a month in advance before the new lease starts, but logically it makes sense to me and seems ridiculous if it is not allowed to have the new lease signed in advance. But again I don't know the legalities of this.


    In any case, what I have learned is
    1. Don't go with Ray White.
    2. When a new lease is signed, ask your property manager for the end date of the lease. Once you know it, set-up an email reminder in your outlook or gmail for 6 weeks prior to lease end so that YOU can initiate contact your agent as per the above instructions.
    3. Don't go with Ray White. Yes this needs to be said twice.
     
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  4. Hodgo

    Hodgo Well-Known Member

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    Thats not a great experience, maybe just your particular Ray White. Good advice re the reminder.

    I've given the go ahead and ask the Tenant for renewal. We'll see what happens.
     
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  5. thatbum

    thatbum Well-Known Member

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    In WA for ending a fix term lease, its just not less than 30 days notice.
     
  6. wylie

    wylie Moderator Staff Member

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    Are you tarring ALL Ray White offices due to this?
     
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  7. Anthony Brew

    Anthony Brew Well-Known Member

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    I am thinking that it should be such a basic fundamental part of managing a property - managing the lease renewal - that if it is not part of what Ray White has explicitly set out as basic procedure required across all of their offices for property management, then yes I think Ray White in general should be held accountable.
    What is the point of having their name on the door if they do nothing to ensure basic competence across their locations?

    "It is not our fault that our office has people who are incompetent - all we do is run the business and have our name on it, we should not be held accountable or anything"

    Seriously?

    I also don't think they did any background checks on any of new tenants but can not be sure on this since I never heard them mention a single thing about it, and at that time was too inexperienced with my first property to check up on them.
     
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  8. Xenia

    Xenia Well-Known Member

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    Sorry you had this experience Anthony, as a principal of an agency I agree, leases should be renewed in advance and if anyone in my office allowed a lease to go to periodic (unless the landlord specifically asked for this and there is a logical reason), heads will be rolling.

    Periodic leases put you at risk of not being able to claim full lease break costs from tenants or cover rent default losses fully either through insurance or legal claims against the tenant.

    I manage around 300 properties, out of those only two single properties have a periodic lease.

    One of them was transferred last week and the previous managing agent put it on a periodic lease due to a sale. We sold the property for the owner but someone else was managing it and we just transferred the management over to our agency. Now we are in the process of getting a new fixed term lease in place to fully protect the new owner.

    The other one was transferred today, tenant was in arrears on water invoices and the property manager advised the landlord to put the tenant on a periodic lease until she proved that she can pay water invoices - dumbest thing ever! The tenant then defaulted in rent, we picked up this file from the managing agent today, there is a tribunal hearing tomorrow where we will be asking for vacant possession - we will not be able to claim full lease break costs for the landlord or put a full order against the tenant due to the periodic lease. The agency we took this property from was not ray white, there are a lot of them that dont do the right thing by their landlords.
     
  9. Anthony Brew

    Anthony Brew Well-Known Member

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    Yeah I also spoke to the principle of this Ray White office and he said:

    "I have property also so I understand - I will make a note to inform you ahead of time in the future"

    Which means it is not even in their normal running of their property management.

    When you consider the cost of lost rent, it comes out to about the entire cost of paying the property managers for a full year. I don't think there is any excuse for something so basic.

    This pales in comparison to their incompetence since then costing me thousands. I won't go into it here since this is a thread on lease renewal, but never again will I go with Ray White.
     
  10. hash_investor

    hash_investor Well-Known Member

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    My PM sends the notice 3 months before
     
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  11. Anthony Brew

    Anthony Brew Well-Known Member

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    How does this work by the way?
    Lets say you are 1 month before their current lease is up, can you get the tenant to sign a lease at this time even though it means the lease starts 1 month later? Or do you need to wait until their current contract has expired before you can get them to sign the new lease?
     
