Tag Archives: rent

Tenant not paying rent? Here’s what to do.

true-property-tenant-not-paying-rent-heres-what-to-do

When you go to a job every week, you can expect to get paid. And the same applies when you rent our property out.

When you own a rental property, a tenant not paying rent is one of the most severe issues you may face. It is important that you deal with it as early as possible.

Give them the benefit of the doubt

If your tenant is a few days late in paying their rent, send them a reminder letter of the overdue payment. Maybe they had personal issues and forgot to pay that particular day. Give them the benefit of the doubt that there is a genuine reason. Call them to talk about it rather than jumping to conclusions. Set up a process moving forward that they need to call you if they are going to be late paying. Set clearly in your contract what will happen i.e. a late charge so everyone is on the same a page. Use your discretion of what you will allow and not allow. Maybe you will let it occasionally go if the tenants phone you in advance.

Take action if it happens often

If the tenant is late paying all the time, you might want to change the method of payment to one that provides more certainty, such as a direct debit.

Your tenancy agreement outlines that the tenant will pay rent on time. If they don’t, you can apply to the Victorian Civil and Administrative Tribunal (VCAT) for an order to make sure the tenant complies with the terms of the agreement. It’s best to do this when a tenant is often late paying their rent. However, it is important to note that such a request cannot result in the termination of the tenancy if the non–payment of rent continues.

Final step: Eviction

If the tenant is more than 14 days behind with the rent, you can serve them with a termination notice. This will give them 14 days to leave the property. Your notice needs to be in writing and properly addressed to the tenant. You need to state why they have to go and by when. Also, mention that they won’t have to leave if they pay the outstanding rent or set up a repayment plan.

Applying to the Tribunal

You can apply to the Tribunal at the same time as or after serving the notice to the tenant or you can wait until after the termination date of your notice before applying to the Tribunal. This way you will know if you need a hearing because the tenant has not moved out or has not paid the rent owed. However, this could add up to 2 weeks before obtaining a hearing date compared to applying at the same time as giving notice. The application cannot be made more than 30 days after the termination date of the notice unless you ask for an extension.

By enlisting the services of a property management agency, you can save yourself the unpleasant job of dealing with tenants in arrears.

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4 things you’re doing wrong as a new landlord

When you are a new landlord, it can be hard to know what to expect and what you need to do to maximise your income.

Here are some common pitfalls that many new landlords find out about the hard way.

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Not charging the right rent

When you buy a property, do some research on similar properties in your area. If you set the rent too high, no one will want to rent it and it will sit vacant while you lose money. On the other hand, if the rent is set too low you won’t make any profits and not only that, you may attract undesirable tenants.

A property manager will be able to inform you on similar rentals and advise you on an acceptable price.

Not keeping track of payments

Money should always be on your mind. If your tenant doesn’t pay their rent, it can be a very lengthy process to resolve and could leave you considerably out-of-pocket.

Keep tabs every week or month when rent is due and if your tenant doesn’t pay on time, you can send them a notice. This process varies from state to state so be aware of your local laws.

Monitoring rent payments and contacting tenants sooner rather than later may help resolve issues and mitigate any financial loss.

Not doing regular maintenance

The #1 complaint from tenants is that their landlords take too long to do repairs. Not following through can put unnecessary strain on your relationship.

If a maintenance issue arises and you don’t fix it, you may be liable if your tenant injures themselves.

Sometimes, the tenant may decide to fix it himself or hire a shoddy contractor, which can cause more damage to the property. Make repairs a priority and ensure they are completed to a satisfactory standard.

Trying to self-manage a property

It can be stressful for landlords to manage their investment properties. Most of them simply don’t have time to do it. Yes, you can save money by doing it yourself, but the benefits of having someone take care of everything for you can outweigh the costs.

Property managers will check the property on a regular basis to see what maintenance needs to be done. They also find and screen tenants, and they have a list of tenants who are known for not paying rent, damaging their rentals and being evicted.

If a dispute arises with a tenant, property managers know the correct procedures to help resolve the problem as quickly as possible.

 

Hiring a property manager eliminate these mistakes for you. Contact True Property Management for more information.

How much money does your tenant make?

True Property - how much money does your tenant make

When screening potential tenants, one thing you need to find out is the ratio of their income to the rent they will be paying you.

