Fellow Landlords, Need Your Opinion - Should We Stop Leasing Our Property out Due to Risk of Non-Payment / Time Wasting

Bryanalves on 20/04/2020 - 09:52
Last edited 22/04/2020 - 01:42

Can fellow landlords please help me out with your opinion and your experience?

My parents' investment property's lease has just expired. And I'm doing some research for them to see if they should rent it out again.

With the new laws coming in there are 2 issues.

1) Without the ability to evict, there is nothing we can do if the tenants treat the property bad or stops paying rent.

2) Not clear on this but apparently if your tenants want to reduce rents there's a complecated process that that will use alot of our time which we don't want to learn what it is (we just want to rent the property out at a price and get that price without any hoop jumping or applying or things with the government). Tldr: can't just say no and move on.

Seems like too much risks and processes to just get normal money for the property.

Other landlords, have you also head of renting your place out due to all the issues? Or you guys wearing the risk?

We are leaning to just not bother.

Poll Options

  • 6
    Lease property out
  • 9
    Don't lease property out
Home & Garden

Comments

  • Unorthodox on 20/04/2020 - 09:56
    +7

    Option 1: not renting it out

    Zero rent
    Shouldn't claim deductions as a rental property as you're not longer treating it as such.

    Vs

    Option 2: rent it out

    Get some money vs effort in finding a decent tenant

    Most tenants would probably be able to provide a floor amount with government support.

    • brendanm on 20/04/2020 - 10:04

      Can you list the property for rent at a ridiculous price, and claim the interest as a deduction still?

      • [Deactivated] on 20/04/2020 - 11:08

        Not really. Ato will look at it and say you werent seriously intending to rent it out.

        • Bryanalves on 20/04/2020 - 12:38
          +4

          Slightly above market rate is ok because i'm factoring in the increase risk of tenants default. This is reasonable.

      • whooah1979 on 20/04/2020 - 13:08
        +5

        List the property privately, accept applications and reject them on reasonable grounds.

        • brendanm on 20/04/2020 - 14:33
          +1

          This is a good one. I'm definately in the camp of "probably wouldn't risk it" to rent it out again right now.

      • fishing on 21/04/2020 - 07:34
        +1

        It's only tax deductible IF You pay tax

    • Bryanalves on 20/04/2020 - 10:10

      Option 1: Thanks for your input…. i guess we can list it out at slightly above market price in order to still have the intention to rent it out and make our deductions for tax purposes legitimate.

      Option 2: the issue is we are time poor and don't want to do the extra work (applying for some support scheme, reading the tenants application for reduced rent, communicating with the tenants and listen to stories, go through their evidence/pay slips, communication with governments' orders/letters.

      Has anyone gone through this process with your tenants doing this to you? Sounds like too much trouble.

      • EightImmortals on 20/04/2020 - 10:15
        +9

        That is what your rental agent is for.

      • smalltime0 on 20/04/2020 - 11:28
        +8

        " i guess we can list it out at slightly above market price in order to still have the intention to rent it out and make our deductions for tax purposes legitimate"
        Err, no. You're not intending to rent it out, you clearly said so.

        You don't have to rent it to any tenant that comes by. You can keep rejecting them.
        Just wait for a tenant that has an essential job and has a good rental history and rent it to them.
        If you got a shitty tenant under normal circumstances, it could take months to evict them anyway.

  • horice on 20/04/2020 - 09:56
    +32

    Oh God another one

    Perhaps they shouldn't be in the Business of LandLording

    • one man clan on 20/04/2020 - 11:30
      +19

      Obviously you didn't get the memo about investment properties - there is no risk and the value only ever goes up.

    • brendanm on 20/04/2020 - 14:35
      -5

      Dumb comment. As with absolutely any investment, you want to limit your risk. Why should it be any different here?

      • Chandler on 21/04/2020 - 09:41

        horice does have a point though.

        To (in a bad light) summarise OPs post:

        • Parents have investment property in which the existing tenant is leaving
        • Want to keep rent coming in, but:
          • Don't want to put in effort currently involved
          • Don't want to pay someone to put in effort currently involved

        It's like me bemoaning wanting to be paid but not wanting to do the work or pay someone else to do it for me.

