When to ask tenant if they are renewing the lease ?

You make good points.
My anger at the high cost of their extraordinary incompetence may be making me think emotionally instead of rationally. Thanks for the reply.

 

You are absolutely correct and one which almost every PM gets wrong. We have a strict 90/60/30 day process to manage lease renewals and it works every time. As an investor this is such a critical management item t to me yet it's one which usually gets pushed aside in the "hope" that the tenant renews the lease when the PM finally remembers it's due. This then usually ends up in vacancy and/or a periodic lease exposing the investor. My PM in Sydney recently screwed this up completely even after my instruction!

I'll never understand why such a basic component of PM is so poorly executed. My only thoughts are that most PMs simply don't understand the investor mindset when it comes to cash flow and the importance of projecting it with respect to leases and therefore they don't place enough weighting on the process.

 

Pays to know when all your Leases expire.

Manage your property managers.

That way you can be prepared and catch a problem before it becomes one. I get my all my renewal reminders 3 months out as 60 days is the limit of notice for an increase in rent.

 

Just out of curiosity. Is there anyway a tenant refuses to sign a new contract and insist that they stay on a periodic lease. Can the owner do anything about it?

 

I did not know that.
Seems like a nonsensical idea though because their contract is up and you should be able to write up an entirely new contract and if they don't like it they can chose to leave (or negotiate).
Couldn't you just get around it by saying it is less than 2 months before the end of the lease and you have decided to not renew and instead look for new tenants at the increase amount?
What is the purpose of this, anyway?

You can not force someone to sign a new lease, but it would be ridiculous if they could insist they stay on periodic lease - it is your property why would they have control over that? I am not any kind of export though - it just seems kind of ridiculous if it is possible.

 

You can write up a new agreement. Increases included. Your PM handles all this for you. If 60 days out the tenant refuses your new terms and decides to vacate at the end of lease they then can. Fair play. Two way street and all that. This will then allow you 60 days to prepare/advertise for a new tenancy and associated costs.

Ideally your tenant accepts your new terms 60 days prior to lease renewal and they sign on for a fresh term at end of lease.This way you incurr no advertising fees, no new letting fees (some agencies may charge a small resigning fee, unless you specify it not be charged) and MOST importantly, no vacancy. Things just roll on as per normal without the hassle of tenant turnover. SANF intact.

Sometimes tenants want to move on. Sometimes they want to negotiate your increases. And even sometimes, heaven forbid, they want to buy their own house.

 

Basically the landlord's 'stick' would be the threat to terminate the fixed term tenancy or issue a 60 day notice of termination if its periodic already.

 

At 8% Ray White need to lift their game. I don't know if that's what you are paying but that's what I was quoted

 

My property is in Sydney where rates are very competitive everywhere and normally about 5-6% and they are about that, but if I had a choice between them managing my property for free or paying 10% with someone competent, it would be a very easy choice of 10% considering how much their incompetence has cost me.

 

Here is the timing schedule we use.

And yes.....its up to you as the owner to make sure that you contact the PM on these days to make sure they do the steps required.......

So schedule is

• 70 days….Owner contacts agent, gives us 7 days to decide on new rent rate/market review etc.
• 63 days…..serve notice with tenant request to renew lease within 30 days to decide if renewing
• If the tenant doesn’t renew on 33rd day out give “30 days notice” ending fixed term asking them to leave
• Show property on Saturdays 28/21/14 days out

If tenant renews……new lease kicks in with increased rent on the first day of new annual lease.

Legal requirements for NSW are listed here:
http://www.fairtrading.nsw.gov.au/ftw/Tenants_and_home_owners/Being_a_landlord/Ending_a_tenancy/Giving_a_termination_notice.page?
•be in writing
•be signed and dated by you or your agent
•be properly addressed to the tenant
•give the day on which the residential tenancy agreement is terminated and by which the tenant is required to vacate
•where appropriate, give the grounds/reason for the notice.


Remember owner with PM doesn't equal entirely hands off. Put the text above in your diary with the associated dates when you sign the new 1/2 year lease etc 70 days out/33 days out etc and then you don't need to worry for 10/22 months until it comes up in your calendar.

 

why.....when you can get competent at 5% + 0.5gst
(and less than that if you have multiple IP's with the same PM's)

Not caring about 5% return on your investment......you may as well stop wasting your time in property.......

 

yep, send them 30 days notice to quit and advertise for new tenants (eg see my post above)
Unless you are planning on selling doesn't make sense as landlord to have a month to month.

 

Check with your state regulations. There are regulated time frames for when the landlord has to offer renewal terms, and when the tenant has to give a decision.
Marg

 

Yeah already switched to somewhere else for 5% + GST

My point was just that they have cost me so much money that even if I could only choose between them doing it for free or someone else charging as much as double the standard rate, it would have still have been cheaper to pay double to avoid the incompetence of Ray White.

 

Spot on. In fact, in the UK it's just routine to issue the notice to leave at the start of the tenancy as soon as the brand new lease. Every agency does it. Here it's not as culturally accepted, even though well within the bounds of legislation. Some people perceive it as a bully tactic but it's not, it's taking control of your property and the lease terms and not allowing the tenant to dictate them. Any investor who is serious about their property investing should be serious about controlling their cash flow and this is very valid and effective way to do so.

 

How much did you lose, and how did you lose it through said incompetence?

 

What happens if a tenant decides not to accept the new lease and its conditions, vacates, and your property is left vacant for several weeks despite being advertised - blame the PM?

Any landlord who doesn't factor in minimum vacancies is a fool or is sailing close to the wind and cant afford to service the loan.

 

I notice your use of the words 'the agent can try' in your reply - agent may not be able to tenant the property as soon as the landlord would like ...

Thank God I am not a tenant ...