If the rate is too high, you run the risk of your tenants going through a bad patch, then not being able to pay you. On the other end of the scale is if it’s too low, you might struggle to attract your ideal tenant. Tenants with a high income may have higher expectations.

The standard approach of the ratio is 30%. 30% of your tenant’s income would go to rent, leaving 70% for the tenant to live and play.

What happens if you slide it one way or the other? If you want rent to be 20% of your tenant’s income, then your property needs to reflect that. You would be attracting high-level professionals, and it’s likely that they will be looking for high-end features. If this is the case, do the numbers still add up on your end? Are you making the profit that you would be if you the ratio were 30%?

What about if you slide the scale, so the ratio is 40% or even 50% of a tenant’s income? You will have a tenant who may struggle to pay the rent on occasion – are you prepared for that?

Tenants (hopefully) will have an idea of what rent they are comfortable paying, which will factor in any emergencies.But it’s your responsibility to double-check during the application process.

Undertaking your due diligence and choosing the right tenant is the key to enjoying being a landlord. Are they responsible? Are they likely to stay for a good long time? Can they afford to live on your property? The rent to income ratio is one of the key factors to look for when you are choosing the right tenant. It’s important then to make sure you feel comfortable with whatever percentage you come up with. But no matter what percentage you want, have a plan in place, so you know what to do if your tenants are demanding more features, or they are not paying the rent.

If you would like help deciding on the ratio for your property, get in contact with us, we’re happy to help.

 

How to raise your rent and increase your profits today

True Property - how to raise your rent and increaes your profits
Recently, we talked about how to set the rent on your new rental. Many landlords have no idea what’s the right amount to charge and often charge too little or too much. Once you have been in the game for a while and your tenants are happy and settled, you may be thinking about raising your rent.

The easy way to do this would be to increase it when your current tenant moves out and before the new one moves in. Many landlords believe this is the only time you can increase your rent – but this is not the case. If you handle it delicately, you won’t lose your tenants and you will be increasing your profits. It can be a daunting task for some landlords as they are afraid their tenants will move out. However, if you want to increase your profits, it has to be done.

What are your expenses?

Look at the expenses for your property to see if they exceed your income. They will increase over time so it pays to look at this over the whole year. If the tenant asks for reasons why rent is increasing, you will able to paint them a clear picture.

How much should you raise it by?

It is best to try to keep the rent increase under 10% otherwise tenants will probably leave. It also pays to look at similar properties to see what they are charging and keep it in line with what the market rates are.

Is it in your lease agreement?

If possible when tenants move in, verbally warn them that rental increases can and are likely to occur over time. You should already have this in writing in your tenancy agreement with the tenants, so this should not be a surprise. Legally you have to give 60 days notice, but depending on your relationship with your tenants, providing a bit more may be the courteous thing to do. It also allows you to find new tenants if they decide to move out.

Do you have any tips on how to increase the rents on your properties?

Here’s a method that will help you decide what to set your rent at

True Property - Here's a method that will help you decide what to set your rent at

You have just purchased a rental property and you want to rent it out ASAP. Trying to figure out what to charge can be overwhelming. How much is the right amount?

Try this method to make things easier:

Step 1: Do your research

Look at similar rentals in the same area as yours. Look at the property, how many bedrooms and bathrooms does it have? See what other amenities like dishwashers, waste disposal, heating/cooling, spa pools etc they have that may drive up the rent. Check online as well as Real Estate offices.

Step 2: List the benefits 

How close its your property to shops and schools? Can your tenants leave their car at home and walk everywhere? Does it have good access to public transport? Tenants will pay top dollar for a beautiful view. Coming home to a view of the ocean or other gorgeous setting will give you more of an ROI than a view into the neighbours bathroom.

Step 3: Look at the layout

It’s obvious to charge more for a 3 bedroom over a 1 bedroom. But what about charging more for a 1 bedroom 100 sq m rental over a 1 bedroom 80 sq m rental? This will be where your research will come in, what size/price/rooms comparable research have you come across?

Is there are natural flow to your place? When you walk in the front door, are you walking into the master bedroom? Or do you have to walk through the whole house to get to the tiny toilet which was an addition out the back? Are their quirks to the house that potential tenants will have issues with? Can you charge them a reasonable rate with the quirks, or will you have to take a hit on the rent to get it tenanted.

