My dream IP is my nightmare

[EnBMips]

Hello All
I am a first time user of this forum. I recently purchased an immaculate newly reno property and leased through the same agent who sold me the property. I was happy that it was leased out soon after the settlement date although the rent is $30 less than my expectation (I did a thoroughly research!). The PM assured me that they chose the best applicants. My nightmare starts exactly 4 weeks later. Apparently the tenants went to the PM’s office with a stack of photo showing mould growing everywhere including their shoes and fridge. They also serve a termination notice on the grounds of health hazard. I was shock to see the photos and puzzle how an immaculate property turned into a mould factory within 4 weeks!! Before I had a chance to inspect the property myself the PM advised that they release the contract without any penalty. Assuming mould problems would be easier to rectify when the property is vacant try to do the thing I did not oppose. After inspecting the property I with a treadie who has experience in mould, I have no double that the tenants’ life style contributed to most of the problems. I than wrote 5 simple suggestions to the PM to pass on to the tenants which may help reduce the condensation, such as open the windows regularly. The PM sat on my suggestions instead suggesting me to invest in major structural maintenances. Whilst I am shopping for tradies, the PM advised that the tenants seeking:
Reversing the termination notice
Requesting rent reduction
Requesting relocation costs if they wish to move out
The list goes on...
Last week I notice that the tenant stop paying rent by checking my bank account. The next day I got on the phone with the PM. The PM appears not aware of the missing rent and continues to push me carry on the expensive structural maintenances. When I arranged tradies to inspect the property the tenants denies their access despite requests made prior to inspections.
I am also told by the PM that if the tenants take me to Tribunal more likely they are heading that path I would have slim chance to win because the Tribunal usually rule in favourite of tenants.
What kind of trouble I got myself into!!

 

[craigb]

there are some water issues in the home and if the tennent won't let any one in, then there is not much you can do about the issues, i would let them go! and repair the mould/water issues as soon as you can,then try and start afresh with a new agent,

 

[jezza]

EnBMips

Accept the tennants termination, go through the property and ascertain why there is mould growing. Turf out the PM, not sure how you did your DD if you just stuck with the selling agent and accepted $30 less. Have you got photo's of this property before renting it out and what does the inspection report mention. Did you do a building report prior to buying it and does this mention any possibilities. Ultimatley I am sure you bought this property for the long haul and to have a hiccup in the first month all though concerning you should take a breath and look at the bigger picture.

I have to say I tend to not buy properties that say recently painted and recently renovated as my first concern is what were they covering but it eliminates any future value adding.

Good luck with this but unfortunatley you can't just say they need to have the windows open, unless they are running the hot water system and treating the place like a sauna, water/condensation is getting in somehow and thats the first step you need to eliminate.

Jezza

 

[Jamie M]

Sounds like a very frustrating situation - which isn't being helped by the existing PM. I'd appoint a new one - someone that will be more proactive about the issue (at the end of the day, it's what they're paid for).

 

[.toe]

tell the tenant if they want the problem rectified but refuse access to tradies then any further damage becomes their responsibility.

 

[EnBMips]

IP nightmares

Hello All

Thank you all for your kind reply.
I know you are going to shake your head. I did not get a pre-purchase building report mainly due the clause in the contract - similar to a silent auction. I also trusted my instants - I have been in the game for some time. I think the PM may have aware of that I do not have a building report and use it against me. I have been actively looking for remidies however I am afraid that the tenants are going blame for everything and seeking compansation. Do I need to get myself a good lawler?

EnBMips

 

[Perp]

Which city/state is this IP in? Is it even in Australia?

If so, you say you made "prior requests" for access for tradies; was this in the form of written notices as per the legislation, with appropriate notice length?

Have you issued a notice that they're in breach with regard to rent arrears?

Has the tenant issued an appropriately formatted notice indicating that you are in breach of the lease - due to health hazard - or have they just written emails / made phone calls?

It's essential that you issue all notices and respond to same exactly as you are supposed to do in accordance with the legislation. The worst thing you can do is "wing it" and do what seems like "common sense" to you; the Tribunal will eat you for breakfast.

Do everything by the book and either the major repairs are required, in which case you have to cough up and do them, or they're not, in which case you won't have to do them. But failing to follow appropriate procedure is likely to result in the outcome being worse than it has to be.

 

[schweedy]

LOL did you get my old tenants.....this seems to be their angel (removal costs, rent reduction etc).

I can only say from VIC......

I'd be releasing the tenants from their lease, even let them take it to the tribunal, as they will need to proove there are problems. Our tenants got half the rent back for about 3 months. We also had to have a building inspection done, and while it costs, I still consider us lucky to be able to have gotten rid of them.

I'd also be getting statements from your tradies who have tried to gain access (in the appropriate manner with notice etc), of them being denied, as this wont go well for the tenant. Even after ours was told to make the house available for the tradies, they still stuffed around as many as they could, luckily the tradies had been told these guys were 'problem tenants' and playing games....most of the tradies have their own problem tenants, so totally understood.

To get compensation, they have to end their lease, as then the compensation is calculated on the time from the first complaint to the PM, until the lease has ended.
I'd be arguing that you shouldn't have to pay removal costs, as they have blocked/delayed access to you having this problem fixed in the first place, their choice to end the lease to get compensation etc.

Oh and GO TO THE VCAT HEARING WITH YOUR PM. The one hearing we didnt go to, the pm made her last day (quit after the hearing), as she had just cost us over $1k in water bills by coming to a rediculuous agreement before the hearing and having it stamped off on.......we never missed another after that.

