Rental Question

[b7277]

As a LL whose property is managed by a RE, is it possible that RE can increase the rent even if the LL doesnt want too and RE could keep that extra money? If so, is there any way to keep track of this without contacting the tenant. I am thinking of investing and would like to clear this doubt.

Happy Tuesday
b7277

 

[Lil Skater]

They *could* but it's not legal.

Trust accounts are fairly heavily audited, so it is unlikely it would happen - but anything is possible.

You'd get a copy of the lease agreement with the rental amount on it, and your statements would reflect the money coming in and going out.

 

[b7277]

True, but the rental statement I would get is from the RE. So amount can be tweaked. Is there any other way to know or just accept and move on that such things could be possible.

They *could* but it's not legal.

Trust accounts are fairly heavily audited, so it is unlikely it would happen - but anything is possible.

You'd get a copy of the lease agreement with the rental amount on it, and your statements would reflect the money coming in and going out.

 

[moyjos]

True, but the rental statement I would get is from the RE. So amount can be tweaked. Is there any other way to know or just accept and move on that such things could be possible.

Do you have a reason to think this would happen? If you are worried that it "just might" them property investing is probably not the right fit for you.

I would be far more worried about tenants doing damage or just not paying than a RE skimming the rent.

 

[Prop_Perspectiv]

I would find a RE agent who I trusted (as much as that is possible) and if I was doubtful I would contact the tenants to check. I haven't heard of this happening but then again, I guess I wouldn't ? Never thought of it to be honest!

 

[b7277]

I agree, there are far more things to worry about but this is something that crossed my mind and wanted to know if there are any tools for LL to check this.

Do you have a reason to think this would happen? If you are worried that it "just might" them property investing is probably not the right fit for you.

I would be far more worried about tenants doing damage or just not paying than a RE skimming the rent.

 

[Lil Skater]

True, but the rental statement I would get is from the RE. So amount can be tweaked. Is there any other way to know or just accept and move on that such things could be possible.

As I said, trust accounts are heavily audited so it is unlikely and the lease will have the amount on it.

Of course if the agent is going to skim your money they wouldn't be too concerned about the legality of ensuring their trust accounts are in good standing.

There's risks with all investments, and I think a REA skimming $500 or so is the lease of your problems.

 

[jenni_nextplace]

It would be fairly difficult for the agent to do. They need to receipt the money for trust account reconciliation and the auditors would pick it up pretty quickly. Also something would show up on your end of month statement. The also must provide a ledger/ receipt to the tenant on request so they would have to show the rent they paid.

It would be too difficult for the agent to try and skim unless they were collecting the rent by cash into the office.

You could ask for a copy of tenant ledger from the agent and post it to the tenant asking them if the rent receipted is actually the rent being paid.

If you can't trust your agent get a new one, otherwise you will be worrying the whole time about everything they do. You don't need the stress.

 

[handyandy]

This is certainly a concern in the US.

I placed a property with agent. Property had just been reno'ed so in very good nick. We get a hurried call from agent that insurance company wants to lease property for 6 months. they are offering $200 per month over normal rent.

I say no as as in my view the value of the reno would be severely impacted.

The agent then comes back twice with increased offers. This is at 7:30 at night so unlikely that there is anyone in insurance office.

All seemed very fishy to me and lead me to suspect that the agent was simply trying to rent the property as a middleman.

The rules are somewhat different in the US.

PS the other reason for not renting to the insurance company is that these people have already destoryed one house and may apply the same to my house

 

[Ed Barton]

It would be fairly difficult for the agent to do. They need to receipt the money for trust account reconciliation and the auditors would pick it up pretty quickly. Also something would show up on your end of month statement. The also must provide a ledger/ receipt to the tenant on request so they would have to show the rent they paid.

It would be too difficult for the agent to try and skim unless they were collecting the rent by cash into the office.

You could ask for a copy of tenant ledger from the agent and post it to the tenant asking them if the rent receipted is actually the rent being paid.

If you can't trust your agent get a new one, otherwise you will be worrying the whole time about everything they do. You don't need the stress.

Not difficult at all, just complicated and time consuming. Something that wouldn't be done to skim 20pw, 2000 pw yes!

Money runs through a ghost account and then gets deposited to the trust account.

 

[alexlee]

I agree, there are far more things to worry about but this is something that crossed my mind and wanted to know if there are any tools for LL to check this.

Get a copy of every lease and lease renewal (you should anyway), and marry that up with the rental statements.

If this sort of thing keeps you up at night, though, ask yourself whether you really want to be a landlord.

 

[josko]

Not difficult at all, just complicated and time consuming. Something that wouldn't be done to skim 20pw, 2000 pw yes!

Money runs through a ghost account and then gets deposited to the trust account.

Yes...seems ridiculous and far too complicated to get away with unless the rent was worth skimming.

If it were a cash scenario..then yes...but not under normal leasing circumstances in Australia.

 

[fisherman]

As a LL whose property is managed by a RE, is it possible that RE can increase the rent even if the LL doesnt want too and RE could keep that extra money? If so, is there any way to keep track of this without contacting the tenant. I am thinking of investing and would like to clear this doubt.

Happy Tuesday
b7277

Yes. After completing a holiday letting I was called by police as a witness for the prosecution. It was a short term letting and apparently I was paying much higher rent to the accommodation manager than he was declaring to the owner.

Don't be so certain that if you detect a scam you have a right to recover the money either. In the case where I was called as a witness, the judge stopped the trial mid-stream with a decision and reasons that surprised both sides.

I will not comment further because it could lead to others trying a similar scam.

While with holiday lettings it is easier for a sharp accommodation manager to cover his/her tracks, it is possible with long term lettings.

You owe it to yourself to ask the obvious questions of the tenant. Anyone with multiple properties would be advised to get a local auditor to do a random check. Or rotate control to other managers for a time. Cheap insurance.

 

[b simpson]

For a RE to try to skim ~$50 per week and risk prosecution and loss of licence seems simply crazy.

Risk/return ratio is far too high surely?

 

[fisherman]

That depends, do offenders think that way?

 

[b simpson]

That depends, do offenders think that way?

I would assume a white collar crim would. I could be wrong though..