Tenants paying well in advance

[alplant]

We have tenants who like to stay well in front with their rent. They started off the lease by paying three months up front and now pay weekly and are a little more than a month in front. The PM recommended a $10 per week increase when their lease comes up for renewal in May and I was wondering how that will work.

Do they start paying the increased rent now given that they are paying for the week the new rent starts, or do they only pay the increased rent from the actual date effectively getting discounted rent for a month, keeping in mind that they aren’t required to pay a month in advance, only a week.

They are now paid up until one week past the starting date of the new lease but I won’t know until the statement comes in whether or not they have paid the increase. I hasten to add that I don’t care if they haven’t. If they get a discount for a month because they are paying so far in front that seems only fair anyway. Personally I would probably have just stopped paying rent until the rent ledger caught up with me if I was told I had to start paying the increase before the actual date. I am just curious about what the requirements are in this sort of situation if anyone knows.

I could ring the PM and ask her I suppose but she has better things to do than satisfy my idle curiosity so I thought I would ask here instead.

Oh, and I was wondering what you all thought of having tenants who are happy to pay so far in advance even though they're not required to. It's all good, isn't it, or are there pitfalls I'm just not seeing?

 

[Kenan]

I would assume when you increase the price, the amount owing would be adjusted accordingly, ie in the same way if you pay either too much or not enough on your phone bill, the next one contains an adjustment.

 

[Dazz]

It's all good, isn't it

yes..........

 

[Luv2Travel]

Oh, and I was wondering what you all thought of having tenants who are happy to pay so far in advance even though they're not required to. It's all good, isn't it, or are there pitfalls I'm just not seeing?

My previous tenants paid anything up to three months in advance. Only pitfall was when they did it in June last year, it was taxable income for me that year. The tenants who paid in advance are much better than the tenants who replaced them and are now four weeks behind.

 

[The Fence]

The tenants who paid in advance are much better than the tenants who replaced them and are now four weeks behind.

Oh Man.....don't let 'em get that far behind...remind them as soon as they are one day overdue and everyday thereafter....and start informing them that after 2 weeks of not paying rent they will be out...!

 

[Luv2Travel]

Oh Man.....don't let 'em get that far behind...remind them as soon as they are one day overdue and everyday thereafter....and start informing them that after 2 weeks of not paying rent they will be out...!

It's been going on for some time and PM has taken it to VCAT twice. I now have a warrant of possession (I think that's what it's called?) and the tenants are on a payment plan. If they miss one payment by a day, they are out without hesitation. Maybe I'm too nice and should have just had them out right away, but I have this valid for six months, so willing to give them a chance to catch up.

 

[The Fence]

Fair enough Biggles...I do have a heart too but non payment of rent is akin to the landlord locking the place with new keys IMO. The tenant would be up in arms....
If they had've come out with a struggle story in a genuine fashion then fair enough as they can be helped, but to lump their hard luck onto you is not fair.

Good luck with it and a shame you couldn't keep the 'good' tenants.

 

[The Fence]

Oh, and I was wondering what you all thought of having tenants who are happy to pay so far in advance even though they're not required to. It's all good, isn't it, or are there pitfalls I'm just not seeing?

All good, I wouldn't knock it back. No pitfalls that I can see...unless they are paying with counterfeit $$$.....

 

[Lil Skater]

The increase would just tick over, the tenant would be paying the increase from day one as it works on the rental amount, not how much they've paid in advance.

Ie - my tenant pays $100 per week, I up the rent to $150 a week but the tenant has paid 3 weeks in advance, therefore having $200 on account (as the first week is not counted). The increase kicks in, now they're only $50 ahead rather than the $100 they'd otherwise be without the increase. If the tenant then forgets the increase the next week and pays $100 they will be up to date - but the week after they'd be in arrears.

Hope that makes sense.

 

[jaycee]

The increase would just tick over, the tenant would be paying the increase from day one as it works on the rental amount, not how much they've paid in advance.

Ie - my tenant pays $100 per week, I up the rent to $150 a week but the tenant has paid 3 weeks in advance, therefore having $200 on account (as the first week is not counted). The increase kicks in, now they're only $50 ahead rather than the $100 they'd otherwise be without the increase. If the tenant then forgets the increase the next week and pays $100 they will be up to date - but the week after they'd be in arrears.

