End of Lease - first time ever

Well, just experienced last night for the very first time in my "second phase" real estate career a Tenant finishing their Lease and moving out properly. It was a pleasure.


We'd picked up the dodgy property back in mid '05 and went about clearing out the dregs. There was two sitting Tenants, both of them absolutely horrific.


One was a drunk Irish woman who'd been there 14 years running a furniture making operation. There was 14 years worth of rubbish and cr@p over the joint, and she flatly refused to acknowledge me as the Landlord or enter into a Lease with me. She said she'd signed a bit of paper 25 years ago when she married her abusive husband and hasn't signed a piece of paper since. Great - now what ??


We tried all of the poncy lawyer stuff with letters etc. Didn't work at all, as she was illiterate and just screwed and ripped the letters up in our face, stood there with her hands on her hips and said "what else ya got ?" We had to learn to speak her language. Locks were changed at 8pm on Xmas Eve (no lovely carols by the fireside with the family that year !!) and the next 3 days were spent with trusty trolley / broom / rake and shovel moving 14 years worth of her stuff onto the road verge. The morning of the 28th she rolled up with her husband and their jaws hit the floor. We had everything padlocked up and their cr@p everywhere out the front.


They quickly ran away to re-group. I got a phone call about 20 mins later from the Small Business Owners Advocacy group councillor. He was explaining that I was being very harsh and needed to give them a second chance. I replied that they had been in my property for 7 months and hadn't paid a cent, they'd been issued with 2 notices to leave and been given the appropriate timeframes. All they needed to do was shut up, stop whinging and bring a couple of big lads with a truck to get their cr@p off my front verge.


There comes a point in the battle when they concede defeat and just get on with it. We had reached that point. Within 2 hours, a truck backed up, the husband and one other guy jumped out and started loading stuff on. Dad and I sat down and watched them whilst having a cuppa behind the locked fence. When they came back for the subsequent loads, and it was clear they were definitely not going to resist, we chipped in and helped them load it all on. By the end of day, we were all getting along fine, they left and we had our warehouse back clear and clean.


The other Tenant was in the process of being dragged through the Supreme Court for refusing to pay rent, and refusing to shift out. That had been going for over 6 months with the previous Owners. Fortunately we came in just at the tail end of that nonsense. The slippery guy tried to pay me a month of rent, which would have started the process all over again, but the wily old Owner who I'd bought it off had previously warned me about this tactic, and so I told him to get stuffed.


It was difficult shifting this guy out, cos he had really big stuff that needed machinery to move, and vehicles that cannot be moved. Police we discovered are absolutely useless when trying to shift vehicles off your property when they are owned by other people. Enter my bestest ever friend - my mate with a tilt tray truck. What a joyous piece of machinery that is. Clears up unwanted cr@p in no time flat. One day we started at 8am, and I roped in a few young lads from next door, one who had a forklift, and with a few phone calls, ended up with no less than 15 of his mates in there taking stuff left right and centre. It was so productive, I put on KFC for everyone and we ended up working round the clock 'til dawn to get the stuff out and gone. Vamoos. Working against the clock charges the adrenaline up and before the dodgy brother could do anything legally, all of his stuff was gone and I had a clear warehouse ready to Lease out. "Nah mate - dunno what you are talking about.....nothing here....talk to my lawyer mate....sorry we are busy. Go away" Home free at last.


Only took a few weeks to attract a Tenant. I wrote the Lease myself, modifying a 20 page solicitor's format that was pathetic. Beefed it up to about 42 pages. (Looking back there was still massive holes everywhere throughout the document, which have subsequently all been tightened up, we are now on version 15 of the Lease). This document is now worth millions to us.


My new Tenants slipped in there exactly 4 years ago, promising to do all these wonderful things to the property. Foolishly, none of it was in writing and so of course noneof it was done and I couldn't enforce it. They conducted their business, paid their rent and paid the outgoings. Importantly for me they didn't whinge and just got on with it. Well - that's not strictly true - they had two bleats a couple of years ago, one about the plumbing being stuffed and one about the garage roller door being stuck and it was a safety hazard. I quickly pointed out they were responsible for both. They fixed the plumbing and they replaced the roller door with a brand new one. I didn't hear from them after that.


Had a meeting with them 4 months ago, to see if they wished to take up their 2 year option period. They asked me what rent I would charge them. I said double, maybe triple, depends how many 100's of thousands of dollars they were going to pour into the place to improve it. They said they would stay if the rent stayed the same, and they weren't going to do anything to it. I said tata.


