Selling with tenant, has anyone reduced rent in return for tenant cooperation?

[BV]

Hi everyone.

I wonder what is a reasonable rent reduction for the inconvenience to the tenant during open house viewings?

I know that the tenants have to provide reasonable access but they can be uncooperative and can leave the property in an untidy state so I'm thinking of rewarding them with a rent reduction to win their full cooperation.

How much should I reduce the rent by?
Thanks in advance

 

[Amadio]

Whatever it takes for total cooperation. When we were tenants paying $450 week we would have cooperated with a $50 week deduction and a smidgeon of politeness.

Now that I know first hand how angry tenants can totally ruin a sales campaign I would never put a property on the market which is tenanted unless the tenants were 100% cooperative.

 

[BV]

thanks Amadio
Anyone else?

 

[kathryn d]

I can only answer from the point of view of viewing property when there are tenants in place.
Most tenants were nice, but we didn't expect them to go out of their way.
They were usually informed we were investors and would most likely be keeping them as a tenant. Sometimes I would ask the tenant directly if they liked living there..if there were any issues that needed attention, (for repairs) I tried to do this when the REA was talking to my husband, so I could get a more candid answer.

When we purchased our 11 unit apt building the vendor owned a winery. She had a small bottle of wine tied with a bow, she handed out to the tenants to say thank you.
We always said thank you to the tenants as well.
We never expected a tenant to leave their home while we viewed.

I didn't like it when a REA would let us have free rein of a property.we know we are honest, but they don't. They should have been protecting the privacy of a tenant a bit more.

If I was a tenant, I would want to be home during an inspection.

 

[BV]

Thanks Kathryn
So you've never discounted their rent when you were selling.
I'm thinking of lowering it by either 70 or $100/week

 

[kathryn d]

Thanks Kathryn
So you've never discounted their rent when you were selling.
I'm thinking of lowering it by either 70 or $100/week

I have never sold a property..only viewed to buy a property with tenants in place.
...but no, I still wouldn't discount.
What happens if they promise to keep house clean, and their "clean" isn't your definition of clean?
Too many variables.
An investor and hopefully any reasonable person can look past a tenant.

Closest to a hostile tenant is when we have refused to renew a contract or ordered an eviction to a tenant, and start showing the property. We inform the applicants the tenants are unhappy because of these circumstances.
We even had a tenant call the police on us a couple times while showing a property...until we show the police the RTA where are permitted to. Many times the police don't know the rules.

 

[wylie]

We sold with a tenant in place. He agreed to leave if the buyer wanted vacant possession in return for the final four weeks being free. We were very happy, he allowed easy access and kept the place tidy. Win/win.

 

[BV]

Thanks for the replies
The agent told me that even $50/week should be enough but I think I'll go higher to get their full cooperation.

 

[pennyk]

Thanks for the replies
The agent told me that even $50/week should be enough but I think I'll go higher to get their full cooperation.

I think more than $50/wk is too much. Is the rent going to go back up after the sale is completed? Its going to be hard to get it back up if you lower it too much.
I would be inclined to keep the rent the same and maybe give them a "cashback" or rebate. Otherwise its going to be difficult to get the rent back up to the original level, and it may backfire if you are selling to an investor because the rent will effectively have been lowered.

 

[BuildingBlocks]

I very clearly remember inspecting a property in Granville last year where the large renting family were still in place during the inspection.

They were very kind in making sure that the toilet bowl had been completed filled with #2's right up to the rim.

I can look over these things, but it would scare many away.

$50 week would not have changed the fact that there was a chance they would lose their home if it sold to an owner occupier, all depends on if you have a decent tenant to start with.

 

[RumpledElf]

Having been kicked out of a few rentals being sold over the years, I would have been happy with 24 hours notice for inspections (not zero, or 10 minutes, TWENTY FOUR HOURS) and some kind of guarantee that I'm going to get my entire bond back or a couple of weeks free rent, because it really grates when you have 20 people walk through your house without warning several times and then the new landlord pings you half your bond for 3 crumbs in the grill and wants to up the rent by $50 a week after telling you the bathroom will be unusable for 2 weeks and no alternative accommodation will be offered.

Had I known I was going to get such a big chunk taken out of my bond I would have stopped paying rent right when the inspections started, which is a tactic that works quite well and I adopted with the next couple of houses that the agent pulled exactly the same trick on (what is it with agents and never giving notice to inspect?) so at least as a tenant you don't lose any money if you stop paying rent slightly more than 4 weeks before it is obvious you're getting the boot. What are they going to do, evict me when they are clearly going to kick me out asap anyway? And you wonder why tenants trash houses. The temptation was very very high.

Edit: also for gods sake TELL the tenant you're going to sell the house, there's nothing worse than coming home after work one day to find a for sale sign in the middle of your lawn. Especially when you, as the landlord, work 10 desks down from your tenant at the same freakin organisation and your tenant has a big deposit saved and is currently house-hunting. You might save yourself an agent's fee and some pain.

