commercial property

Hi MJK

I self manage.

Former tenants were billed by mail and either paid on the last day posiable or took the penalty interest. One ex tenant is gathering a nice interest bill still :p

New tenants in one property are emailed a bill and pay by EFT on the last day posiable.

Other tenants are billed by mail and pay on time and even early :D

Some do have a pay if and when I feel like it attitude, that is why it pays to read the lease and know what big stick you can tap them on the knuckles with, billing them a couple of K in agent fees soon has them finding their online bank accounts :D

Accountants are the worst offenders IMHO and they will go to court to avoid trying to pay, they will even represent themselves when their own lawyer has told them they are in the $h!t and they should settle :( /end rant ( appologies to the decent accountants out there )

bundy
 
MJK and Bundy

Why do you invoice your tenants?

The lease is the 'invoice'. It is a contract of supply. It serves as both invoice and receipt. If you feel you really must, give your tenant a blanket "Tax Invoice / Receipt" at the start of the lease for the entire lease.

As for outgoings, I can understand that you want to make sure the outgoings are paid. My previous commercial property manager told me absolute horror stories of tenants who had not paid rates for the entire terms of their tenancies, and that can be an unpleasant legacy for the owner to discover.

MJK my commercial manager finds the tenant, sets everything up, then I manage. The Agency holds the security bond in their Trust Account so we all remember where it is.

However, the first tenant went into liquidation, and certainly hadn't paid outgoings (we recovered them from the liquidator), so I left management to the pm for the first year of the second tenant.

Now, monthly rent is paid by direct debit and they are responsble for the outgoings themselves.

Council Rates come direct to me and I fax them on. That way, I can see if there are any arrears plus I keep a copy of the Notice.

But I can see how, to keep track of payments, you may want to pay rates, insurances, etc yourself first and recover the payment from the tenant second. Being out of pocket for an instalment or two is better than being in arrears for five years of Council Rates!

Cheers

Kristine

PS Bundy - how did the auction go today?
 
Hi Kristine

I invoice them as one slimy tenant said if I didn't he would take withholding tax out :( and it is a reminder not to spend all their money on other things ;)

Out goings are charged monthly +GST so there is no reason for them to get behind. I also get the reward points from paying the bills not them ;)

Auction got 252K on a net return of 25K with 2 bidders, not a bad buy IMHO.

bundy
 
Thanks for your replies. Its great to know I'm not the only one.
Bundy, funny you should mention accountants ! Thats what my tenants are!
My lease says if the rent is more than 14 days overdue I can charge 18% interest until payed. Hoping I won't have to do this I'd rather have a good relationship with my tenant but I'll have to see how it goes.
I'm only looking for my second months rent as I settled the property in mid October. I suppose this tenant will be one of those that uses the 14 day period to their advantage.
I just wondered how you guys went about things. Do you call the tenant on the phone and hassle them or just bill the penalty if late?

MJK
 
Bundy,

It never occured to me that management fees could be included as an outgoing and the tenant pay this as well. If thats the case we should all be using a manager shouldn't we ?
I chose to self manage to save 5% of the rent in fees and secondly to learn more about property management etc...

MJK
 
Kristine,

One of the reasons I chose to invoice the tenant monthly was so I could add outgoings onto the bill as I paid them. I have Body corporate fees & rates coming to me.

Also , the previous owner was invoicing this tenant so I decided not to reinvent the wheel.

I'm a little bit green when it come to commercial management though.

MJK
 
Management Fees -

Depends on the lease some have it included regardless of who bills the rent........I liked the idea of $70 extra a month for under 2 hours work :D Agent wasnt so happy ;) not using them in the future anyway :(

Penalty Fees -

Being an online junkie I mostly use email :D New leases my legal person likes using a fixed % on their standard lease, I cut them a weeks slack to get me paid.

bundy
 
Originally posted by MJK
Bundy,

After the weeks slack, then what. What is your approach to late rent collecting ?

MJK

After a week a nice email reminder that the penalty is backdated to when the rent is due and that at 2 weeks overdue I can kick them out and the other legal nasty things that I can do according to the lease they signed ;)

bundy
 
Bundy,

Just to follow up, I did get my November rent paid on the 20th of november ( 3 weeks late ). My tenant promises to be better behaved for December onwards. Hopefully its just a few teething problems as they use a freelance bookkeeper who is in only once a week.

Thanks for your advice and shared experiences.

MJK
 
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