        • brendanm on 21/04/2020 - 17:44

          Op hasn't said anything about still wanting to get paid that I can see. Seems like he just doesn't want the hassle of getting someone in, the dealing with rent reduction, eviction process etc.

  • Diji1 on 20/04/2020 - 10:00
    +2

    The private sector fails again.

    • [Deactivated] on 20/04/2020 - 10:22
      +14

      Yes. Government should seize all investment properties and homes and allocate living quarters to everyone equally.

      • smalltime0 on 20/04/2020 - 11:29
        +2

        Tenants of the world, unite! You literally have nothing to lose.

        • TheRealCher on 21/04/2020 - 07:44

          Read the memos: property is theft!

      • ozhunter on 20/04/2020 - 14:08
        +2

        Can I call dibs on a cbd apartment?

        • [Deactivated] on 20/04/2020 - 14:10
          +2

          Only if you are a comrade for the greater good.

        • brendanm on 20/04/2020 - 14:36
          +1

          I want a large acreage property with a pool thanks. This plans sounds pretty good!

  • Seraphin7 on 20/04/2020 - 10:01
    +12

    Notwithstanding the issues of deductability mentioned above, I too would be tending towards not leasing in the current environment. The risk profile at the moment appears very high for the return that you might get over the near term. If you don't need the cash, I think I'd exit the market for 3 months and see where you find yourself then.

  • Soluble on 20/04/2020 - 10:01
    +11

    Rent it out to people still working that provide evidence of their ability to pay? As the landlord you pick the tenants.

    • [Deactivated] on 20/04/2020 - 10:23
      +3

      But in the current scenario, if you pick poorly, you have no recourse.

      The ability to pick hasn't changed. The ability to evict is practically gone.

    • Bryanalves on 20/04/2020 - 12:41

      Im worried that good tenants will loose their jobs and become bad tenants.

      • EightImmortals on 20/04/2020 - 14:03
        +1

        Well they would still be good tenants (i.e. they look after the place and do the lawns etc) it just means they might not be able to pay full rent until the government lets us all out again. As an ex landlord I would happily take a paycut out of necessity to keep good tenants in occupancy. But as you were contemplating not renting it out at all then sure some rent is better than no rent (temporarily)?

  • holdenmg on 20/04/2020 - 10:09
    +4

    Plan C

    Sell?

  • burningrage on 20/04/2020 - 10:10

    I think you should continue to advertise and call the shots on tenants.

    At the very least, your property expenses will continue to be tax deductible because of your property being available for lease.

    That is still better than nothing at all but yes, I agree the environment at the moment means too much hassle for very little gain until we have a change of (State) Government and relax the (so many absurd) regulations including one in QLD where tenants can just not pay rent (before being recanted).

    Way too many regulation.

  • toniyellow on 20/04/2020 - 10:16
    +3

    there is nothing we can do if the tenants treat the property bad

    the moratorium is only a pause on evictions for not paying rent whilst in financial distress
    https://www.pm.gov.au/media/national-cabinet-statement

    You can evict for other reasons such as "treat the property bad"

  • [Deactivated] on 20/04/2020 - 10:21
    +11

    I have decided not to lease out.

    Personally I have not had bad tenants but I have helped cleanup a place after bad tenants failed to pay rent and sought vendetta against the LL for asking for rent.

    The nerve of the LL. Asking for rent.

    Anyway, we had to clean the place with a shovel and the LL spent months chasing insurance and stressing over the responses.

    I mean, anyone could potentially be a bad tenant but in this economy, the chances are higher. Far higher.

  • Gronk on 20/04/2020 - 10:24

    Does your insurance still cover you if the property if vacant?

  • godofpizza on 20/04/2020 - 10:27

    talk to you PM about your concerns. Or are you renting out without one?

    • giftcardinspector on 21/04/2020 - 08:00
      +2

      Scomo won't answer my calls

      • [Deactivated] on 21/04/2020 - 12:42

        Have you tried Scotty from Marketing?

      • DARK KHAOS on 21/04/2020 - 13:02

        PM = Property Manager

  • dogboy on 20/04/2020 - 10:54

    Just turn it into a grow house and make a killing. All the people stuck at home now and out of work, the demand is going through the roof!

