There is a well-known joke in the property management industry that occurs quite often at the end of a tenancy where a tenant states “What happened to my two weeks rent in advance that I paid when I moved into the property?” It is at this point when we have to take out our calendar and explain that “Yes you did pay two weeks’ in advance, but you used up this rent when you paid two weeks after moving in”.
As mentioned, we refer to this as an ongoing industry joke, but the tenant paying rent on time is no joke to us.
At this time of the month (when owners receive their rental statement) we can also receive telephone calls or emails asking ‘why is the tenant not two weeks in advance’? (Or a month in advance if that is the payment terms).
A Tenancy Agreement does outline the terms and conditions of the tenancy and the frequency of rental payments. However, the reality is the tenant does not have to pay their rent 2 weeks or a month in advance. It doesn’t even have to be one week in advance, just up-to-date.
As a managing agent when communicating with the tenant we do highlight the terms of payment in accordance with the Agreement, but the tenant is not considered in breach, until they fall behind in the rent, which is when you can issue a breach notice letter and if not remedied, a termination notice to vacate.
Unfortunately, in these economic times and with the lack of affordable housing across the nation we are also finding that some Tribunal Courts are becoming lenient with tenants allowing them to continue residing at the property with a performance order and payment plans for the outstanding rent.
It is our focus and priority to ensure that the tenants’ rent is paid on time.
Are you investing in property with planning, purpose and direction?
Property investing is about making money. There are short-term returns and long-term returns.
Long-term returns relate to capital gains achieved over a long term and short-term returns are the profits you make from the rent less expenses.
The obvious way to increase short-term returns is to minimise expenses and obtain the highest possible rent achievable.
Landlords are often afraid to raise the rent on their tenants for fear that they will move out. But the reality is – rising rents is part of a healthy rental market and tenants don’t expect to pay the same amount for their home, year after year, after year.
There are three smart investing tips for increasing the rent.
1. Gather evidence: It is important to know what the market rent is. How does the tenant’s current rent compare to other properties that are ‘available for rent’. Don’t compare to friends and families rent of similar properties, as the ‘market rent’ is what is achievable right now if the property was to become vacant. The rent achievable can fluctuate with supply and demand and at different times of the year.
2. Offer a discount: If you have a great long-term tenant and you want to reward them, we can let the tenant know that you want to offer a rental increase discount. Our evidence may suggest that the market rent is $440 when the tenant’s current rent is $400. Instead of a $40 per week increase we could state that the landlord has requested a $20 per week increase, being a $20 discount.
3. Implement regular increases: This is where some landlords can get it wrong. They have long-term tenants and leave the rent unchanged throughout the tenancy, missing out on putting more investment dollars in the bank. Tenants understand (while they might not like it) that rents increase. The tenants will also be comparing their property to other rentals that are ‘available for rent’ in times of rent increases. Rent increases (market rent reviews) should take place at each tenancy change or a minimum of one per annum.