Setting up rental agreements before settlement?

Hi,
I am in the process of purchasing an investment property in the ACT with Settlement only 2 weeks away on the 7th Nov 2014. We would like it available to rent 1 week later on the 14th Nov to allow us to get the carpets professionally cleaned and the back yard landscaped.
We have signed up with a property manager but they will not do anything to help us sign up a tenant until settlement. I can understand their office policy of not advertising it as we are not the legal owners, but we have permission from the owners to bring prospective tenants through on our final inspection so a consequence I am now advertising it myself online to find potential tennants.
We presently now have a number of possible tenants lined up to come to our final inspection on the 6th November to view the property and a few of them would like to submit an application beforehand (they might even be agreeable to signing a rental agreement for the 14th Nov as one of them needs proof of address for enrolling their children at the local school). I had directed them to my property manager for the application process, however I have now found out that my real estate PM are also not willing to take any applications before the applicants have viewed the property. Is this common practice?? - what about overseas/out of state applicants?

We would like to recieve applications so that we can consider them before settlement and then if they still like the property after viewing it we can quickly make a choice.

Since this is our first investment we I would like to know if we are being jerked around by the PM and can we get someone pre-approved and signed up before settlement (even if they haven't seen the place)? I would think it should be possible to at least submit an application?

Ideally I would like a property manager to work with us and make it an easy experience for any possible tenant. Since we have not signed a tenant through the current PM I am assuming that we cant still shop around for a property manager if needed?
 
Sadly I have seen at odd times, that an agency is concerned about inspections prior to "physical" ownership, based upon recommendations from their insurer. ie, what would happen if an inspecting tenant has an accident, is that person protected by the agency cover. I will let the insurance members comment, however I believe that the usual insurance for agencies, covers their legal operations, so action for a contractual owner is within that scope. Any that's my thinking and we have done that in the past when we have hade sellers consent. Perhaps have a discussion with the agency about what they see as concerns etc
 
The not accepting applications is fairly normal. If a tenant hasn't sighted the property before signing on the dotted line then all sorts of issues can arise when they actually see the property! I typically accept the application but I don't process it until they have seen the property and confirm they wish to go ahead (you will be amazed how many people pull out after seeing the property).

If the vendor has given permission and it is in the contract then there is no reason that they shouldn't be showing the potential tenants through the property and advertising it for rent, simply add a clause to any lease signed before settlement that the contract is subject to settlement of the property to the purchasers. Either that or approve them and have them sign on the day of settlement. :) Once the contract is unconditional then there really isn't any reason to delay though.
 
add a clause to any lease signed before settlement that the contract is subject to settlement of the property to the purchasers.
I would think this is the biggest concern. Settlements get delayed all the time, and if you sign a lease without this protection, you have contractually obligated yourselves to house the tenants, and the fact that the property hasn't settled would not - without such protection - be their problem, and you may find yourselves having to compensate them for not having their housing ready.
 
Your agent is probably concerned about whether they have agency or not. Until you actually own the property, you cannot delegate agency and hence it would be illegal for them to make representations to potential tenants that they have agency. Not to mention that potential tenants are their customers too, and they are no doubt unwilling to risk jerking them around by showing them a property that may or may not ever settle.

On a more practical note, I would not be showing prospective tenants through a property before settlement because:

a) if the vendor knows you have interested tenants it puts them in a stronger negotiating position should material problems show up before settlement that make crashing the contract a real option.

b) In many cases I have had fixes I wanted to do before tenanting the place. Obviously you are not going to do this before settlement, nor is it in most cases a good policy to be advertising and showing tenants through before the place is looking right. Tenants quite sensibly don't give you credit for saying "I'm gonna have this fixed......" All you are doing is pointing out defects that are working against you. If the fixes are very minor this is not a big issue, of course.
 
Morbuis, good point on possible delayed settlement. I don't believe that the property will be shown, prior to the works done, I gather they would at least like the advertising to start. This may be difficult as the photos wont show the new landscaping.

I will restate, a contractual owner can engage an agent. We have sold property for people who just have a contract themselves. You just need the appropriate cover clauses.
 
Thanks for the correction PeterW. My agents have wanted to see evidence that I owned the property, I was not aware that an executed contract was enough.

I still think that showing a property before you know when it will be available is cutting corners, and until it is settled it ain't settled. I have had situations where there was goodwill dripping out of every available orifice, and settlement was still delayed by quite a lot of days because of a paperwork error far in the past making one bank unable to release a mortgage on time.

I also think advertising a place before you can show it is a tactical error because adverts go stale fairly quickly, and similarly showing a place before you have the presentation substantially as you want the place to be rented out in is a waste of time. You are just going to get lowball offers you don't know what to do with.

And that's just my concerns as an owner. The agent will have further concerns. Is there an agent on the forum who has never been told a yarn by an owner?
 
I recommend Distinct Property Management. Give Chris Scullin a call 6140 5900. I have found them to be very professional. Chris took on an extremely difficult tenant for me (one that the previous managing agent was very glad to get rid of) and he did a terrific job. Distinct also have extremely competitive rates. I have used many managing agents in Canberra and Chris has been the best.
 
Hi,

We presently now have a number of possible tenants lined up to come to our final inspection on the 6th November to view the property and a few of them would like to submit an application beforehand (they might even be agreeable to signing a rental agreement for the 14th Nov as one of them needs proof of address for enrolling their children at the local school).

You are very lucky to have tenants lining up to see the property! The rental market is very flat at the moment.
 
I recommend Distinct Property Management. Give Chris Scullin a call 6140 5900. I have found them to be very professional. Chris took on an extremely difficult tenant for me (one that the previous managing agent was very glad to get rid of) and he did a terrific job. Distinct also have extremely competitive rates. I have used many managing agents in Canberra and Chris has been the best.

Thanks, I am talking to distinct property at the moment as they were my radar from a friend
 
Thank you all for your responses. The reason for advertising it was that settlement was less than 3 weeks away and the Canberra rental market has been very slow (a house across the road from our home in the same suburb has had the 'rent me' sign out now for two months; other stories I had heard was 5-6 weeks). I figured if I didn't get any enquires then I would have time to adjust price. Furthermore we were aware that if we had a tenant lined up we would save on professional advertisement & potentially also leasing costs charged by PM.

I have taken my advert down as I have been corresponding with one of the responders (the one that let me know the PM wouldn't take her application) and she has sent me a copy of the application she had prepared to give to our PM. We will consider her application first & if all checks out & she likes the place after viewing it we could offer it to her. Based on responses here I will leave signing a lease agreement till after settlement.
 
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