    • brendanm on 20/04/2020 - 14:39

      Meth lab would be better, all the junkies are now getting payed double what they were.

  • DingoBilly on 20/04/2020 - 10:57
    +7

    I don't really understand the question. It's basically do nothing and get no money, or do something and get some money.

    I'd be happy to do something and get some money. It's unlikely that someone signing a contract for X amount rent will immediately default/not pay rent.

    Of course it depends a bit on the property itself. For instance, if it's in a bad suburb/in pretty bad shape then you'll likely attract not great tenants and I may not rent it out in that case. But if it's in in a good location and the property itself is nice, you'd likely attract good tenants that shouldn't have issue paying rent.

    For reference, I have a few properties and they're all rented out/have had zero issues over the last 5 years including now. But they are in nicer suburbs and I did focus on getting tenants that are unlikely to be problematic (public servants/medical workers).

  • tsunamisurfer on 20/04/2020 - 11:02
    +1

    I think it is still worth looking for a tenant.

    But one has to be very selective.
    - Well paying jobs.
    - Lots of savings.
    - Willing to pay many months in advance (I have to check whether this is allowed).
    - No one on casual / low pay / gig economy work.
    - No one on welfare.
    - No one with single income and multiple children.

    If the above is not satisfied, I'm happy to leave vacant. I'd rather have no income than the thought of someone living in there and refusing to pay because they can.

    • JimB on 20/04/2020 - 11:56
      +1
      • Willing to pay many months in advance (I have to check whether this is allowed).

      I don't think you can formally ask but of course the tenants can 'voluntarily' pay 6 months, 1 year, in advance.

      • No one with single income and multiple children.'

      single income with multiple children are likely to get quite a bit of welfare. I'm a bit of a sucker, and have chosen tenants that weren't 'perfect' like the above.. it's worked out well for me as they seem appreciative that I've given them the chance.

    • netjock on 21/04/2020 - 12:38

      If you can find someone with well paying job and lots of savings the rest won't apply. Obviously!

      • No one on casual / low pay / gig economy work.

      Unless you are a bank or crypto robber

      • No one on welfare.

      well paid, lots of savings and on welfare please give me their number on how they do it

      • No one with single income and multiple children.

      Plenty of middle aged people divorced with one child or more that might be living with them or ex. But if they are well paid with lots of savings why rent except for short term. If they are well paid with lots of saving you don't care if they are single with 20 kids. You want to know how they can do it (so you can get well paid with only 2 kids)

    • gorgrond on 21/04/2020 - 15:33

      I have multiple children and single income. I also don't have a lot of savings for the simple fact that I am knew to Australia and came from somewhere where the money is worth a LOT less.

      By these standards, my family and me would be living in the streets. And still, I was never late with rent, even a single day.

  • ThithLord on 20/04/2020 - 11:34
    +5

    Willing to pay many months in advance (I have to check whether this is allowed).

    lol get stuffed.

    • No one on casual / low pay / gig economy work.
    • No one on welfare.
    • No one with single income and multiple children.

    Crikey, no wonder LLs are getting a bad rep on here.

    • Bryanalves on 20/04/2020 - 12:49
      -2

      Its all about decreasing risk on investment. And a doctor is likely to Pay rent, have money, comply with the law, not trash your place than a centerlink user.

      Theres exceptions but without being able to see the future, logic is all we can go by.

      • tsunamisurfer on 20/04/2020 - 13:05
        +1

        It's important to note that this is not a critique on one's character.

        A single income with 6 kids is not necessarily a person of bad character.

        She represents a risk especially in this environment.

        People who have stable jobs are less risky and not necessarily of better character.

        • gottacatchemall on 20/04/2020 - 13:27
          -3

          Exactly. When we first rented out it was a white single mother and she was a nightmare and regularly late on rent. Now we just rent to couples from China (I'm ethnically chinese) and have 0 issues. Doesn't mean the single mother is a bad person or vice versa all about risk.

        • fishing on 21/04/2020 - 07:31

          Wow!!! Sexist much??

        • gorgrond on 21/04/2020 - 15:30

          Does not matter. If all LLs think like this, then a family is supposed to live on the streets?

