Your cash flow is in your tenants’ hands. Learn how to make sure it doesn’t stay there.

In real estate, there are two important things to focus on: capital growth and cash flow. While the former mostly happens in a passive way, it’s your job to secure the latter. A seasoned investor will tell you that this is often a challenging task.

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The wrong tenants can deprive you of the cash flow needed to fund your lifestyle, and possibly future investments.

And this is only the beginning of issues bad tenants can cause…

They might damage your property, disturb the neighbours, and treat you with complete disrespect.

Just ask Casey Fleming, who had all of this happen to him.

He owns a fourplex, and one of his tenants abused his other tenants, trashed the place, and was consistently late on the rent. Fleming had to spend thousands of dollars on cleaning and repairs before he could find new tenants.

But the nightmare wasn’t over. He went to show the place to potential new tenants, only to find the previous tenants had broken into it. They forcefully moved in and refused to leave. It wasn’t until the police intervened that he was able to get rid of them.

The sad thing is that there are many such stories. Tenants who don’t pay rent on time, or not at all, are among the most common. Let’s take a look at some of the best tips for making sure this doesn’t happen to you.

1. Discuss the Reasons Behind Latency

You’ll be glad to know that there are laws in Australia supporting law-abiding landlords who have problematic tenants. But first we should discuss a less-hostile approach. In many cases you won’t have to bring the law into it, as open communication can solve the problem.

Wealth for Life shortfall
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For example, your tenant might have trouble making the rent because of temporary financial problems. Ideally, you’d take a proactive approach and make sure this doesn’t happen in the first place.

If it does, see if you can work out a payment schedule both sides will be comfortable with. An agreement based on mutual respect can go a long way towards securing a long-term tenant who won’t cause trouble. You’ll need good tenants for the stability they provide.

So, talk to the tenant and see if a temporary shortfall is the reason behind the late repayments. If so, see if you can restructure the deal.

2. Send Notices

If talking didn’t work, you should start exploring more formal approaches. The simplest one to start off with would be a breach notice. If you can’t come to an agreement with the tenant, you’ll have to take a firmer approach.

A formal notice will let the tenant know that they need to take the rent more seriously. In addition, you can charge a penalty for any missed payments, which should motivate the tenant to prioritise the rent. Again, it’s best to be proactive and set this up in the lease agreement so you can avoid trouble down the road.

If nothing changes after the first notice, you should send another one asking the tenant to vacate your property. The grace period for a tenant to leave differs from location to location, so you’ll have to look into it for your area. If you’re not compliant with regulations, the tenant can challenge it in court. This can stretch out the eviction process, which means your property’s not generating any income for a longer period of time.

3. Report Rent Payment History

If you haven’t already, you should sign up to report rent payment history to the credit bureau. This can be a powerful incentive for your tenants to pay rent on time. Just like you want to keep your credit score spotless, so does your tenant.

Wealth for Life reward tenants
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Of course, the first thing you should do is to let the tenant know you’ll be reporting their rent payment. In many cases, this alone should get them to pay you on time. If not, keep your word and report any late payments. If this doesn’t get them to pay, you might have to resort to more hostile measures.

You can also reward tenants who pay on time. Some people respond better to incentives than punishments. Some landlords offer a token discount for on-time payments. But you may only have to promise to report their timely payments, which will make it easier for them to rent another place in the future.

4. Take the Tenant to Court

If none of the above worked out and you’re unable to evict the tenant on your own, you’ll have to go with a court order. You can submit an application to the relevant authority for a tribunal or court hearing.

With a warrant of possession, you should be able to evict the tenant immediately. However, this process might not go smoothly every time. Depending on your locality, there might be laws and regulations that favour tenants over landlords, or the other way around.

For example, if your property is in Victoria, the police will accompany you to the place and issue the warrant directly. In most cases, this will be enough to get the tenant out. If not, you can turn to a bailiff or sheriff to forcefully remove them.

5. Change the Locks

If nothing seems to work, this step should be your last resort. As soon as the tenant receives an eviction order or warrant of possession, you have the right to change the locks.

Wealth for Life tenants
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In case they’re not there when you take over the property, it’s your obligation to store their belongings safely. You must keep them for a certain period of time as dictated by local regulations. After that period, your obligation to the tenant goes away.

Once again, this time frame varies by state and local jurisdiction. You can turn to the Consumer Affairs Department or ask the local Real Estate Institute for help.

6. Hire a Good Property Manager

As you can see, you have access to some aggressive measures as dictated by law. There shouldn’t be a need for them if you don’t have tenant troubles.

If this all sounds like something you don’t want to bother with, engaging the services of an expert is your safest bet. They should be familiar with the situations that may arise and what to do about them. Although you have to pay for these services, many property investors agree that it’s worth it for the peace of mind.

Instead of trying to handle it all on your own, consider asking for a helping hand. It can save you a lot of headaches and allow you to focus on the more important aspects of property investing.

Establish Control

Luckily, you have all the tools needed to make sure your tenants don’t pull a fast one on you. If you feel like your cash flow is in danger, one of the above steps should take care of it.

Remember that you should be able to reason with most tenants, so try to talk to them with respect. But if this doesn’t do the trick, take advantage of the many laws that protect landlords who are in the right.

And if you need help, feel free to turn to an expert. They can save you a lot of time and energy – and often money – in these cases.

For more information on how to handle your tenants the right way, reach out to us.

Your cash flow is in your tenants’ hands. Learn how to make sure it doesn’t stay there.

In real estate, there are two important things to focus on: capital growth and cash flow. While the former mostly happens in a passive way, it’s your job to secure the latter. A seasoned investor will tell you that this is often a challenging task.