They've just spent the last 2 months finding a new warehouse and shifting out. The head duck of the Tenant admitted to me that if he'd known how much disruption it was to his business shifting, he would of gladly paid me double the rent to stay. Stiff. Jobs done now. They replaced all of the carpets with brand new. Freshly painted everything. All of the fire extinguishers are now fully charged and inspected. All interiors of the warehouse have been pressure cleaned. Exterior looks fantastic. Septics and drains have all been pumped clean. White ant inspection report submitted. All lights have been repaired and functional. 3 x new roller doors installed, each 4m wide by 5m tall. All aircons fully serviced.


So, keys were handed back yesterday, the old place is empty again, and is back on the market looking for a new Tenant. The place has quadrupled since the tenant moved in 4 years ago, but I reckon I'll be struggling to have the rent double. The growth we've experienced from this one property is more than my entire residential property, so it owes me nothing and will always be a favourite.


I'd dearly love to smash the whole thing down, along with the sheds we own next door as well, and build a whopping great office block and install an entire Govt dept for the next 30 years......but that might have to wait a few years. Til then, I'll paddle along with the poxy sheds.


Anyone looking for a shed to rent ?? I'm a nice Landlord - trust me. :)
 
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The Irish are easy to bribe, simply throw a large bottle of alcohol out on the road and when they run out to retrieve it, lock them out... that was a bit of craic :)
All the best with getting a new tenant.


Well, just experienced last night for the very first time in my "second phase" real estate career a Tenant finishing their Lease and moving out properly. It was a pleasure.


We'd picked up the dodgy property back in mid '05 and went about clearing out the dregs. There was two sitting Tenants, both of them absolutely horrific.


One was a drunk Irish woman who'd been there 14 years running a furniture making operation. There was 14 years worth of rubbish and cr@p over the joint, and she flatly refused to acknowledge me as the Landlord or enter into a Lease with me. She said she'd signed a bit of paper 25 years ago when she married her abusive husband and hasn't signed a piece of paper since. Great - now what ??


We tried all of the poncy lawyer stuff with letters etc. Didn't work at all, as she was illiterate and just screwed and ripped the letters up in our face, stood there with her hands on her hips and said "what else ya got ?" We had to learn to speak her language. Locks were changed at 8pm on Xmas Eve (no lovely carols by the fireside with the family that year !!) and the next 3 days were spent with trusty trolley / broom / rake and shovel moving 14 years worth of her stuff onto the road verge. The morning of the 28th she rolled up with her husband and their jaws hit the floor. We had everything padlocked up and their cr@p everywhere out the front.


They quickly ran away to re-group. I got a phone call about 20 mins later from the Small Business Owners Advocacy group councillor. He was explaining that I was being very harsh and needed to give them a second chance. I replied that they had been in my property for 7 months and hadn't paid a cent, they'd been issued with 2 notices to leave and been given the appropriate timeframes. All they needed to do was shut up, stop whinging and bring a couple of big lads with a truck to get their cr@p off my front verge.


There comes a point in the battle when they concede defeat and just get on with it. We had reached that point. Within 2 hours, a truck backed up, the husband and one other guy jumped out and started loading stuff on. Dad and I sat down and watched them whilst having a cuppa behind the locked fence. When they came back for the subsequent loads, and it was clear they were definitely not going to resist, we chipped in and helped them load it all on. By the end of day, we were all getting along fine, they left and we had our warehouse back clear and clean.


The other Tenant was in the process of being dragged through the Supreme Court for refusing to pay rent, and refusing to shift out. That had been going for over 6 months with the previous Owners. Fortunately we came in just at the tail end of that nonsense. The slippery guy tried to pay me a month of rent, which would have started the process all over again, but the wily old Owner who I'd bought it off had previously warned me about this tactic, and so I told him to get stuffed.


It was difficult shifting this guy out, cos he had really big stuff that needed machinery to move, and vehicles that cannot be moved. Police we discovered are absolutely useless when trying to shift vehicles off your property when they are owned by other people. Enter my bestest ever friend - my mate with a tilt tray truck. What a joyous piece of machinery that is. Clears up unwanted cr@p in no time flat. One day we started at 8am, and I roped in a few young lads from next door, one who had a forklift, and with a few phone calls, ended up with no less than 15 of his mates in there taking stuff left right and centre. It was so productive, I put on KFC for everyone and we ended up working round the clock 'til dawn to get the stuff out and gone. Vamoos. Working against the clock charges the adrenaline up and before the dodgy brother could do anything legally, all of his stuff was gone and I had a clear warehouse ready to Lease out. "Nah mate - dunno what you are talking about.....nothing here....talk to my lawyer mate....sorry we are busy. Go away" Home free at last.


Only took a few weeks to attract a Tenant. I wrote the Lease myself, modifying a 20 page solicitor's format that was pathetic. Beefed it up to about 42 pages. (Looking back there was still massive holes everywhere throughout the document, which have subsequently all been tightened up, we are now on version 15 of the Lease). This document is now worth millions to us.