          I did not use to think like this, but these discussions in OzBargain are making me realise how toxic the current market is. Investment property benefits are generating a huge imbalance, IMO.

  • duluxe2000 on 20/04/2020 - 12:02

    Agree with being selective and willing to leave it vacant/reduce rent to select the right candidate.

    Realistically, the property will sit empty until you can find the right candidates (if you ever find one).

  • narbe on 20/04/2020 - 12:07
    +6

    Recently rented a property. Got 25% off for doing 8 month advance rent.

    Sign of the times. I'm sure I won't be the only one looking for a deal.

    • tsunamisurfer on 20/04/2020 - 12:54

      I'd be more than happy with a 25% reduction for an 8 months prepayment.

      That's a win / win.

      • Choc0 on 20/04/2020 - 13:20

        great outcome. Certainty for both parties. Can be very equivalent to a full 8 months if you play your cards right and stay within the tax laws.

  • Choc0 on 20/04/2020 - 13:18

    50% of the workforce haven't had their incomes impacted. That's still a wide net to be casting, and that's not thinking of high income renters with lower incomes who aren't materially impacted, relative to the price of your rental.

    You pay a property manager to assess applications and get the best possible tenants in. Ultimately it's your decision on what level of risk to accept.

    Alternately, if you're renting yourself, you can break your lease with no penalty and occupy your own property, so that at least it's giving you some value.

    Good luck.

  • wallet72 on 20/04/2020 - 13:24
    +1

    Where is the rental? I'm looking for a new place and I'm a stable tenant (only moving because the house is about to be condemned - old house, rotted wood, termites, asbestos)

  • abc123z on 20/04/2020 - 16:02
    +3

    Is the property in Vic like your profile? The laws haven't been passed yet in Vic and there isn't a huge amount of detail on the proposals.

    If it is empty I would be keeping it empty for a few weeks until the legislation is passed, and it is clear how everything is going to actually work in practice. Then make the decision.

  • [Deactivated] on 20/04/2020 - 18:28
    +6

    My head says, "No effing way!" Not after reading some of those entitled tenants' comments around here. But my heart, my heart feels for all those who are genuinely struggling at this time,through no fault of their own. It is hard to morally justify leaving my property untenanted knowing that there's a family out there who could really use a break.

    That being said, both of my IPs are tenanted: one by a good mate and his kids, and we would never kick him out no matter what, and the other by a medical professional. So I don't have to make that decision.

    • Bryanalves on 21/04/2020 - 01:13

      How is leaving a property empty more morally bad during this corona period than any other time? People need a place to stay regardless of corona or not.

      • [Deactivated] on 21/04/2020 - 02:08
        +6

        Ideally, no one should ever have to be homeless or sleep rough in a wealthy country like Australia. Yet, on any given night, 1 in 200 Australian are sleeping on the streets.
        Yes, I normally find it morally reprehensible that someone would choose to leave their property untenanted. I do have to admit, however, that my stance has changed considerably after reading some of the LL-haters'/ stick-it-to-the-LL comments on ozb.

        How is leaving a property empty more morally bad during this corona period than any other time?

        Because we're in the middle of a pandemic. Because we're in lockdown. Because people are scared and they need somewhere safe to live. Because not everyone who has been affected by COVID is eligible for the pension, jobkeeper or jobseeker assistance. But they are eligible for the $2000 rent relief. Because no one is as entitled as a keyboard warrior-tenant on ozb in real life.

  • plugmeister on 21/04/2020 - 07:52
    +4

    Wow, what we basically have here is a 'holier than thou' landlord thinking that all tenants are scum. That is why I don't rent in this country. Maybe just sell the house and 'invest' elsewhere!

    • ozhunter on 21/04/2020 - 08:32

      When you look at other threads, some tenants are scum. So due to the moratorium, it's good to be cautious.

      • plugmeister on 21/04/2020 - 13:07

        Works both ways. If a tenant is scum, just don't rent the property to them seems the simplest solution. Agents don't help much so in the current environment just take a more active role I guess….

        • ozhunter on 21/04/2020 - 18:02

          Except you don't know for sure if they are scum until you are renting to them and find out later.

