IP property in Melb - late payments & self managing advice

[groperfish]

Hi all,

We have a 2BR IP in Brunswick, Melbourne. Has been rented consistently (furnished) for the past 2 years, without issue, managed by one of the larger RE agents while we have been living overseas.

The most recent tenants have been consistently late in paying rent and have had some personal issues lately - I hear they are separating and rent payment *may* become an issue. They were expected to meet with the RE agent yesterday to discuss, but never showed up.

Agent has advised waiting another month.

We are thinking that now we are returning to Aus, maybe we could look at self-managing the property. Have never done this before and are wondering if it is really a good idea. My concerns are:

- If something goes wrong, tenants less likely to be concerned as they wouldn't be able to be noted on tenant databases as 'bad tenants' (Does this really exist?)
- How do we do assess them as good tenants - is it as simple as phoning references and using own judgement? Do RE agents have access to databases to review prospective tenants?
- We are expecting a new family member so I might have limited time to attend to issues. I don't see this as being a major hurdle, though, as there have been limited issues so far. Money saved might offset this downside.​

Would appreciate any advice. Thanks kindly.

 

[wylie]

Is rent up to date now? If so, ensure you get landlord insurance if you don't have it.

Why does the agent say to give them another month? If rent is paid and they have not breached the lease what can you do? I would keep in regular touch with the agent. Check on rent due day if it is paid. If not then insist a breach notice is issued the minute it can be issued. And followed with the next notice if not remedied by the deadline.

I think that is your best course of action. I would not take on a potential problem. Let the agent do their job. I self manage but I think you should ask the agent to do what you are paying them for.

 

[Lil Skater]

Hey Adam! Nice to see you back on the forum, and congratulations on the little one to come.

A few quick questions.. Is the current tenant on a lease? If so, when does it expire? This will give a better indication of your options to remove the current tenants, if you wish.

The bad tenant databases do exist. The most widely used are NTD and TICA, a private landlord can list on TICA but not NTD - it's worth noting that 3 or so years ago the laws changed around these databases, and you can no longer just list tenants as you once could do.

There's a number of ways to assess tenants, for me first impressions count and I'll usually pass this feedback onto clients when making a decision as well. Beyond that you need to call around their references, google, Facebook etc. for self employed you can look up their ABN and make sure they're still registered, for those that have lived at a private rental/haven't rented before/owned their home I would check RPdata to double check the names they've provided on the application, as well as calling their references. You can check NTD/TICA provided they've signed a privacy statement, if you find anything you need to provide them with a copy of the listing.

You also need to request a number of different forms of ID is also handy, you can make sure they're who they say they are and can also double check the address listed on bills/license. You'd want, at a minimum - drivers license, Medicare, one bank card, pay slips and at least one bill that shows their current address. It's funny how many people will provide bills with an "overdue" notice on it.... Beyond that requesting their ledger from the current agent (or both if they've not been at their current property for long) or a bank statement clearly showing the rental payments being sent out.

Beyond placing the tenant in the property, there's a lot of legislation you need to know. You don't need to know everything, but the basics are necessary. For some breaches of the Act the penalties can be quite high, and if you happen to find a tenant that knows how to play the system, you need to know your rights and how to get them out.

Hope that helps!

Sam

 

[S.T]

Get educated :

http://www.consumer.vic.gov.au/housing-and-accommodation/renting

You can also email or fax in a form and Consumer affairs will mail out you all the correct forms you require - handy to have say 5 of each at home ready to go.

As Lil Skater has pointed out definitely have the prospective tenant sign a privacy statement, you'll need this to check up their previous references with other real estate agents and check tenancy databases.

When I first started self managing, I just 'used' a real estate agents rental kit they provided to me and rewrote some of their forms for my use, including application form, privacy statement form etc.

 

[thatbum]

Beyond placing the tenant in the property, there's a lot of legislation you need to know. You don't need to know everything, but the basics are necessary. For some breaches of the Act the penalties can be quite high, and if you happen to find a tenant that knows how to play the system, you need to know your rights and how to get them out.

Yes I would have thought the knowledge of the legislation and procedures would be the most important factor in whether or not someone is ready to self manage.

That and perhaps just some general nous at dispute resolution.

 

[wylie]

I'm not sure I've understood the question, after seeing other answers.

I'm thinking your main concern right now is managing the tenants you have, that the agent thinks "might" become a problem.

