After my current property managers have continually proved themselves more and more useless with every passing day. I have taken the plunge and have organised for a friend who is a Property manager to set up my properties to be self managed by myself. I was just enquiring if anyone knows if you can ask your tenants to pay weekly rather than fortnightly or monthly. I've always being big on having as much money in your offset to pay down your interest payments. I've done some calculations and with my current portfolio it would save me a fair amount of money getting the rent weekly.
Any help would be greatly appreciatedJamie MooreParticipant@jamie-mJoin Date: 2010Post Count: 5,069
If you're going to self manage you'll need to introduce yourself – ask them over a casual chat if it's ok if they set up a weekly debit….obviously don't point out that it's so you can save more cash.
Yeah i was thinking that with my higher rent properties it would even be worth offerring a couple of dollars less if they paid weekly. See how they respond i guessTaylorChangParticipant@scha9799Join Date: 2009Post Count: 234thecrestParticipant@thecrestJoin Date: 2004Post Count: 992
Suggest you get the ones onboard who are willing or for whom weekly rent really suits, before offering incentives.
The Residential Tenancies Act states that rent must be in advance at all times, but you can't default a tenant on rent until the sun sets on an unpaid day.
Also, they can pay you anyway they want, weekly, daily, fortnightly or every 13.5 days if they want, as long as there are no arrears, they have satisfied the Act.
However,, you can make set arrangements before starting a tenancy as part of your agreement, but remember some landlord wishes are not enforceable.
thecrestJamie MooreParticipant@jamie-mJoin Date: 2010Post Count: 5,069
Agree with Crest.
I wouldn't worry about incentives. Just ask them if it's ok to start paying weekly – for most it should be as easy as changing the direct debit they have set up from monthly to weekly.
JamieDerekMember@derekJoin Date: 2004Post Count: 3,544
They would probably prefer to make payments in line with their own pay cycle – will make things easier for their own budgetting. Worth the question tough.Scott No MatesParticipant@scott-no-matesJoin Date: 2005Post Count: 3,850
Your numbers are slightly skewiff but good for demonstrating your point:
$12 * 52 / .08 = $7800Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539
I agree with Jamie. There is no need to discount your product.
Remember that your rental yield dictates serviceability of subsequent loans (and as such how much you can borrow). Also, depending on the kind of building it is, the rental yield can dictate valuation and thus equity.
When interest rates were hovering between 6.5 and 7%, the bank serviceability rule seemed to go like this:
A $12 rental hike enables you to go and borrow another $7800. The equation went like this:
$12 x 0.08 / 52 = $7800.
Doesn't sound like much but when you have a few IPs it all adds up to a substantial amount.
Then depending on the building type (eg commercial building, or residential unit block) your valuation can be tied to yield on the 6.5% rule. eg:
$12 x 52 / 0.065 = $9600. So in essence by putting the rent up $12 you manufacture $9600 of capital growth. Or conversely, put the rent down and you have negative growth.
Bet you don't feel like offering discounts now hey!Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539CatalystParticipant@catalystJoin Date: 2008Post Count: 1,404
Have you actually worked out how much you will be saving? If you give a discount I think nothing.
So you get $500? a week early so you will be $500 ahead each week so you are saving $500 x 6%pa = $30???? WOOOHOOOO!!!!Scott No MatesParticipant@scott-no-matesJoin Date: 2005Post Count: 3,850JacM wrote:true, close enough for illustration tho. edited for preciseness
I am just a pedant
LOL no i would never give a discount unless they weren't willing to pay weekly. I should have written that in but yeah don't worry I'm not the discount giving type of guykong71286Participant@kong71286Join Date: 2009Post Count: 261
The last 2 weeks has been quite an interesting experience for me.
What I have learnt is that agreements should be made on paper, rather than made verbally, so that there is no misunderstanding from either side, and there is something to refer back to in an event of a dispute.