  • ozboygsl on 21/04/2020 - 08:32

    what are these new laws?

  • BigBirdy on 21/04/2020 - 09:13
    -2

    Tenancy laws are state laws. The intent of any new law here, if and when any get written and passed, is to prevent landlords evicting a tenant over an inability to keep up rent payment due to coronavirus affecting their income. An inability to pay due to reasons outside the tenants control should never have been a sufficient reason to evict, rather a trigger to negotiate a workable compromise. It may well (& should) become a permanent feature of tenancies. This in no way affects a landlords ability to evict a tenant refusing to pay rent, or damaging a property. Those landlords who think they are entitled to behave as lords of their manor need to rethink their attitude. When you rent out a property, that property becomes someone else’s home, not yours. It is your investment, and investments come with downsides. Don’t treat your tenants as commodities.

    • [Deactivated] on 21/04/2020 - 12:45

      When you rent out a property (…)It is your investment, and investments come with downsides. Don’t treat your tenants as commodities.

      So it is an investment but don't treat it as one?🤨

      • BigBirdy on 22/04/2020 - 08:09
        -1

        What?

  • saltypete on 21/04/2020 - 09:44
    +1

    This is not all going to go away soon folks, and we have to adapt to the new normal. If you want to continue to run a rental property you will need to really focus on getting your property to be in good condition to attract good tenants, then be really picky about them. As others have said, application stage is probably your only chance to get a good tenant and some time and patience here is well spent.
    If your good tenant has difficulties you will need to be prepared to go through whatever process with them and put the time into doing it right.
    There are wonderful people in this world, many choose to rent.

    I have had some crap tenants, never again (I hope). Cleaning up and repairing their sh@t is no fun. Insurance is a farce. If crap tenants end up on the street, my pity level is low I have to say.

    • Ginag on 21/04/2020 - 14:54

      Hi Brian
      You should advertise to lease.
      We had advertised our property one week prior to covid restrictions. We had people that were interested and made an application and we accepted. Before they moved in they lost their jobs so didn't move in.
      This was mid March. As there are no open for inspection and people have lost their jobs it is still vacant more than five to six weeks later. The place is still advertised so you might find that you will get no one to inspect and it may not be leased so I would recommend you advertise it. It is very likely that you won't find anyone.
      Also if you are in Victoria, you are entitled to get 25% of your land tax back if you have trouble finding tenants and have genuinely advertised for lease. See the state revenue website. I think it's the same in NSW and Qld.

  • LFO on 21/04/2020 - 19:27

    An "investment" property is an investment.

    People invest to obtain a profit.

    Profit with properties come via leasing out or selling at a price higher to cover expenses and loss of income.

    If leasing out is a no go, selling is the go.

    Otherwise wait for an even higher selling price.

    OP: Is the "investment" property fully paid or it has a mortgage?
    That should help to decide to sell and end debt (mortgage) or wait, hold on and sell when convenient.

    • Bryanalves on 21/04/2020 - 20:32

      Its mortgaged but thinking of holding…. with the ban on inspections and auctions the price for selling wont be too good.

      • LFO on 23/04/2020 - 21:08

        On line auctions and inspections are, apparently, very popular and very much accepted by potential buyers.

        Probably not your case but someone bought (and another one sold it) a monster palatial $40mill (40? 48?) property after a 30 minutes FaceTime "inspection".
        Meaning the tech is there and in very much in use.

        If it is worth it and the price is right it will sell fast.

  • [Deactivated] on 22/04/2020 - 00:30

    Op, this post could use a poll. Could you add one, pls?

    • Bryanalves on 22/04/2020 - 01:43
      +1

      Ok done

      • plugmeister on 22/04/2020 - 09:25

        Also need to add a "Sell the property" option :)

  • plugmeister on 22/04/2020 - 09:25

    In reply to @ozhunter, from experience, it is much easier if you don't rely on an agent and actually take a more hands on approach to 'weed out' those 'scum'. I also do admit, that in this current environment it might be hard to know that they may not be able to pay that lucrative rent (with that 1% yield) at some point in time, but from my experience Australian landlords care more about carpet cleaning and minor scratches on the surfaces of their glorious investments, because that property is going to make them rich by sitting on their ar$e$ and patiently waiting for those tax reduced capital gains to flow, yeah baby! Let that equity flow! <SARC>I'm also sure that it is common knowledge that property doubles every 7 years, guaranteed!</SARC> It's so easy to make money with IPs and also easy money with all that Government tax support built in! Australian Property, winning again!

