The house next door

[steveadl]

Hi all, would love to get some opinions on a situation I'll be looking at in a few months.

I'm currently in negotiations to buy the house next door to us. Assuming all goes according to plan, the current owner will rent back from us for a period of around 3 months.

My dilemma is what to do at the end of this term. I use a PM for my IP's as I cannot be bothered dealing with the day to day stuff, and do not wish to have any interaction with my tenants - I believe PM fees are quite good value for money. I do however send my dad around to take care of minor maintenance hassles for me rather than send out tradesmen - this may be particularly prevalent in the coming purchase as it is an old house.

My problem is - the main reason I use a PM is to keep myself hidden from the tenants so I don't have to deal with them. If they find out that I'm the owner, they may approach me about issues, and there is the potential for tension when rents increase, or if the PM points out lack of care on tenants behalf, sob stories about not being able to pay on time, issues at eviction time etc.

An option I have considered is renting out the place privately with my dad handling it on my behalf - again, I don't have the time, nor the inclination to deal with it. He would do it for next to nothing, but I don't necessarily like the idea of having to find a good tenant in the first place. Also, they would then know I'm the landlord when they also see my dad going in to our place.

The easiest solution would seem to be to use a PM and pay full price for any maintenance costs that may arise (instead of dad on the cheap)? But even if I did this, would I be running the risk of the tenant still finding out I own the place eg. neighbours talking etc in which case I'm in the same position that I don't want to be? This is what I dearly want to avoid. I don't want to feel uncomfortable going in and out of my house if the neighbour has an issue and knows who I am.

Would love to hear ideas, opinions, and even stories from those who have been in the same situation and what issues have arisen.

 

[wylie]

You have basically answered your own question. You need to get it managed for all the reasons you have outlined. Your dad might let slip you own it, if you have kids or visitors and he is there, how do you stop them saying "Hi grandpa" or whatever.

Your neighbours need not know you buy it, but that would be pretty much impossible to hide, unless you drive away, dress up and pop on a wig, and drive back in a different car to do any renovations or stuff when you buy it .

It has rarely bothered me that tenants know where I live, but right next door is a little different.

A friend of mine's parents own the place next door to them but have it managed, and each six months, they watch the owners pack the two dogs (no pets allowed in the lease) into the car and take them somewhere while the inspection takes place . These tenants think they are soooo clever. I wonder how they would feel if they knew the owner was watching their every move.

 

[steveadl]

No one in my family would say anything, so that's not a problem. I'd have to use a regular handyman instead of my dad anyway as he comes to our place often, which would give up our game within a couple weeks. I'm just worried about them finding out another way, then I'm paying the PM for pretty much nothing and get all the hassles and tension.

This is all of course assuming I don't have to have my personal details as LL listed on the lease agreement? I know it usually is, but I don't think it has to be done that way?

hmmmm, we are planning to rip out the carpets and polish the floor boards - might have to jump over the side fence out the back to take a look at it. Got a bit of a nosy neighbour across the road who would no doubt blab to the tenants if he finds out.

 

[GoAnna!]

We let out the house nxet to us.

I self manage. I told them we lived next door. We agreed that any landlord / tenant issues would be dealt with in writing or via phone. When we see each other face-to-face we are just neighbours. We certainly don't knock on each othes doors.

They have been there since September last year and so far so good.

I enjoyed the process of selecting my own neighbour. They even e-mail when they have a party coming up.

I think that if you do things as per usual and use a PM then if they do approach you then just politely say " You'll have to speak to PM about that" I am sure they would soon get the message.

 

[Billy_Bokkie]

I suppose that we have a different management style with respect to investment properties. We self manage all of our properties including interstate and we provide mobile phone numbers, email addresses, personal address details and our home phone number to all our tenants. We know each tenant personally and we also know their kids and pets.

In the time that I have owned investment properties and self managed, the worst problem I have had in all those years is rent being paid a couple of days late (which we got a formal request from the tenant as they changed banks).

Personally, I think you are in the best property management position available as you live next door. If the tenants know you live next door you wont attract people who want to party to all hours or wreck the place as you are able to monitor it everyday.

I sometimes think that a majority of tenants complaints come form frustration with dealing with a property manager, rather than the person that owns the place. I am sure you have seen the SS property management forum and have an understanding of the frustrations that the property investors are having (and they pay for the service). I can only imagine what a tenant requesting something from a PM must feel.

I know some people may argue that IP's are a business and you need to manage them like one, but at the end of the day our business is people and where they live. You have your Father able to provide handyman services which is a great bonus. I could never in my life justify a real estate representative charging me up to 10% to manage something that I could do far better by going next door and saying hello.

This is only my opinion, but it has always worked for us so I thought I might share it.
Cheers,

Billy

 

[Andrew_A]

I'm in this situation.

Used a PM to find a tenant as I was getting the dregs apply privately, really shocked by the quality of applications. In the end they got some wonderful tenants and I paid them letting fees + 6 months of management before taking it over myself for a 10% pay increase... Would prefer to have it managed actually but can't really hide as the landlord being right next door, and will put it back to be managed when we move, but for the moment there's no point paying any more fees.

