How much to pay a nice tenant to leave

Looks like we've sold our PPOR . We bought our downsizer but it's rented till July next year . rent 920 / week .

We could rent , but would much prefer it if we could encourage the tenant to leave. This way we avoid a move , paying rent and can start renovating and moving on in life

In order to do this I'm planning to offer to pay them an inconvenience fee , the question is how much ?

Moving costs
bond at new place
couple of weeks rent for inconvenience
bottle of booze for your troubles

10K and I'll have them out by the weekend.....but I get to keep the furniture.

Sorry misread it, you are going to pay the tenant to move out.

How long until you must move out of your PPOR?

When we sold an IP recently, we agreed in writing (tenant was a solicitor so we made sure we covered our backsides) that he would get the final four weeks free once we gave him that much notice of the sale.

It worked well for us and for him. He wanted to move anyway, but the power was with him, and we were happy to forego that last month of rent in return for being able to open up the marketing to owner occupiers who wanted vacant possession.

People who moved into an IP in our street were paid $10K to leave a place they were renting before the move so it could be sold with vacant possession. They were NOT happy to learn the house they just moved into was quietly on the market (quite against the rules for renting too). I know the landlords would NOT offer anything like $10K for them to move along, and the tenants could have kicked up a stink if they knew the landlords should not have listed the house for sale within a certain time of the start of a lease.

So, I would be telling the tenants the lease will not be renewed, that you are happy to offer them some compensation for moving out early. Perhaps offer them the final four weeks free and see what they come back with.

wylie said:

People who moved into an IP in our street were paid $10K to leave a place they were renting before the move so it could be sold with vacant possession. They were NOT happy to learn the house they just moved into was quietly on the market (quite against the rules for renting too). I know the landlords would NOT offer anything like $10K for them to move along, and the tenants could have kicked up a stink if they knew the landlords should not have listed the house for sale within a certain time of the start of a lease.

So, I would be telling the tenants the lease will not be renewed, that you are happy to offer them some compensation for moving out early. Perhaps offer them the final four weeks free and see what they come back with.

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Good thought re telling them the lease wont be renewed . re the 10 K , what was the rent on that place ?

Datto , we don't want to alienate the neighbour hood .. I had a couple of patients who were in a major bikie gang out at letho . They did offer to help me if I ever had problems ..... Another one also said his boss ( PI ) was a hit man if I ever had problems .... I suppose they have to advertise somewhere .

Financially , by renting , paying tax on the rent ( property will be paid off ) extra move , we'll be about 20 K worse off if we rent , and that's not putting a price on the inconvenience , which in reality is the bigger problem .

Cliff

see_change said:

Looks like we've sold our PPOR......

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I noticed the "let's hype the Sydney market" thread had gone quiet.

see_change said:

Good thought re telling them the lease wont be renewed . re the 10 K , what was the rent on that place ?

Datto , we don't want to alienate the neighbour hood .. I had a couple of patients who were in a major bikie gang out at letho . They did offer to help me if I ever had problems ..... Another one also said his boss ( PI ) was a hit man if I ever had problems .... I suppose they have to advertise somewhere .

Cliff

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I don't know where they were renting before they moved into our street, but they were yuppie types, new SUVs, high earners, and the house they moved into was (from memory) $750 per week, but this was probably four years ago.

And regarding telling them the lease will not be renewed... they will know they have to move and the expense that involves in July so giving them four weeks' rent for free to move when they find a suitable place gives them so much more flexibility, means they save that and that "might" be enough for them. It depends on your tenants and I would speak with them directly rather than allow the PM to do this.

Of course, it all depends on what your settlement deadline is. If you have a four week settlement, you would have to move fast.

wylie said:

How long until you must move out of your PPOR?

When we sold an IP recently, we agreed in writing (tenant was a solicitor so we made sure we covered our backsides) that he would get the final four weeks free once we gave him that much notice of the sale.

It worked well for us and for him. He wanted to move anyway, but the power was with him, and we were happy to forego that last month of rent in return for being able to open up the marketing to owner occupiers who wanted vacant possession.

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We wouldn't have wanted to do that when we put the place up for rent ( more to the point we didn't think of it .... ) but the rental market was relatively soft , and if anything is softer now .

We put up our place for sale when it vacant , but it didn't sell at what we were hoping for at that stage so we re rented . The holding costs of keeping it vacant would have been painful in particular when you don't know how long it will be .

Cliff

see_change said:

I suppose they have to advertise somewhere .

Cliff

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True, nothing beats word of mouth lol.

pierso said:

I noticed the "let's hype the Sydney market" thread had gone quiet.

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It's been a good learning experience watching the market that closely and I intend to keep on posting . After all this is only one of six properties we have in Sydney and I'm sure I can move the market more

... oh ... damn , looks like Andrew Wilson has more clout than me .

