Rental questions

With rising costs and increased learning needs, financing our children's education is no longer a simple walk in the park. Discuss with other parents about how they are managing their finances to cope with their expenses.

Rental questions

Postby MMM » Wed Mar 31, 2010 9:11 am

Wanted to tap on the experience of those parents who knows how to handle this.

We've a rental property that is due in Sept this year. Contractually, the tenant was given the option to extend based on current term for another year. Just planning in case the tenant is keen to renew which I feel there is a good chance as they have stayed in another unit within the same development and our unit is one of the good units in the development and they are pretty happy so far. My questions are :

1) Do they usually negotiate for rental adjustment for extension or based on current contract? How does it work?

2) My tenant loves to go through their agent. They have been in Spore for 30 yrs and have been renting :roll: For this property, my auntie was the one who got the tenant for us. When there was aircon issue, their agent got in touch with my aunt but we were the ones who did the follow up by ourselves. I've been communicating to them to come direct to us if there are any problems. Should I send them a email asking if they intend to renew at some point?

3) For renewal, we are trying to minimise agent fees but we need to get the paperwork done too. What is the best way to do it? Eg. for extension, what is the market rate for agent fee for paper work? It doesn't make sense for us to pay them 1 month rental. Can we potentially do this paper work ourselves?

Appreciate your advice.

MMM
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Postby tamarind » Wed Mar 31, 2010 9:35 am

I rented out my mother's old HDB flat without using any agents. It was quite simple, definitely can be done without an agent. I did all the paperwork by myself.

However, I do not have experience with private property.

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Postby hquek » Wed Mar 31, 2010 9:38 am

hi mmm,

Just completed renewal of my tenant.

I gone through my agent to get this tenant, paid her the market rate (half month rental for 1 year contract), and used her to fullest extent (eg when tenant was days late in making payment, whenever we got anything to communicate). In that sense, I don't have a feel who my tenant is (good and bad); at least I don't have to do the ugly bits (eg chase for payment).

Discussion was held via agent only. First, did market survey (based on advertisements, word of mouth from neighbours etc) on what the rentals are like now. Then I set my target. I would communicate this to my agent what is my target (hopeful rate), and base (beyond that forget it).

DISAdvt of continuing with same tenant: I wasn't able to get as much as others were getting in same estate.

Advt:
1. Already know who I'm dealing with. Neighbour feedback that they are generally quiet sort (I like, no problems) so I feel assured that these tenants are not subletting to 20 others.
2. Don't have to go through hassle of looking for new tenant (potentially may lose out on rental when house is empty).
3. Don't have to do this/that for new tenant (eg arrange for professional cleaning, fix this or that). Becos I settled on a marginal increase, it was agreed that they cannot demand for new things (eg change curtain, change furniture).

Paperwork:
I am sure you can use existing agreement template and sign new one based on that. I believe you have to get it eStamped in IRAS (they will fine you if this is not done within 15 days); IRAS wants to know if there is any change in the rental amount - this is all I'm aware of. If there is any adjustment in rental, tenants will have to top up the rental deposit.

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Postby hquek » Wed Mar 31, 2010 9:41 am

I'm sure it can be done without agent. Just that I like the agreement template used (it's very clear, sets out the roles/responsibilities of each party in a reasonable manner).

In any case, first time you rent out, the agent fees cannot offset against tax; but subsequent years, you can offset the agent fees against the rental income when declaring income for tax purpose.

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Re: Rental questions

Postby Guest » Wed Mar 31, 2010 9:42 am

MMM wrote:Wanted to tap on the experience of those parents who knows how to handle this.

We've a rental property that is due in Sept this year. Contractually, the tenant was given the option to extend based on current term for another year. Just planning in case the tenant is keen to renew which I feel there is a good chance as they have stayed in another unit within the same development and our unit is one of the good units in the development and they are pretty happy so far. My questions are :

1) Do they usually negotiate for rental adjustment for extension or based on current contract? How does it work?

They would negotiate based on current market terms especially if it is lower. If higher, they may sign longer term to maintain the rate.

2) My tenant loves to go through their agent. They have been in Spore for 30 yrs and have been renting :roll: For this property, my auntie was the one who got the tenant for us. When there was aircon issue, their agent got in touch with my aunt but we were the ones who did the follow up by ourselves. I've been communicating to them to come direct to us if there are any problems. Should I send them a email asking if they intend to renew at some point?

Going through agent for them is hassle-free because they leave their agent to do all the follow up for them. Also, they may not be keen to build relationship with the landlords. If they have rented so many years, I don't think they want to deal with so many people plus they really need an agent to look for new places each time they terminate an old tenancy. No harm sending them an email to trigger the renewal process as it takes time but they will redirect to their agent again I suppose.