I would be managing this scenario now, let the agent who is already managing the place deal with these tenants. Don't take over now there "could" be a problem. You've been paying the PM all this time to manage, and now there is a potential problem, don't take it on yourself.

I would recommend allowing the PM sort out the problem for you and then once this hurdle is done, think about whether or not you want to take on the management going forward. I would, however, keep on top of the property manager and insist on notices going out if and when any breaches occur until they prove they can pay or prove they cannot pay.

 

[chunho01]

I'm going through a similar issue here, rent is basically behind by just over a month! We were going to do the Vcat thing, but suddenly the tenant continued paying (was setup to do fortnight direct billing)

Question now is: should we still proceed to forcefully remove tenant via Vcat? Or continue hanging on (no efforts seem to be made to reduce arrears). Notice has already been issued, and tenant made clear of the arrears issue two weeks ago.

 

[Lil Skater]

Chun,

If the tenant is paid up to date, or paid within 3 days of the notice to vacate being served, you will need to start the process again when they're 15 days in arrears (14 full days).

There is other ways to remove the tenant depending on whether they have a lease or not, though.

 

[elsLan]

Chun,

If the tenant is paid up to date, or paid within 3 days of the notice to vacate being served, you will need to start the process again when they're 15 days in arrears (14 full days).

There is other ways to remove the tenant depending on whether they have a lease or not, though.

Actually you can still make an application to vcat based on the original notice to vacate/arrears. The application asks what the arrears were at time of notice not at the present. This is helpful if the tenant is likely to fall in arrears within the following 14 days prior to the notice expiring again. The three days is only to allow registered post receival.
I used to think if the tenant paid and wasn't 14 days in arrears at time of application (in between 3 day period) that you had to start again. But as long as there are still arrears, then you can make the application.
My pm checked this as she used to think the same.

 

[chunho01]

Actually you can still make an application to vcat based on the original notice to vacate/arrears. The application asks what the arrears were at time of notice not at the present. This is helpful if the tenant is likely to fall in arrears within the following 14 days prior to the notice expiring again. The three days is only to allow registered post receival.
I used to think if the tenant paid and wasn't 14 days in arrears at time of application (in between 3 day period) that you had to start again. But as long as there are still arrears, then you can make the application.
My pm checked this as she used to think the same.

Yes, they are still in arrears (checked, about 3 weeks in arrears actually). My main concern is that I feel the arrear gap will not close and may even increase in near future.

Tenant keeps saying that she need more time relocating, but since the direct payment continues to come in, despite her 3 weeks arrears, should I extend a bit more time for her to relocate? Rather than vcat her immediately.

 

[thatbum]

Tenant keeps saying that she need more time relocating, but since the direct payment continues to come in, despite her 3 weeks arrears, should I extend a bit more time for her to relocate? Rather than vcat her immediately.

Just do both at the same time.

 

[Lil Skater]

Actually you can still make an application to vcat based on the original notice to vacate/arrears. The application asks what the arrears were at time of notice not at the present. This is helpful if the tenant is likely to fall in arrears within the following 14 days prior to the notice expiring again. The three days is only to allow registered post receival.
I used to think if the tenant paid and wasn't 14 days in arrears at time of application (in between 3 day period) that you had to start again. But as long as there are still arrears, then you can make the application.
My pm checked this as she used to think the same.

A 14 day notice to vacate is invalid if the tenant is less than 14 days in arrears when served, it is deemed as "served" when received. Ie. 3 business days.

If the tenant is more than 14 days in arrears after the notice is served (day 18) you can commence VCAT proceedings and the tenant doesn't need to be 14 days in arrears at the time of the hearing - but if they are less than 14 days at the time of the hearing you will be awarded a payment plan only. Payment plans are annoying, but if the tenant breaches a VCAT payment plan by 1 day you can recommence proceedings, rather than waiting 14 days.

The VCAT application asks for arrears as of date of service, the wording would normally be along the lines of "the tenant is paid to and including 1st February 2015, with $0 on account. The tenant owes $x".

If the tenant is still more than 14 days in arrears when the notice is served, despite having made a payment the notice is still valid.

 

[elsLan]

Sorry my mistake.
I checked with my pm and she said it was in relation to renewing vcat proceedings that had been adjourned.

 

[Lil Skater]

Sorry my mistake.
I checked with my pm and she said it was in relation to renewing vcat proceedings that had been adjourned.

That sounds right, they'll usually be adjourned for ~3 months, but last week was granted one until the end of the year.