Maybe I should get that hitman to target him ......

While the Sydney auction scene isn't getting over 80 % clearance rates , the number of sales is high . While every one says Winter was busier , we've have double the number of inspections in the last three weeks , multiple people expressing interest compared with when we tried to sell it three months ago and we've had the offer we wanted prior to auction so we've said yes. I think it represents fair market price . Not a bargain , but not an Oh WoW , you got that !!! Our last two PPOR sales where in that catagory as was our purchase of our down sizer , so we cant really complain .

There are houses that aren't selling ( unrealistic vendor expectation ) , but there are people who are prepared to pay fair market price for almost anything and if the stars align , some properties are getting fought over and going over expectations , but that's a minority . I don't think that has changed over the few months I've been watching closely .

Cliff

Congratulations on selling your house Cliff, I read all your posts with big interest!!

Maybe to offer them free rent from now til week before your settlement date if they leave by then. Assuming settlement is 6 weeks that would be less then 5K so you might even offer them another 5k as incentive and if I was that tenant, I would be happy to move now, as rent wont be extended in July anyway so why wait and lose 10K

And of course, everyone can use some extra money for Christmas shopping

Nem said:

Congratulations on selling your house Cliff, I read all your posts with big interest!!

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Not unconditional yet , just making plans ...

Nem said:

Maybe to offer them free rent from now til week before your settlement date if they leave by then. Assuming settlement is 6 weeks that would be less then 5K so you might even offer them another 5k as incentive and if I was that tenant, I would be happy to move now, as rent wont be extended in July anyway so why wait and lose 10K

And of course, everyone can use some extra money for Christmas shopping

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More good thoughts

Thanks guys

Cliff

Makes sense to offer to let them not pay rent until they leave . More tax effective as less income , less tax .

One issue I'd have concerns about would be them taking money then not moving out ... Very unlikely , but would be a nightmare senario . Short of going to the trouble of getting a formal contract drawn up .

So structure it so , no rent until they leave , We pay ( directly ) the deposit bond for their new property and then maybe a couple of thousand ( subject to negotiation ) once they vacate the property . Maybe get the agent to hold that if the tenants have any concerns.

Cliff

I'm surprised at the suggestion of $10k compensation money...for all you know they might be going through a break up or personal issues and are chomping at the bit to break lease, but don't want to go through the hassle of negotiating it.
I'd say offer the weeks free in rent (or whatever you feel is fair) and then don't offer any compensation money until right at the end - you might be throwing money at something that could be sorted in a much cheaper way.

So structure it so , no rent until they leave , We pay ( directly ) the deposit bond for their new property and then maybe a couple of thousand ( subject to negotiation ) once they vacate the property .

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Too complicated I reckon, Cliff.
You mentioned it would cost you $20K + a lot of inconvenience to have to move twice in a short space of time.
I would tell them they will have to move out in July anyway, but if they move out by the end of January you will give them $10,000. You could start at $5K, or $8K and move up, but $10K would be pretty compelling.
And I would get an agreement drawn up.
Scott

depreciator said:

Too complicated I reckon, Cliff.
You mentioned it would cost you $20K + a lot of inconvenience to have to move twice in a short space of time.
I would tell them they will have to move out in July anyway, but if they move out by the end of January you will give them $10,000. You could start at $5K, or $8K and move up, but $10K would be pretty compelling.
And I would get an agreement drawn up.
Scott

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Agree with Scott here- keep it as simple as possible and yes obtain something in writing. This can make all the difference in commitment to the process. Best of luck with it all

Firstly I would tell them they will have to move when the lease is up.

I would then offer $6000 if they move in January, $5000 in February, $4000 in March etc, no bonus left by July.

Ah, that's a nice twist, Macca.
That one wins the prize, Cliff.

Macca said:

Firstly I would tell them they will have to move when the lease is up.

I would then offer $6000 if they move in January, $5000 in February, $4000 in March etc, no bonus left by July.

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Unfortunately no point in that as if they don't move out January , we will have to have rent then , though I was thinking of making it a bit more if they move out early as that gives us more time to move things over and would be less stressful on SWMBO.

Cliff

fokas said:

I'm surprised at the suggestion of $10k compensation money...for all you know they might be going through a break up or personal issues and are chomping at the bit to break lease, but don't want to go through the hassle of negotiating it.
I'd say offer the weeks free in rent (or whatever you feel is fair) and then don't offer any compensation money until right at the end - you might be throwing money at something that could be sorted in a much cheaper way.

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I've realized the down side of offering free rent is that it gives them an incentive to stay to the last minute , whereas from our perspective , the earlier they leave the better.

So maybe some bonus if they leave early.

Cliff