Buying a TENANTED PROPERTY
So, you’re purchasing a property, you’ve examined every possible avenue of the home – you’ve checked and rechecked the history of the property. You were happy with the result. You had a plumber look through the pipes, an electrician through the wires and a builder inspect the piles. Well, based on that, nothing could possibly go wrong, right?
The only possible thing you haven’t looked over is the tenants. The house is staying, the furniture isn’t going nowhere and what about the tenants? Those tenants are there to stay, you purchased the property with that knowledge. How well do you know them? Is it an emotional decision to retain them? Or alternatively, do we source new tenants?
Will this decision generate more stress for us as a property owner or will it relieve any problems arising in the future? When we buy a tenanted property, there are a few things we must take into consideration – let us jump into the possibility and decide whether it was the optimal decision with such a weighted investment.
Yes! The tenants are here to stay, there isn’t any worries as to finding new tenants, doing background checks or losing rent during that period – what a win! The investment is already generating money and that means we can start paying off the mortgage immediately. What’s more, you wouldn’t have to find a property management firm to find your tenants, of course this is a great start – your tenants are happy, you’re happy and the bank’s happy.
Well, with the pros, come the cons.
We have to admit, nine times out of ten, tenants are lovely and considerate to our properties, they even bring us presents during the Christmas season! These reliable ones are the individuals which fuel the rental market and give us hope for what’s to come – the entire experience is pleasant.
But, remember, those are the tenants that you’ve interviewed yourself; you know them, you know how they would respond to certain circumstances and what would happen if any damage or issues occurred on the property. Now, when buying a property and we retain the existing tenants; we don’t know them. We have no idea of their backgrounds, we haven’t affirmed that with a reference check nor a credit check. These are imperative steps in finding appropriate tenants for your rental. It is unknown to you if the last tenants were punctual in their rent payments or if they did no damage. These are the most crucial things when buying a rental property – when you undertake a management with Quinovic Wellington Regional Property Management Specialists, we ensure your tenants are the ones you desire. We don’t mess around.
As in all cases when we take over the property, we must inform our tenants of the alteration. If a tenant isn’t informed of the replacement landlord, how are they to know where to pay their rent – things such as contact details and all information pertaining to rent payments.
Ok, the property has changed ownership, therefore, the original landlord’s interest in the bond will pass to the new landlord. This means that the original landlord actually cannot make a claim of any bond after the settlement date. If the bond is held by the Ministry of Business, Innovation & Employment, both the original and new landlords must fill in a change of landlord/agent form.
Down to facts – If the new owner has agreed to purchase a tenanted property and the tenant is under a fixed term lease, by law the landlord can’t give notice to end the tenancy early. What happens is that the lease will continue. However, if the tenancy is under a periodic agreement, then the new landlord must provide at least 90 days’ written notice to end the tenancy.
New owners have the right to change property managers if they wish, but they must inform the tenant and update these details on the lease. If you’ve recently purchased a house and have considered changing property managers – we make it simple! Just click HERE!
As we know, if the increase is not within 180 days of the last increase, and they give the tenant 60 days written notice the new owner is entitled to raise the rent.
Let’s say we want to increase the rent, the landlord may ask the tenant to pay extra bond money based on the number of weeks’ bond charged in the tenancy agreement. Let’s take for example, we want to increase rent by $10 per week, the tenant pays 3 weeks’ rent as bond money, the landlord can ask for an extra $30 to be added to the bond. Extra bond money needs to be lodged with the rest of the bond, by completing a bond lodgement form – something we take care of here at Quinovic Wellington Regional Property Management Specialists.
So, now, we obviously know that tenanted properties can be a great first investment. If you’re just starting out in property investing and don’t want to be overwhelmed with tenant applications and selection, this is the perfect option for you. Getting an instant income and guaranteed rent until the end of the fixed term tenancy gets the investment off to a good start, and helps it on its way to becoming a successful investment property. If you are someone who is looking to purchase a rental property and have considered all of the possible options, this may be the one for you. Give us a call today to find out more about our property management possibilities.