Wealth for Life Mutual trust
  • Facebook
  • Twitter
  • Google+
  • Pinterest
  • Gmail
  • LinkedIn

The wrong tenants can deprive you of the cash flow needed to fund your lifestyle, and possibly future investments.

And this is only the beginning of issues bad tenants can cause…

They might damage your property, disturb the neighbours, and treat you with complete disrespect.

Just ask Casey Fleming, who had all of this happen to him.

He owns a fourplex, and one of his tenants abused his other tenants, trashed the place, and was consistently late on the rent. Fleming had to spend thousands of dollars on cleaning and repairs before he could find new tenants.

But the nightmare wasn’t over. He went to show the place to potential new tenants, only to find the previous tenants had broken into it. They forcefully moved in and refused to leave. It wasn’t until the police intervened that he was able to get rid of them.

The sad thing is that there are many such stories. Tenants who don’t pay rent on time, or not at all, are among the most common. Let’s take a look at some of the best tips for making sure this doesn’t happen to you.

1. Discuss the Reasons Behind Latency

You’ll be glad to know that there are laws in Australia supporting law-abiding landlords who have problematic tenants. But first we should discuss a less-hostile approach. In many cases you won’t have to bring the law into it, as open communication can solve the problem.

Wealth for Life shortfall
  • Facebook
  • Twitter
  • Google+
  • Pinterest
  • Gmail
  • LinkedIn

For example, your tenant might have trouble making the rent because of temporary financial problems. Ideally, you’d take a proactive approach and make sure this doesn’t happen in the first place.

If it does, see if you can work out a payment schedule both sides will be comfortable with. An agreement based on mutual respect can go a long way towards securing a long-term tenant who won’t cause trouble. You’ll need good tenants for the stability they provide.

So, talk to the tenant and see if a temporary shortfall is the reason behind the late repayments. If so, see if you can restructure the deal.

2. Send Notices

If talking didn’t work, you should start exploring more formal approaches. The simplest one to start off with would be a breach notice. If you can’t come to an agreement with the tenant, you’ll have to take a firmer approach.

A formal notice will let the tenant know that they need to take the rent more seriously. In addition, you can charge a penalty for any missed payments, which should motivate the tenant to prioritise the rent. Again, it’s best to be proactive and set this up in the lease agreement so you can avoid trouble down the road.

If nothing changes after the first notice, you should send another one asking the tenant to vacate your property. The grace period for a tenant to leave differs from location to location, so you’ll have to look into it for your area. If you’re not compliant with regulations, the tenant can challenge it in court. This can stretch out the eviction process, which means your property’s not generating any income for a longer period of time.

3. Report Rent Payment History

If you haven’t already, you should sign up to report rent payment history to the credit bureau. This can be a powerful incentive for your tenants to pay rent on time. Just like you want to keep your credit score spotless, so does your tenant.

Wealth for Life reward tenants
  • Facebook
  • Twitter
  • Google+
  • Pinterest
  • Gmail
  • LinkedIn

Of course, the first thing you should do is to let the tenant know you’ll be reporting their rent payment. In many cases, this alone should get them to pay you on time. If not, keep your word and report any late payments. If this doesn’t get them to pay, you might have to resort to more hostile measures.

You can also reward tenants who pay on time. Some people respond better to incentives than punishments. Some landlords offer a token discount for on-time payments. But you may only have to promise to report their timely payments, which will make it easier for them to rent another place in the future.

4. Take the Tenant to Court

If none of the above worked out and you’re unable to evict the tenant on your own, you’ll have to go with a court order. You can submit an application to the relevant authority for a tribunal or court hearing.

With a warrant of possession, you should be able to evict the tenant immediately. However, this process might not go smoothly every time. Depending on your locality, there might be laws and regulations that favour tenants over landlords, or the other way around.

For example, if your property is in Victoria, the police will accompany you to the place and issue the warrant directly. In most cases, this will be enough to get the tenant out. If not, you can turn to a bailiff or sheriff to forcefully remove them.

5. Change the Locks

If nothing seems to work, this step should be your last resort. As soon as the tenant receives an eviction order or warrant of possession, you have the right to change the locks.

Wealth for Life tenants
  • Facebook
  • Twitter
  • Google+
  • Pinterest
  • Gmail
  • LinkedIn

In case they’re not there when you take over the property, it’s your obligation to store their belongings safely. You must keep them for a certain period of time as dictated by local regulations. After that period, your obligation to the tenant goes away.

Once again, this time frame varies by state and local jurisdiction. You can turn to the Consumer Affairs Department or ask the local Real Estate Institute for help.

6. Hire a Good Property Manager

As you can see, you have access to some aggressive measures as dictated by law. There shouldn’t be a need for them if you don’t have tenant troubles.

If this all sounds like something you don’t want to bother with, engaging the services of an expert is your safest bet. They should be familiar with the situations that may arise and what to do about them. Although you have to pay for these services, many property investors agree that it’s worth it for the peace of mind.

Instead of trying to handle it all on your own, consider asking for a helping hand. It can save you a lot of headaches and allow you to focus on the more important aspects of property investing.

Establish Control

Luckily, you have all the tools needed to make sure your tenants don’t pull a fast one on you. If you feel like your cash flow is in danger, one of the above steps should take care of it.

Remember that you should be able to reason with most tenants, so try to talk to them with respect. But if this doesn’t do the trick, take advantage of the many laws that protect landlords who are in the right.

And if you need help, feel free to turn to an expert. They can save you a lot of time and energy – and often money – in these cases.

For more information on how to handle your tenants the right way, reach out to us.

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