 

[BV]

I think more than $50/wk is too much. Is the rent going to go back up after the sale is completed? Its going to be hard to get it back up if you lower it too much.
I would be inclined to keep the rent the same and maybe give them a "cashback" or rebate. Otherwise its going to be difficult to get the rent back up to the original level, and it may backfire if you are selling to an investor because the rent will effectively have been lowered.

Penny
The rent on the lease won't reduce, it will actually go up by $20 because it is due for the yearly increase anyway.
The tenant will eventually leave in 4-5 months because they are building their own home

[by IRumpledElf]
Having been kicked out of a few rentals being sold over the years, I would have been happy with 24 hours notice for inspections (not zero, or 10 minutes, TWENTY FOUR HOURS) and some kind of guarantee that I'm going to get my entire bond back or a couple of weeks free rent, because it really grates when you have 20 people walk through your house without warning several times and then the new landlord pings you half your bond for 3 crumbs in the grill and wants to up the rent by $50 a week after telling you the bathroom will be unusable for 2 weeks and no alternative accommodation will be offered.

I think in NSW the notice period for access is 2 days but ideally a lesser notice would be good. This is the reason I want the tenant to be cooperative.

[by buildingBlocks]
$50 week would not have changed the fact that there was a chance they would lose their home if it sold to an owner occupier.

In this regard I'm taking care of the issue by offering to sign a 6 month lease so the new buyer won't evict them before their new house is ready

 

[RumpledElf]

I think in NSW the notice period for access is 2 days but ideally a lesser notice would be good. This is the reason I want the tenant to be cooperative.

It is 24 or 48 hours in SA too, but when a REA in his nice suit, gold watch and a huge crowd of people in tow just turns up on your doorstep and puts his foot in the door, what do you do? And I've had the same behaviour from more than one agent!

Definitely tell your agent to give notice so you don't get bad feelings from the tenant.

 

[kathryn d]

It is 24 or 48 hours in SA too, but when a REA in his nice suit, gold watch and a huge crowd of people in tow just turns up on your doorstep and puts his foot in the door, what do you do? And I've had the same behaviour from more than one agent!

Definitely tell your agent to give notice so you don't get bad feelings from the tenant.

Hold your hand out and ask for $50?
Otherwise you close the door and politely say sorry.

 

[RumpledElf]

With a literal foot in the door? I'm a small person, I can't move someone who is physically much bigger than me, and both times they were fairly big male REAs. People can be very intimidating if they want to. And of course they have keys to the house and could just walk in if I wasn't home.

Every house I've sold as the OWNER on the other hand, I've had heaps of notice from the agent and they were extremely polite.

 

[Compropmanager]

I must say that as a tenant I would tell the agent to go away as they had no right to enter (provided they just rocked up)

that being said as the agent one of my current tenants despite being given 3 notices of inspection all 2 days prior to the inspections and then not being at the property allow access (being commercial they changed the locks) is now in a world of hurt.

so I have had the locks changed, goods removed and cashed in their bank guarantee of around $5,000.00

all this just because they didn't want us to show some buyers through, as a landlord you have the right to show prospective tenants/buyers through a property however there are rules as to how you do this, tenants should not need to be bribed into complying with the law.

the agent needs to have a meeting with said tenants if need be with yourself as well and it explained that their co-operation is expected provided the rules are followed.

agents that turn up with 20+ people without the required notice deserve to be told where to go, just like tenants that don't allow access after they have followed the rules shouldn't expect to be treated like they own the place.

Don't like they should buy their own place simple!

 

[BV]

tenants that don't allow access after they have followed the rules shouldn't expect to be treated like they own the place. Don't like they should buy their own place simple!

I like your way of thinking

 

[Macca]

I have been through this, I was renting a unit which was for sale.

The RE agent turned up at 9.00 on a Saturday morning and let himself in with the clients in tow. I heard a noise and pokes my head out the bedroom doorway and here he is in the middle of the lounge room.

Twas obvious the top half was naked but I didn't show them the bottom half After a short sharp exchange with a few F words they never did that again.

Next time I was given the 24 hr notice that is the rules and all went well. It would have been nice if the LL had recognised the fact that it is an inconvenience and I suppose places do sell better when bright and shiny so a thank you would be appreciated.

10% of the rent would be a fair reward for assistance above mere cooperation, the problem is what if you don't sell it for 6 months, it would get expensive.

Maybe a discussion with tenant offering a $200 gift voucher after the sale is on contract ?

 

[Bargain Hunter]

10% of the rent would be a fair reward for assistance above mere cooperation, the problem is what if you don't sell it for 6 months, it would get expensive.

Maybe a discussion with tenant offering a $200 gift voucher after the sale is on contract ?

The issue with any sort of compensation above that required by law is where do you stop. As you have pointed out the sales campaign could be extended so 10% is expensive, on the other hand a $200 gift voucher for six months inconvenience doesn't seem enough.

Personally I would offer nothing, either the tenant will cooporate or they won't. That way I only upset the tenant by being an ******** landlord not a cheap ******** landlord because they felt the compensation wasn't enough.

Regards

Andrew

 

[BV]

Some good points there.

The property won't take more than a couple of months to sell.
I actually offered 20% to win their cooperation
If they don't cooperate fully and it looks like they are delaying the sale I'll take my offer back and continue the selling campaign for free.