  12. D.T.

    D.T. Specialist Property Manager Business Member

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    Only 28 days over here but generally look at renewals 70-80 days out. This is because rent rises need 60 days notice and allows time if the rise or extension is rejected, to serve exit notice instead.
    Easy , it just has the appropriate dates on it.
     
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  13. chibs

    chibs Well-Known Member

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    Sorry to hear your trouble OP. I too learnt it the hard way with a different agency and had since tried to be more involved in the management of my rental.

    Is this the same for WA ?
    By not being able to claim full lease break costs, is it because the notice period for periodic is shorter for periodic than for fixed term ? In WA, 21 days notice as opposed to 30 days if on fixed term.
    I'm not aware that insurance won't cover default losses in full if on periodic ... tried to find anything discriminating periodic lease against fixed term the other day on my TS landlord insurance...maybe I should try to read the insurance policy more carefully...

    I just let one lease lapsed into periodic. He's rented the property for a year and always paid rent on time, so I'd thought it's okay to go periodic. Bad move ? Under what circumstances would you let tenants be on a periodic lease?
     
  14. kierank

    kierank Well-Known Member

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    Like you, I couldn't believe it when I read those earlier posts.

    The first PM for our first IP was Ray White and that was 17 years. Prior to that, we self managed the IP for 8 years until we got ourselves in some 'hot water'. We went to Ray White and they 'saved our bacon'.

    We still have that IP and the same Ray White office still manages that IP for us. We are very happy with their professionalism, their level of service, ... so much so, that this Ray White office now manages FIVE of our IPs.

    Having said that, we have sacked one Ray White PM/office and transferred the PM to LJH.

    We have also sacked one LJH PM/office and, as a co-incidence, transferred the PM to Ray White.

    We are smart enough to know that, like any profession, you will get one or two 'bad spples in the box'; you don't throw out the whole box.

    If we ever have a bad experience with a PM, we change PM (it only requires a signature on a piece of paper) and we move on.
     
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  15. kierank

    kierank Well-Known Member

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    All of ours do the same.

    I believe in Qld, the landlord must give the tenants two months notice if you wish to increase the rent on lease renewal.

    So, all of our PMs give us 3 months notice that our leases are up for renewal. This gives us and the PM plenty of time (a month) to discuss rent increase, ...
     
  16. D.T.

    D.T. Specialist Property Manager Business Member

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    Sort of. Instead of calculating duration remaining, if they were to vanish on a periodic lease you could still take the notice period as a break fee (21 days).
    Most insurers, especially the majors, cover periodic leases.
     
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  17. mikey7

    mikey7 Well-Known Member

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    My PM's give 3 months notice, and lease renewal is signed 1 month before the current one ends.
     
  18. teetotal

    teetotal Well-Known Member

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    Would you do this to a good tenant too or would you want to keep them regardless of month to month lease ??
    Reason i asked is because when we were renting, we'd consider ourselves good tenants as we always paid rent in advance and rarely asked for anything. They never asked us to renew and we stayed there 5 years. Also gave them plenty of notice when we moved out.
    Next place we were asked to renew after 12 months and we decided to move out because if we were to start our 12mnths again then why not find a better place to start new 12month cycle.
    It also came across as the landlord wasn't appreciating that we've been good tenants.

    This is my perspective as a tenant.

    Cheers
     
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  19. Zoolander

    Zoolander Well-Known Member

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    Thats the risk of signing up to a franchise. Get the nice branding and marketing/website support but if you screw up, it tarnishes the whole group.
     
  20. Anthony Brew

    Anthony Brew Well-Known Member

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    For me, I need enough time to find a new tenant to minimise (or eliminate) the time it is vacant.
    If month-by-month gives you enough time then that might be ok, but I would want to start advertising plenty of weeks ahead to avoid vacancy time which is why I would want the lease signed a month before so I can start advertising shortly after a month before.

    I think the only time you want to let it slip to month-by-month is if you are planning to sell or move in so that you can get them out of there when you need to, otherwise it is advantageous to the renter at the expense of the owner.
     
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