Hi all, having a bit of a nervous moment and thought I should turn to my more experienced forum colleagues for advice.
Have bought my first three bedroom IP in rural NSW. Got a call that after two weeks of initial vacancy there is a tenant interested. Several haved looked through - not as big as they thought, didn't like orange cupboards in kitchen, wanted more for their money etc - however a woman with her partner and four young children are interested.
This is an town that has pockets of housing commission however my property is in a very good street in what is deemed to be the "nicer" part of town by the locals. Apparently dept of housing is putting up their rents and this lady (currently in dept of housing property) feels that if she has to pay more rent she would like to live in the nicer part of town. Apparently was almost in tears when I agreed to allow her to move in.
I am now having second thoughts. Was chatting with friends this morning who have now cast doubts in my mind....kids will rip the house apart...lower income earners...etc etc. Some considerations are the fact that at the moment in this town rental vacancies are currently 8% so people can be choosy (normally sit at 2% however they are going through an unusually high spell in the new year period) and that in this town there are many young families, possibly on lower incomes and being income assisted. I was aware of this when I purchased however that's why I bought in the nicer end of town as I thought it might attract a good tenant.
I don't want to be judgemental. I have nothing against people in a lower income earning bracket and I would like to give them a chance. They have good references from the dept of housing. However in my purchasing phase I did see some some properties that have been ripped apart by people who obviously have no value in the property. However you can get that in any town.
What to do? Give the tenant a chance and see what happens, possibly risking damage to a very neat little property (with no work needed even though its an older house). Or keep going through the tenant seeking process, possibly risking a long vacancy and maybe never finding that perfect tenant.
What to do? Give the tenant a chance and see what happens, possibly risking damage to a very neat little property (with no work needed even though its an older house). Or keep going through the tenant seeking process, possibly risking a long vacancy and maybe never finding that perfect tenant.Click to expand...
Friends can be so negative sometimes
Everyone on this forum who owns IP's would have the same thoughts about new tenants with varying degrees, but there is an answer.
A GREAT PM IS WORTH THEIR WEIGHT IN GOLD, do you have one goddessk
You say they have a great reference from the Housing Department, that is a good first step. Are you self managing this property, or do you have a property manager? A good property manager will help sort out any problems you have. Make sure you have landloard insurance as even the best tenants can, and do occasionally, cause damage.
Another thing to consider is that you can't judge how well they will look after the place on their level of income, their intellegence or their career choices (or lack of in some cases). We have unemployed, single mums & pensioners as tenants & have no problems. We also have had two income families who have been problems.
Don't sweat the small stuff. Everyone is nervous with the first. It gets easier the more you do it. Good luck.
With all investments types one should always be working toward maximising cashflows & minimising risks. As already rightfully mention on this thread Landlord Insurance is IMHO vital. Its found in the minimising risks category.
Hope this helps
I reckon the best thing you could do would be to give them the benefit of the doubt,
like Skater says - especially with a good reference
And if they ask for something to be fixed (not improved), do it straight away.
My best tenant so far has been a person with no reference. We self manage this tenant as well. We have no landlord insurance, and because of the relationship we have with her, feel this is a waste of money.
Things could go sour - I realise that. But until they do, I work especially hard on gaining the tenants trust and respect.
Of course a lot of potential problems can be avoided by purchasing property that will always attract a large pool of hopeful tenants.
Thanks for the replies. I actually do feel better about this already.
Yes, I have landlords insurance, got it the day I settled. My only other concern is PM and as has been mentioned a good PM is key.
No offence to anyone in a rural area, but they just seem so much more casual in the country! Every agent I have spoken to is very slow at responding and seems very casual about the attitude to how they deal with things. An "I'll call you back today/tomorrow" turns into a week. Paperwork seems to be done at the last minute and it seems to be consistent across most agents I have spoken to. The agent I have found the tenant with lost my keys last week and because it only just settled (and I didn't attend settlement as I live in Sydney) I don't even have a set of keys yet!
So I guess my first tenant jitters is compounded by that fact. I just need to chill, accept that this is how it is in a non-metro area and go with the flow I think! It really doesn't pay to be a control freak!
The very first thing I do after settlement is to get all the locks changed and everything keyed alike.
This includes screen doors, all the house doors, and any padlocks on the sub-floor door and garden sheds.
About the only thing I haven't been able to get keyed alike is the garage door, but I get the lock reset and a new key cut.
This way, there are minimal keys to keep track of, and after every three tenants or so, I have the house rekeyed again.
Doesn't cost much, gives me the peace of mind that I do know who has what keys, and if one key gets lost it is only one key to replace, not a whole bunch.
Have the locksmith cut one for you, one for the agency, two for the tenants, have them engraved with a code, and that way you know if any key has been replaced.
Our property managers have a 'lost key' code on the key rings which they hand out to a new tenant. If the keys are lost, and someone finds them, they can return the keys to the agency which knows which property they belong to without having to have the address on the key tag.
You may find that your insurance policy has a subsidy regarding keys. Insurance often has lots of little perks which are rarely used.
Good luck with your new venture. Landlording is lots of fun, and by the sound of it your new tenants are showing a bit of initiative, wanting to move 'across the tracks', and you may have many trouble free years with them.
By the way, at one recent change of tenants the locks had dried out so much that all the doors were being slammed and forced open. The locksmith cleaned and reoiled all the mechanisms while changing the lock settings, and now all the doors are smooth again.
A stitch in time and trouble free doors.
Your wear'n'tear factor will be understandably high with 4 children, and you have to allow them that extra. Get the PM to be specific about the 'good reference' from Dept of Housing - previous bond refunded ? Damage ? Rent always paid on time in full ? Who was the previous PM - often DOH clients rent homes from REA, or REA's manage properties for DOH.
? What did they say about this tenant ? Are they working ? What do they do ? Can they afford the extra rent ? Offer a short lease or short initial fixed period until you've had some satisfactory inspections by the PM. It's easier to remove bad tenants if the fixed lease is about to expire. Will they agree to patch and paint the house in 3 years time after the 4 kids have " worn & torn " it ? Do they have or want pets ? Is it in the same school zone as before ? Dig a little, see if the PM knows what's going on.
...maybe the department of housing gave them a good reference to get rid of them....
Drive Bye Their House NOW
If you have referances is there a address that they are living at now. If you have it drive bye. Are there car bodies full of beer boxes, lawn up to the windows. Rubbish laying in piles everywhere? If so you know what type of tenants they have been in their present location. It is hardly going to change in a bright new place
If it is neat maybe you or a friend could get ya Sunday best on carry your black brief case and knock on the front door. Then you will get a quick look inside.
Gee Cee said:
If it is neat maybe you or a friend could get ya Sunday best on carry your black brief case and knock on the front door. Then you will get a quick look inside.You might get further into the house if you smoke that green stuff shave your head put on the orange painting frock and heaps of beaded necklaces--- and don't forget to sing hury hury hury
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Sorry couldn't help myself ( gee cee's fault)