 

[Andrew_A]

Oh and the one thing I learnt about advertising privately is next time stick a sign out the front! I just did it online and in the courier mail and missed the tenant who is now there that walked past every day.

 

[redsquash]

If the place is in good condtion and maintained then the tenants wont compalin and the landlord thing will be a non issue.
For the reasons you suggested get a Pm. But i wouldnt.
Alternatively if the landord was next door how likely is it that wild parties or damage would occur knowing the lease may not be renewed.Alternstively an angry landlord isnt something I would want living next to me.
Most people might tend to behave better.

I think you are focusing too hard on this possible problem.
If you select appropriately you will avoid poor tenants.

I guess you want good tenants who will stay along time and be able to afford incresed rental payments without getting sob stories from people who cant afford to pay.
your dad can attend to repairs.
I know you dont want to manage but are the real problems you mention actually going to eventuate.
If I was renting from you I would want to keep my life private and not have a nosy landlord watching or interfering...................it works both ways.
So is the possible down side worth $2000 a year, evry year, in Pm and plumbers bills?

If things go wrong just be a pruck/prock
and the tenants will avoid you. you still have their bond and it is surprising how people will react to even a few dollars worth of incentive

 

[wylie]

Billy, that is exactly how we manage things too. We have had very little trouble in nearly 30 years of self managing. And Andrew, the sign out front also works wonders for us. We always put up a sign while we are renovating. It is amazing how many people come from the sign.

I really believe that tenants like dealing directly with me, rather than feeling like they are going cap in hand to a third party who has the power to deal with (or ignore) their request, which could take days to resolve. One phone call to me and it is sorted.

 

[skater]

Steve, we are in the same position, only the second house sits directly behind ours, on a battleaxe block. Each time we rent it out, out PM doesn't tell the new tenant that we own the front house, but they always find out. I still use a PM each & every time. We usually don't hear from the tenants as they know from the start that they are to deal through the PM. We are in the process of evicting the current one.

The downside to having an IP so close, is that you can see what goes on, but that can also be a blessing, depending on the tenant. If there are issues that need fixing & the PM has trouble contacting the tenant, I ring the PM & tell them, "OK, ring them now, they are at home",

 

[kathryn d]

You worry too much.

All of tenants know our home phone and mobile as they are written on our lease.
Only really worried about it a couple of times (as they were evicted by sheriff) but they were 100 kms away and didn't have a vehicle.
They will try to act better if they know you are watching.

If it doesn'twork this time, try using the PM the next.

They are probably more concerned than you.If you are going to be hassled with repairs, you are going to be paying a LOT more using a PM and a regular handyman.

Maybe you should hire your Dad and pay him accordingly?

 

[steveadl]

I'm in this situation.

Used a PM to find a tenant as I was getting the dregs apply privately, really shocked by the quality of applications. In the end they got some wonderful tenants and I paid them letting fees + 6 months of management before taking it over myself for a 10% pay increase... Would prefer to have it managed actually but can't really hide as the landlord being right next door, and will put it back to be managed when we move, but for the moment there's no point paying any more fees.

Hi all, really appreciate the feedback and stories. Having read these, I'm a bit more inclined to give private renting a go.

It's not so much I think there will necessarily be problems - but am realistic, so try and prepare myself for what may happen. But interesting to hear that most people who have done it find the tenants are actually better behaved when the LL is next door/known personally.

Ideally I'd probably like to have my dad manage it for us, but the main issue I can foresee with that is what Andrew outlined above - being able to find a suitable tenant. I could use a PM's letting service then self manage - would just have to hope they don't stick me with a less than great tenant simply because they won't have the hassle of dealing with them.

 

[steveadl]

You worry too much.

My fiancé tells me that all the time!

 

[Andrew_A]

Hi all, really appreciate the feedback and stories. Having read these, I'm a bit more inclined to give private renting a go.

It's not so much I think there will necessarily be problems - but am realistic, so try and prepare myself for what may happen. But interesting to hear that most people who have done it find the tenants are actually better behaved when the LL is next door/known personally.

Ideally I'd probably like to have my dad manage it for us, but the main issue I can foresee with that is what Andrew outlined above - being able to find a suitable tenant. I could use a PM's letting service then self manage - would just have to hope they don't stick me with a less than great tenant simply because they won't have the hassle of dealing with them.

Don't tell them you are planning to take it over, just tell them that you are living right next door and would like to be involved with the selection process.

I met the tenants before agreeing that they were a good choice, gave them a chance to view the property and me a chance to size them up. The PM's went through bank account details, all the checks etc that I wouldn't know how to do myself, also if the tenants turn out to be not the best then having a PM will be a welcome bit of distance between you.

Later on if you decide to change; just say thank you very much for your efforts but with the recent rate increases I will have to manage the property by myself from now on, wait the 30 day notice period and that's it. A good chance to try out the PM as well, I will be using mine should we decide to move, I was only ever going to take over self managing if the tenants were ok and they were more than that, quite impressive what they have done to the place since moving in (value added!)

I think the idea that most people are potentially good people and good tenants is true, and I was worried too much about being right next door as well, turned out great though.

Good luck!

 

[steveadl]

Thanks for the advice Andrew, very useful.