Hope that makes sense.

I think that was well explained

Assume the tenants are aware of the rent increase, is it worth reminding them with a letter or what not ?

 

[alplant]

Thanks Lil Skater, I never thought of that, makes sense. Now that you have explained that I can work out that they have actually paid the increased rent for the first week because they are also in credit and that has stayed the same. If they had paid at the old rate it would be ten dollars less.

Our RE uses online agent and that's why I have some information ahead of statements.

 

[Lil Skater]

I think that was well explained

Assume the tenants are aware of the rent increase, is it worth reminding them with a letter or what not ?

Good! Wasn't sure if I'd explained that well or just rambled on

Nah, usually just give them a quick phone call. The rent increases (in Vic) are sent off a minimum of 60 days in advance so a lot of tenants do forget to pay the increased amount. Just give them a call, have a bit of a laugh and it's usually paid within 24 hours.

 

[priscilla]

Your PM would be required to give the 60 days notice for the rent increase anyway regardless of a new lease or not (NSW laws) so unless the tenants are paid more than 60 days in advance I wouldn't have thought this would be an issue. They will just pay the new rent from the increase date in 60 days time and the new rent would be written into the lease as commencing from ../../..

 

[alplant]

Hi Priscilla, that two months notice is more or less what got me wondering. These tenants would have been given the necessary two months notice but because they are paid up one month in advance the week that the new rent is due to start was only one month away when they got the notice, if you know what I mean. It's hard to explain what I am getting at. I just wondered if they would start paying the new rent a month early. I didn't really think about the credit situation. They are almost another full week in credit as well for some strange reason, probably because they paid the original three months with a cheque they got from the sale of their house or something.

The statements read - rent paid ../../.. to ../../.. - credit $*** and those rent paid dates are more than a month in the future with the credit being a little less than a full week.

Lil Skater's post reminded me of the credit thing and I suppose they could just go on paying the old amount for months (or not pay anything at all for five or six weeks) before they would end up in arrears, but it looks like they chose to pay the new amount a month early. I just find it strange that someone would choose to fork out that much money when they don't have to, not that I'm knocking it. They obviously feel that the roof over their head is important, and let's face it that's pretty unusual.

 

[Rentaladvisor]

You can not look to increase rent until the tenancy agreement has expired, the payment of rent in advance does not effect this situation.

 

[Ocean Architect]

Something at the forefront of my mind would be to keep good paying tennants happy by either adhering to whatever minimum notification period is legally required, and even if they had paid in excess of that period, I would honor that rent as having been paid in full (and have a conversation with them about it so as to demonstrate good faith/build relationships)

 

[Doovalacky]

If had tenants paying that far ahead I would give them a discount for the period that they are in advance.

If nothing else your probably saving the difference lost in lower interest on loan.

 

[alplant]

Yep, I agree that they deserve a discount for being that far in front. I think I mentioned that in my first post. Like I said, if I was that far in front and was asked to pay the higher rent earlier than the actual date it was due, I think I would just stop paying until the ledger caught up with me.

They could be doing that for all I know because the RE office stopped updating online agent a couple of weeks ago so I won't know anything more now until the statement comes in.

Online agent is a great tool but it's only as good as the person updating it and at the moment that appears to be nobody. I guess it might become a nuisance to a PM for a landlord to know exactly how late tenants are with the rent every single week. Some landlords would probably be on the phone as soon as the tenants were a day or two late.

Incidentally we have another lot of tenants that fall into that category, but we don't bother to ring, we know they will pay just before they get a breach notice, or if not then, just before they get a notice to leave.

So ... one way in front and one always behind. Swings and roundabouts.

 

[Electro]

My grandparents had an IP where the tenant would pay well in advance and did not have any complaints whatsoever. 2 years later he was busted for having a hydro setup in the back two rooms. I have no idea how he got away with it for so long with inspections and that...

Apart from the obvious, to date, they say he's been their best tenant yet.

 

[alplant]

Yikes, you would wonder how that wasn't picked up at inspection.

We had a PM who completely missed a caravan in the backyard with another family living in it, and I thought that was bad enough, but to miss a set up like that.