Take this all in your stride, get them out, get the problem sorted and get on with things....... you will be laughing about it in the future.
Get a new PM, better rental price and get the problem fixed while your awaiting your new tenants.

 

[Xenia]

The tenants need to go I would be pushing for early termination so that you can fix the problem.

I don't agree with going to a hearing with a property manager, that is what you pay them for. A good pm would be professional, know the law and know how to handle the hearing. Landlord's argue from an emotional perspective and tend to "blame and point" not different to what tenants do but you don't need both sides doing that, you need some degree of professionalism in there.

 

[willair]

Hello All

Thank you all for your kind reply.
I know you are going to shake your head. I did not get a pre-purchase building report mainly due the clause in the contract - similar to a silent auction. I also trusted my instants - I have been in the game for some time. I think the PM may have aware of that I do not have a building report and use it against me. I have been actively looking for remidies however I am afraid that the tenants are going blame for everything and seeking compansation. Do I need to get myself a good lawler?

EnBMips

Welcome to property investing,i would be interested to know what the clause was in the contract that stopped you from having a building report after all most reno work is just paint and that will covers all the problem area's,you just have to face the facts does the -RE-PM- and the tenants all know each other?,because they all sound useless and i would get rid of them all as quickly as possible,with the building mould vent problems wait till you have all the problems out of the way ,that being the PM,tenants,and start again don't use anyone the PM,tells you about just run a simple add in the local paper under the tenders and quotes and price the work yourself,that the problem with property investing thses days there is too many layers of people that will help for a price and at the end of the day yours is the only name on the "TITLE",no one else good luck willair..

 

[EnBMips]

The property locates in a bay side suburb of Sydney.
Even I have emptied all my pockets to purchase this property I am still willing to do whatever I can to fix the mould problem.
I am afraid this time the tenants will eat me for breakfast not the Tribunal.

 

[EnBMips]

The solicitor did warn me something but I was head over heal.
Get ride off the tenants and PM seem too far away. It becomes clear that I am in the mercy of tenants. It does not make any scene at all that I provided an immaculate property to the tenants less than 8 weeks ago now they are not just living there rent free also seek compensation from me.

 

[cadence]

How old is the property? Older properties near the water are generally more susceptible to mould ... I normally keep that in mind when looking at properties in bay/beach areas.

get rid of the tenant and the PM, find a good tradie - call up 2GB's Home Reno Show every Saturday 9am-10am. Mould is a common problem and they address it on almost every show.

Mould is a living thing. A temporary solution is to spray pesticide over the mould to stop it growing. That doesnt solve the underlying problem though which is why you need to get someone experienced to have a look.

good luck!

 

[dr house]

it may be a longstanding mould problem and the new paintwork covered up an old problem.
It's very hard to get rid of mould spores once its in the walls.
The mould always seems to come through again, even when repainted.
You need to fix what caused the problem in the first place, ie where is the moisture coming from, poorly ventilated bathrooms, leaking roof, rising damp?

 

[tubs]

Everything to be in writing from now on.

Whatever happened with inspections, selling etc is no longer relevant.

What you've got is a situation where you have a mould problem. Your responsibility as LL is to rectify the situation in a timely manner.

But go through your agent for everything. Get them to organise tradies etc. They need to be responsible for organising access and so on. Then if you've done everything by the book it becomes a case of hard luck for your tenants because you've done the right things.

 

[jezza]

The solicitor did warn me something but I was head over heal.
Get ride off the tenants and PM seem too far away. It becomes clear that I am in the mercy of tenants. It does not make any scene at all that I provided an immaculate property to the tenants less than 8 weeks ago now they are not just living there rent free also seek compensation from me.

ENBMIPS

Go pick up the phone and ring other PM's in the area, make a rational decision, speak to them about the issue and what they would do. Then hire one of them, give the PM the AR5E and if the tennant is just winging this refussal to pay rent, kick them out. Then fix the property up. If you do nothing and let the PM & Tenant tell you how it is going to work then I wish you all the best. Read the rules fot rights for both tennant and landlord this would be HIGHLY recommended

Jezza

 

[Aaron Sice]

accept termination.

fire PM.

 

[Ausprop]

accept termination.

fire PM.

clean up house

sell it

resi houses are for living in, not speculating on. yes you can get wealthy with resi IP but barrellignin on high leverage with bad tenants in this environment is not good

 

[FormerLurker]

Professional Tenant

Sounds like you got a professional tenant to me - they seem to know the barrel landlords are over and intend to take you for as much as they can.

I can almost see them with a spray bottle misting the walls with water to create an easy problem to obtain said rent reduction/relocation costs etc........or maybe I'm just paranoid.

best of luck to you.

 

[EnBMips]

Sounds like you got a professional tenant to me - they seem to know the barrel landlords are over and intend to take you for as much as they can.

I can almost see them with a spray bottle misting the walls with water to create an easy problem to obtain said rent reduction/relocation costs etc........or maybe I'm just paranoid.

best of luck to you.

That’s exactly what I suspected. No such problem were reported form the previous tenants and even after 3 month locked and seal whilst on the market, it was immaculate when I got the keys. It seems to me quite extraordinary that the property turned into a mould factory exactly 28 days!! Anyway I am getting it clean this week. Hopefully it will be the beginning of the end of my nightmares I have some worry thought, the tenants may not pay me back the rents in arrears because of the mould issue, also they may refuse to pay rent on the grounds that the cleaning and structural work are not up to their standard etc… Please give me your thoughts and don’t ask me where your PM is.