My new Tenants slipped in there exactly 4 years ago, promising to do all these wonderful things to the property. Foolishly, none of it was in writing and so of course noneof it was done and I couldn't enforce it. They conducted their business, paid their rent and paid the outgoings. Importantly for me they didn't whinge and just got on with it. Well - that's not strictly true - they had two bleats a couple of years ago, one about the plumbing being stuffed and one about the garage roller door being stuck and it was a safety hazard. I quickly pointed out they were responsible for both. They fixed the plumbing and they replaced the roller door with a brand new one. I didn't hear from them after that.


Had a meeting with them 4 months ago, to see if they wished to take up their 2 year option period. They asked me what rent I would charge them. I said double, maybe triple, depends how many 100's of thousands of dollars they were going to pour into the place to improve it. They said they would stay if the rent stayed the same, and they weren't going to do anything to it. I said tata.


They've just spent the last 2 months finding a new warehouse and shifting out. The head duck of the Tenant admitted to me that if he'd known how much disruption it was to his business shifting, he would of gladly paid me double the rent to stay. Stiff. Jobs done now. They replaced all of the carpets with brand new. Freshly painted everything. All of the fire extinguishers are now fully charged and inspected. All interiors of the warehouse have been pressure cleaned. Exterior looks fantastic. Septics and drains have all been pumped clean. White ant inspection report submitted. All lights have been repaired and functional. 3 x new roller doors installed, each 4m wide by 5m tall. All aircons fully serviced.


So, keys were handed back yesterday, the old place is empty again, and is back on the market looking for a new Tenant. The place has quadrupled since the tenant moved in 4 years ago, but I reckon I'll be struggling to have the rent double.


I'd dearly love to smash the whole thing down, along with the sheds we own next door as well, and build a whopping great office block and install an entire Govt dept for the next 30 years......but that might have to wait a few years. Til then, I'll paddle along with the poxy sheds.


Anyone looking for a shed to rent ?? I'm a nice Landlord - trust me. :)
 
It was difficult shifting this guy out, cos he had really big stuff that needed machinery to move, and vehicles that cannot be moved. Police we discovered are absolutely useless when trying to shift vehicles off your property when they are owned by other people. Enter my bestest ever friend - my mate with a tilt tray truck. What a joyous piece of machinery that is. Clears up unwanted cr@p in no time flat. One day we started at 8am, and I roped in a few young lads from next door, one who had a forklift, and with a few phone calls, ended up with no less than 15 of his mates in there taking stuff left right and centre. It was so productive, I put on KFC for everyone and we ended up working round the clock 'til dawn to get the stuff out and gone.

There will be many WA lawyers bemoaning the loss of their fees:D

Where did you move this tenant's stuff to?

Always take out worker's insurance- even on the voluntary workers for this sort of stuff- but you knew that.

I hope you are working on your first book - this is exactly the sort of filler you need for it.
 
Dazz, I can't say I'm anywhere near ready to get into commercial stuff, but your posts are always inspiring.

Shuggy, I normally hate it when people quote entire posts, especially when they're this long, but something interesting happened on this occasion:

The place has quadrupled since the tenant moved in 4 years ago, but I reckon I'll be struggling to have the rent double.

The place has quadrupled since the tenant moved in 4 years ago, but I reckon I'll be struggling to have the rent double. The growth we've experienced from this one property is more than my entire residential property, so it owes me nothing and will always be a favourite.

-Ian
 
Only took a few weeks to attract a Tenant. I wrote the Lease myself, modifying a 20 page solicitor's format that was pathetic. Beefed it up to about 42 pages. (Looking back there was still massive holes everywhere throughout the document, which have subsequently all been tightened up, we are now on version 15 of the Lease). This document is now worth millions to us.


I suppose, then, that this means that you won't be sharing said document cheaply...? ;):D
 
I suppose, then, that this means that you won't be sharing said document cheaply...? ;):D


.....ah no....that's the stuff that Keithj and JIT have been asking for for years. The nitty gritty is worth more than $ 24.95 down at the local book store.

You know how the Ozzy critics say at dodgy presentations "yeah, well, if it was so valuable, why isn't he out there making money just doing it, why is he here trying to flog stuff to us for a $ 500 weekend."

I'd rather just stay out here making money, just the other 10,000 industrial Landlords.
 
But when everything you say (or not) will be used against you, you can only "hint".

Fair comment- but the defence in Court would be- I never touched any of his possessions- I thought all these blokes who rolled up were tenant's mates responding to my demand to vacate premises with the tenant too gutless to show. Rego numbers? Identities? whoops never bothered to ask?:rolleyes:
 
Dazz what did the bank look for when you bought the property? surely the dodgy Irish tenant and some bloke stuck in court wasn't exaclty an appealling revenue stream?