Step 4: Make a few updates

Have you recently renovated the property? Even simple alterations can increase the amount you can rent your place out for, so if you haven’t it may pay to have a few updates done. I’ve talked about ways you can increase the value of your property here. If you do this, you’ll be able to charge more.

What other steps would you add to this method?

How to decide what rent to charge

True Property - deciding what rent to charge

How much to charge is something most business owners struggle at some point, and landlords are no exception.

New landlords may wonder where to start and experienced landlords may be wondering when is the right time to increase the rent. A lot of people believe that the mortgage payments will set the rent but this is not always the case. High payments do not always equate to high rent. A rule of thumb is that the rent will be determined by how much the renter is willing to pay (which is the same for every business, in every industry on the planet.

Here are a few guidelines to get you started:

Do your research

Look at similar rentals in the same area as yours. How many bedrooms and bathrooms it has and other amenities like dishwashers, waste disposal, heat pump, spa pools etc will drive up the rent. Check online as well as local Real Estate offices. This will give you a ballpark figure of what you can expect – is it in the $200/week range or the $500/week range?

Location, Location, location

How close is your property to shops and schools? Can potential tenants leave their car at home and walk everywhere? Does it have good access to public transport? Don’t underestimate how much people will pay for a view. Coming home to a view of the ocean or a park will give you more of a return than a view into the neighbours bathroom.

Size and Layout

It’s obvious to charge more for a 3 bedroom over a 1 bedroom. But what about charging more for a 1 bedroom 100 sqm rental over a 1 bedroom 80 sqm rental? This will be where your research will come in, what size/price/rooms comparable research have you come across?

Is there a natural flow? When you walk in the front door, do you have to walk through the whole house to get to the living area?  Are their quirks to the house that potential tenants will have issues with? Can you charge them a reasonable rate with the quirks, or will you have to take a hit on the rent to get it tenanted.

Has it been renovated?

Have you recently renovated the property? Even simple alterations can increase the amount you can rent your place out for. Have you added amenities that are not common to comparable rentals? Do you have luxuries like a spa pool, solar heating, lots of storage etc. If you take the effort to spruce up the property after tenants move out, it will hopefully improve the property’s value, improve the rental rate and be tenanted faster.

After you have gone through all these steps and now have realized that the numbers aren’t adding up (costs vs income)?  What do you do?Unfortunately, you will need to make some decisions – if you try to rent it at a higher rate (to cover your costs) then you may not get tenants in. But if you rent it out at the lower rate, will that bankrupt you? Call in the experts for advice, don’t try to work this one out on your own!

How did you decide what to charge for your rental?

New to property investing? Read this first

True Property - New to property investing? Read this first
Some things don’t change when it comes to choosing the right investment property. Here are some tips for newbie investors:

Location

Buying in the same area you live in is often preferable, especially for a new investor, as it is easier to keep an eye on the property. Driving past the property regularly will help you stay on top of any potential problems. The location of the property is generally more important than whether it is a house or a flat.

Rents

Three or four bedroom homes are usually easier to rent and normally have a quicker chance of resale should you need to sell anytime in the future. Double income properties, for example, homes with a granny flat, often offer excellent rental yields. If you lease these at different times, then you won’t be down double income if both are vacant.

Long-term

Look for properties that have an X factor. Can it be extended? Is it sub-divisible? Is its location superior? Look to the future as to what you could do with the property. Low maintenance cladding materials on the exterior of the home will help to reduce ongoing maintenance costs. Maintenance is not something you should take lightly.

Finances

Develop a relationship with your Mortgage Broker and Buyers Agent. They will save you time and money. Speak to them regularly about your future investment plans. Make sure organise your finance before you actually sign the agreement to minimise the conditions applicable. So many people forget to do this. Always keep accurate, complete and tidy tax records. Highly important!

Investment

Spread your investments. Target some properties with high yields and low potential for growth, and also target properties with lower yields and a higher potential for growth. A balanced portfolio is always a good idea. Make sure you follow a plan so you know what sort of property you will be buying next and why it will work for you.

Relationships

Always be nice to your tenants. They will be nice to you in return.And always respond quickly to a tenant request.

Property Management

Review your rental rates, both up and down, on a regular basis and according to the market. Work with your Property Manager to help you with this. Your property manager will have the market information and experience to help you to make the right decision for your investment.