    • LFO on 23/04/2020 - 21:18
      +1

      it is much easier if you don't rely on an agent and actually take a more hands on approach

      That is not my experience.

      Professional property managers have more experience than most of us and I will avoid at any cost to get personally involved with tenants: what they do, don't do, might do, their pain, their joy, their life!
      Sorry, too bloody personal!!

      I want a faceless entity paying rent

      I do not want to know is a human being just like me but wanting/using the property I have.

      TMI - Too much information!!

      • Bryanalves on 23/04/2020 - 22:19

        I get what you mean, i feel the same. Its like i like to eat beef/chicken etc. But dont wana see them get killed.

        I want my rent monies but dont wana see families not able to eat cos using the jobseeker to pay me.

        • LFO on 24/04/2020 - 18:25
          +1

          It is not just ignoring their potential or perceived suffering. Is a business transaction not a social interaction.

          A lot of people renting DO have money.
          Perhaps Mum&Dad money, selecting to share a superbly good house with absolutely no responsibility other than rent!
          Perhaps even owning a dwelling as well but 3,000 or 2,000km away!!
          Or perhaps in another suburb, but without good transport, without good roads, without good policing (safety), perhaps unfinished, perhaps, who knows?
          They might greatly treasure that asset for their future but still need (wish? want?) to live where they actually rent because of school, work, friends, social status, lifestyle, health, property quality and amenities, whatever.

          That is the part I don't want to know about it. I am not rejecting them, I am busy with my own life. It is my private life as much as it is their private life.

      • plugmeister on 24/04/2020 - 10:45

        Professional property managers usually have a high turn over of junior staff who have no idea what is going on with a property. Those professional property managers are working on a business model that involves maximising commission while doing the least amount of work possible and pushing all blame on tenants (and vice versa should anything need fixing). TMI! What you get is TMI when you trust a property manager then finally after 10 years get to see the state of your property!

        • LFO on 24/04/2020 - 18:26

          OK, all I can add is that is not my experience.

  • slow on 24/04/2020 - 10:59
    +1

    I have a property for rent at the moment at market rates and am getting a lot of enquiries from tire kickers - people who are currently renting but thinking they can take advantage of the situation and get something cheaper, so offering much below the advertised rent.

    Other properties in the area are renting for market rates, so whilst I am happy to go down a bit I am not desperate and happy to wait for the right applicant

    • LFO on 24/04/2020 - 18:30
      +1

      YES!!
      Try selling a high value vehicle as well!
      The first question is "why are you selling?" … how desperate are you? is what they mean to ask.

      You are correct. Just stay cool and rent (or sell) when you decide so.

  • Trying2SaveABuck on 25/04/2020 - 00:43

    If you can Air BNB it until this ban in evictions is lifted

    • Bryanalves on 25/04/2020 - 01:25

      Im in suburbs hard to find airbnb people

  • MasterScythe on 28/04/2020 - 11:26

    We rent.

    Basically, no money is worse than little money.

    We make sure to lease ourselves, not use an agent, so we can inspect the people.

    We are currently charging $100 per person, with a rolling no lock in lease, and the knowledge it'll go up once the virus is over

    Even on basic jobseeker, everyone can afford $100, and its better than paying rates for no income.

    Currently rented to a bunch of 'gamers' who spend most of their time running DND games or online.

    We advertised as "geeks wanted" and "no drugs, and non drinkers preferred", basically advertised our 3 units like we were renting a room in a share house.

    No damage, no parties, at worst they could vacuum more, but eh, carpets old.

    • Bryanalves on 28/04/2020 - 15:55

      Doritos and mountain dew? What about pizza boxes?

      • MasterScythe on 28/04/2020 - 19:51

        Yeah, pizza boxes usually fill the recycling LONG before collection week.

        Gonna order another bin.

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