I want to take on more of these sorts of properties but the bargains are vacant possession and I can't see a bank sticking their neck out for that

are you concerned about how long the vacancy may now be?
 
TPFKAD said:
Had a meeting with them 4 months ago, to see if they wished to take up their 2 year option period.

Would the marketing for a new tenant have started at around this time then... ?

Suppose you could write into a lease that notice of whether the option is to be taken up or not should be given eg... at least 6 months or ?longer before the end of the lease term... depending on what you can get away with.

Not sure what happens with the financing side of things now... presumably the loan term went for the duration of the lease term... ? (but if it's all x-colled up it may be more complex than this?)

How long do you leave it before asking the bank to extend finance for that property (vacant or otherwise)?
 
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Dazz what did the bank look for when you bought the property? surely the dodgy Irish tenant and some bloke stuck in court wasn't exaclty an appealling revenue stream?

Initially I showed them the Leases that were in place and the spiel from the REA. There were three sheds.

Shed - 1 Drunk Irish mad cow in one, no Lease.

Shed - 2 Dodgy vacated guy with tonnes of cr@p and dead vehicles everywhere. Lease formerly in place but expired.

Shed - 3 National good Tenant been in place since 1972. Lease about to expire.


You can see why the Vendor wanted to sell. He tried to paint a good picture, and I was wet behind the ears enough to believe everything was great. The Land value was 92% of the price I paid....so didn't pay much for the hardstand, the sheds or the Tenants.


I called the Vendor the day after settlement and he said he was very happy to receive the funds, and said we had inherited a huge headache. I said "oh well, we'll deal with it". Three years later wehn I bumped into him again, his only comment was "I should never have sold those to you." I guess you gotta take a ticket and chance your arm sometimes. There are no guarantees.


The Bank thought it was as dodgy as all hell. They gave me an ultimatum. They said to me we'll give you 106% LVR to buy the place, but within 12 months, we want to see fully executed proper drawn up commercial Leases for all of it on our desk.....or we'll pull the plug and sell the lot from underneath you.


You bewdy !!! I'm in like Flynn. I love it when the ball is 100% in my court. If you duff it up, you've got no-one to blame. If it comes off, you grow from it.


Stamp duty and costs were the penalty for failure at 280K.....I wasn't going to give that up without a red hot go. I was working overseas (fly in fly out) living with the Yemeni Bedouins at the time. All this nonsense was what occurred in my holidays.


The first Lease was executed after 5 months. That covered sheds 1 & 2, despite the drunk woman still being there. There was a clause in there that I had to get her out and deliver up vacant possession of Shed 1 to the new Tenant who'd moved into Shed 2 within 4 months of signing up, or they had the option of leaving (we got her out in 2).


The second Lease was touch and go. I'd never negotiated with a high powered elderly Sydney Director of a big national company. Thankfully it was all done by phone and email, so we never met face to face. I was way younger than his son, but he never found that out until the ink was dry. Fortunately they were interested in signing up another 3+3, but I managed to push them to a 4+2, which gave me more sway with the Bank. This is what the Bank was really looking for, this company on board and signed up.


All up, we had both Leases fully executed and back on the Bankers desk within 7.5 months of purchase. They then extended to us another 3 yr loan to match the Lease term -1 year.


That loan term expired 6 months ago, and they've subsequently extended funding for another 2 years at a good rate and on good terms. The crucial period when everyone gets nervous is over, values and rents have gone up and they take a much more casual approach. Experience under the belt when talking to Bankers helps.


are you concerned about how long the vacancy may now be?


Nope. The good national Tenants moved out 18 months ago and that property has sat forlornly vacant for all of that time. We stil receive electronic funds into our account every month for the rent and all outgoings as they are required to do, and will continue to pay me. It was funny giving them notice of an increase in rent 6 months ago when they had left a year before. They just paid us all of the council and water rates up to June 2010 so I quite enjoy having all of the benefits of a Tenant and no wear and tear on the place.


Now that the other mob have also left, it would be perfect to smash down the lot and develop......and as you know I tried to get that option up and running, but alas, due to a couple of Alabama mortgage defaulters, our Ozzie Banks don't want to support developments. Joy.


We'll palm it off to the agents and let them lie their little sox off to incoming Tenants.....we won't panic and we won't get frazzled. If you have a temperament for that, this game will crush you like a bug.
 
so you are rolling over commercial bills to fund these? can you not get a typical resi 20 year lend on it? am curious because this has been a big problem for me recently - 2 dev sites that I took out with medium term funding. along comes the alabama idiots and presto I have no where to turn...banks don't want to lend anymore and the sites have dropped in value
 
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