How to?? Flats

[KJ#]

I have learnt a huge amount over the last 12 months I just can't thank you enough

but
I cant find the answer to this anywhere...I would love some help...please.

Have just made an offer-been accepted on a block of 4x2 bed flats in an area where rental is hard to come by. The flats are occupied but the Tenants are not under any Tenant/Lease agreement the guy did it all himself.

Couple of options I Think
1) Vacant Possession
2) Get rental checks ect done on Tenants those that can supply references get to stay seems a great way to get the flat trashed if they are asked to leave,
3)The realestate seems to think let them stay as long as they sign a Lease and start references as/if people move on.

3 of the flats seem to be reasonable choices of tenants the other the seller admits he has a hard time getting the rent from him.I will be using a PM.

It would be great to know what others do

Thanks KJ

 

[geoffw]

KJ,

One approach I've heard to be very effective is to offer a tenant a cash bonus (maybe two weeks rent) to be out of the unit before "tomorrow afternoon". A cash strapped poor tanant might jump at that chance.

But it would depend on what sort of return you are getting now, and how well they are looking after the units.

You would also have to consider how units in the same area are performing, and what sort of returns they are getting compared to yours.

You're on dangerous waters if the tanants don't have an agreement.

I'd be approaching a PM locally and getting advice. It may well be there is a PM associated with the agency who are selling it. You may get a discount for them managing it- it's a bonus, but not the only reason (not even the main reason) for choosing a PM.

 

[Jill Chivers]

KJ

This response is somewhat tangential to your post... We've been tossing around the idea of buying a block of flats.... Am always inspired when I read that someone has actually done it. I'd be keen to know more about it -- what area, research you did, how you found them, and so on. Not looking for any trade secrets of course, just a bit more info. if you feel you can share.

Thanks
Jill

 

[KJ#]

Hi Jill

Feeling very excited but a bit apprehensive Ill answer this the best I can,

We bought our first ppor 8 years ago, a little 3-bedroom house and saved like mad towards a new home. We built a beautiful 5-bed home and now rent the 1st place out for a great return. We have lived in the same small country town for 14years,

The flats we are purchasing have had a high occupancy rate,
# They are across the road from my sister in laws place
# I had a friend that lived in them a while ago
Rental flats/units/houses are generally in high demand and the price is great.

Flats are $165 000 for 4x2 bed flats and they rent at $110 each pw . There is a small amount of work eg. the carpet needs replacing in 2 but not desperately and one has the old glass sliding door (not nice) on the bath/shower. Little things that can be done as the flats become vacant.

I know a lot of people see county towns as too big a risk but when it's the area we know the best it seemed silly to start anywhere else especially when my husband and I are looking long term.

KJ

 

[Jill Chivers]

Thanks KJ for your response... Good to hear a little more about how that all came about (will add you to my inspiration list!)

I agree that investing where you know best has lots of upsides, country town or otherwise.

Rgds

Jill

 

[Nicko]

KJ, what country town is that property in?

I just bought a 2-bed unit for $34,300 -the rent is $110 pw also.

Nicko

 

[jennyn]

What country town is that, Nicko?

I have a villa in Coffs Harbour I bought for 89k and it rents for $165 pw.

Jenny

 

[investor]

Originally posted by Nicko
KJ, what country town is that property in?

I just bought a 2-bed unit for $34,300 -the rent is $110 pw also.

Nicko

Hi

WOW

A 2 br unit for $34300. Add another zero to that for Sydney if you're lucky.

Regards

 

[Macca]

Jenny,

how long have you had your villa? I have been looking at Coffs Harbour and can't find anything close to that return.

Macca

 

[jennyn]

Hi Macca

I bought my villa in August last year. It's 2 bedrooms in a block of 2 and has a largish garden for a villa. It had been on the market for 4 months and was originally priced at $97,500k.

It had a tenant in it when I bought it which was what I wanted and the rent was $155 but when he left early this year my PM put the rent up as she said it was quite a tight rental market

Unfortunately Coffs council rates are expensive, over $1200 per year, nearly double my Sydney rates!

I bought it through Glen Larsen at NSW Real Esate at Coffs. He was the only agent who answered my email inquiries when I was looking at properties at realestate.com.au. He's nice and quite helpful.

Jenny

 

[Macca]

thanks Jenny,

I will email him and see if he give me an update on the market

Macca

 

[jennyn]

They also have a website, www.nswrealestate.com

It's [email protected]

Jenny

 

[JustAMum]

Back to the chase, ....?
Sounds a good deal, and my best performers have always so far been close to my back yard, which I know the best.
The three that look good, I would be teeing up the PM to sign up ASAP after settlement, complete with agreements and confidential application info. I would also ask the PM to cross check some of the confidential info (especially work details and personal referrees). This is as I have found some people to lie! And if they lie - treat them very cautiously. (I'd be moving to get rid of them before they did me over). I'd also cross examine the PM a couple of weeks later to check that he did ACTUALLY make some phone calls to real people to confirm the information. (PM can get very busy and let some not so urgent tasks slip ....(to put a good spin on it) (more due to the rule I keep telling myself - never trust anyone completely - especially when money is concerned)

Just a thought, could you specify or even request that the doubtful unit be vacant prior to settlement? Otherwise, the previous suggestion of a financial incentive for a quick vacancy may be the best insurance deal for the year. Or you could start off by signing the doubtfull one up on a NON fixed term tenancy, and check him out thoroughly and negotiate a payment budjet for him to come up to a month in advance. I've found in all but two circumstances if they can't be usually a month in advance (except for a very SHORT period of time) - they end up costing you money. I'm sure the PM will have plenty of ideas.

Have fun with it - I find my flats take more cost and time than the houses, but accept it at this stage as part of our diversified portfolio.