12 month lease not 6!

Hi All,

I was wonder if anyone else has had this problem before?

Currently have an investment property in Perth and have had a great tenant in there for 12mths. The property manager till now has also been great.

She suggested that I only sign the new tenant up for 6mths in case she didn't work out and we could get someone else in. I was probably getting just above market rent when I first got this tenant in. Of course with rental prices increasing substationally in the last 12mths or so after the 6 mths the PM suggested that I only make a small increase to the rent so I don't scare the tenant off and have to pay all the extra fees for getting a new tenant and only do another 6mth lease so I could make small increases to rent if required (the rent was still good and thought it was a good idea of the PM)

But when the PM sent out the lease she sent the tenant a 12mth lease not a 6mth as we had agreed. The 6 mth has just passed and I had been trying to get onto my PM for about 3 wks to negotiate a rent increase, but my emails were never returned. So I called with no answer and left a message. No return call, so called again and got through. She then
informed me that she had made a mistake and sent a 12mth lease not 6.
But she said that she would cover the rent increase difference. I asked her to give me an appraisal of what she thought the rent might be ?

The tenant was paying $190pw (first 6mth) I got an appraisal after the 6 mth for up to $250pw (I went for $210pw to keep the tenant) She has come back saying she was unsure of what the place might be worth as there was little on the market in the area. (I have looked and there isn't)

I have contacted other PM's to see what the market rent is and I have gotten anywhere from $250-$290p/w and $280-$300pw

Not sure if I should be that rude and ask for the PM to pay the extra $40pw+ (yes I am soft) or negotiate something else?

Any help (or a kick in the behind would be appreciated ha ha)

Obi
 
Firstly, the PM should have informed you of her stuff up upfront, when it happened. And you shouldn't of had to chase her so hard to get her.

Pretty unprofessional.

Secondly she has to now cover the difference. They have made plenty of money over the years, it will not be much to them to keep you as a customer.

If she doesn't cover the difference, find a new PM after the 12 months.
 
Pretty unprofessional.

If she doesn't cover the difference, find a new PM after the 12 months.

Very unprofessional. I personally would be getting rid of her after this lease is up. I refuse to do business with PM's that do not communicate well. To not respond to phonecalls and emails made over a three week period is unforgiveable. I have never heard of an Agency that has made up a perceived shortfall in weekly rental income and will be interested to learn how you fare. Just be glad that you've got a decent tenant - you could easily have been in the same situation with the tenant from hell.

Cheers
 
Hi Obiwan

I have had a slightly similar experience - are you able to say which agency or at least which suburb? In my situation a friend of a girl working at the agency wanted to rent my house and wanted a 12 month lease so I negotiated by phone with the girl at the agency that I wanted a $15 increase written into the contract after 6 months. However when the signed contract turned up it had not been written in.

Sparky
 
...when the PM sent out the lease she sent the tenant a 12mth lease not a 6mth as we had agreed.

Didn't you receive a copy of the lease after it was signed?

If this is a traditional REA the PM is in all likelihood going to have to get the OK or at least inform the principal of the business. This might be the reason for the delay ie PM's not wanting to fess up to the error with the principal.

I would put in writing your request for the difference and have resolution by a specific date. (ie 1, 2 weeks). Not usre what luck you will have in getting the difference. My gut feeling, is that the principal/PM may offer reduced management fees, no letting fees for the next rental but would be surprised if they offer anywhere near $40pw that you mention.

They might be resigned to the fact that you will change PM's at the end of the agreement given what's happened, so would probably not be that willing to be too receptive for any compensation. (Hey, but I have been wrong in the past ;))

I agree with the other comments about speediness of communication and honesty. That is clearly frustrating and not indicative of the behaviours and ways of working that I would want my PM to exhibit.
 
Just looking at the numbers, 26 weeks x $40 = $1040
Definitely worth asking for this.

Also this would seem to be a fairly sizeable stuff up; i.e. the r/e agent has just cost you over $1000 by not following through on your agreed course of action. Pretty good grounds for ending the lease and getting a new PM, if you wanted to go that way.

Like others have said, you can be firm and nice at the same time.

Good Luck

TB
 
Hi All,

The tenant was paying $190pw (first 6mth) I got an appraisal after the 6 mth for up to $250pw (I went for $210pw to keep the tenant) Obi

This is a very common flaw in most real estate agencies! They are not investors and don't understand numbers. The tenant should always pay market rent! Settling for $40 less is not the right thing to do from a business point of view. If the true market rent is $250 the tenant is more likely to stay because they will compare similar prices and wheigh it off against the burden of moving.
 
I have contacted other PM's to see what the market rent is and I have gotten anywhere from $250-$290p/w and $280-$300pw

Beware of agents overquoting to get your business. always ask for proof of where they got those numbers from? If there arne't that many comparable as you say how did they come up with these?

If you current agent said it is worth $250 based on her research then she stuffed up by $40 and should make up the difference!!!
 
Didn't you receive a copy of the lease after it was signed?

Hi Buzz, No I didn't receive a copy of the lease, because everything went fine for the first 6mth and the same tenant was staying I didn't chase it up. I will in the future and I suppose another black mark against the PM for not sending it out

Settling for $40 less is not the right thing to do from a business point of view. If the true market rent is $250 the tenant is more likely to stay because they will compare similar prices and wheigh it off against the burden of moving.

Hi Xenia, You point is well received from a buisness point of veiw it is definitely worth chasing up


The PM has her own business and sells property as well, I think she is getting to big to quick? and with the recent madness in Perth lots of little things may have been over looked. I will put the $40 pw increase to her and see what she has to say

Thanks everyone for the advice!!
 
Hi Buzz, No I didn't receive a copy of the lease, because everything went fine for the first 6mth and the same tenant was staying I didn't chase it up. I will in the future and I suppose another black mark against the PM for not sending it out

The reason I mention it, is if you receive the copy of each lease, after it is signed, at least you would have known of the issue after a few weeks, not 6 months. Sonmething to bear in mind for next time.

Good luck with the rental issue.
 
Back
Top