3) For renewal, we are trying to minimise agent fees but we need to get the paperwork done too. What is the best way to do it? Eg. for extension, what is the market rate for agent fee for paper work? It doesn't make sense for us to pay them 1 month rental. Can we potentially do this paper work ourselves?

You need to rework the tenancy agreement and get the stamp duty done.
Was their agent the one who provided you with the first copy of the tenancy agreement? If yes, then it may hard for you to shake off the agent. If no, then you can go ahead to renew the tenancy agreement on your own and do the stamp duty. If the agent wants a fee in this case, he/she should get from the tenant who has been using his/her service for this renewal.


Appreciate your advice.
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Postby MMM » Wed Mar 31, 2010 9:52 am

Hi Hquek,

Thanks for your advice.

My tenant is a US couple who has been staying in Spore for the last 30 yrs. My 1st question when I met them was "Why didn't you buy a house?". We actually visited our unit when there was aircon issue.... They are the type who turn on aircon all the time. Dunno if 24/7. My sil stayed just opposite our unit so she told us that the windows are always closed.

They are couple in their 70's with their finance mgr staying with them as this is a company lease and they run their own business. All adults and we can see that they really do up our place. Eg. placing table runner and decors on the dining table that made me wonder how frequent they use that table.

Unlike the horror stories we heard about late rental payment. We never have this issue with them and in fact, they are always early. So my agent (my aunt) never had to do anything. I like their profile and believe that they will treat our house well and we are keen to continue with them if they want to.

For the tenancy agreement, you mean we can mirror the existing template of the version that was signed. We just need to get stamping at IRAS? Is that all the legal requirements we need? I was thinking if they go through their agent which they usually do so, we probably engage her service but on the other hand, the other agent is my aunt so .... In addition, I am thinking what are the value add the agents can bring us. I was thinking if we can cap the agent fees? Is it usually 1/2 month for 1 yr? Frankly, I feel that $500 for the fees for admin is already alot :?

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Re: Rental questions

Postby MMM » Wed Mar 31, 2010 9:55 am

ks2me wrote:If the agent wants a fee in this case, he/she should get from the tenant who has been using his/her service for this renewal.


It's the same agent who got them the place. I know my aunt and the agent co-broke and share the fees. So this time round seems alittle tricky to get rid of them? On the other hand, hubby was like.... quite expensive huh and where is the value add?

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Postby hquek » Wed Mar 31, 2010 10:00 am

hi mmm,

I see from the agreement I sign that if the tenant continue, I have to continue to use the agent also. It's a matter of trust, and now I guess breach of contract.

I understand, it seems a bit too much for such small paperwork. Just take it as payment for finding a good tenant? Yes, market rate is 1 month for 2 year; half month for 1 year (and plus GST :cry: ).

I would say go through a good agent can resolve a lot of worries. Like if anything spoilt, I am fairly sure that my agent will be the one informing us. If there is any bad issue, it's good to have middle party cos emotions won't run so high. I tend to get a bit worked up, so it's good lah.

I would think if you use the tenant's agent. There MAY be conflict of interest and I'm guessing he'll charge market rate also.

If you are keen to continue, maybe you can think to set your base a little lower (ie don't have to set new record for highest rental in the estate lah). I see now units at my estate asking $500 per month MORE than what i settle for. Cest la vie lah...I console myself by saying that this is asking price AND I am not renting out to a carousel of subtenants.

Share story. My mum's current neighbours always change face. I think the tenant sublet it out on short term leases. And they don't take care of the place. The place machiam like hotel (I don't like).

Yet on the other hand, if there is upside, I sure won't want to lose out entirely cos the estate is 99 years....when the place is older, I'm sure tenants would be willing to pay only lower rates.

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Postby MMM » Wed Mar 31, 2010 10:07 am

I will go back to read our agreement tonight.

Actually, I was just thinking if it ends up that we must use agent, then probably I will just get my aunt to talk to them directly and then just wait to pay them for the service :roll: Yes + gst :!:

Hopefully she can offer some perspective on the latest rental value too.

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Re: Rental questions

Postby qms » Wed Mar 31, 2010 10:09 am

MMM wrote:1) Do they usually negotiate for rental adjustment for extension or based on current contract? How does it work?


New rate based on market. You quote the tenant a rate, and see what they say. If they are not happy, they will counter-offer. Now, it's your turn to decide whether you want to accept the new rate.

MMM wrote:2) My tenant loves to go through their agent. They have been in Spore for 30 yrs and have been renting :roll: For this property, my auntie was the one who got the tenant for us. When there was aircon issue, their agent got in touch with my aunt but we were the ones who did the follow up by ourselves. I've been communicating to them to come direct to us if there are any problems. Should I send them a email asking if they intend to renew at some point?


Check with them whether they want to go through their agent this time. If so, you have to get the agent in the loop. However, if they want to go through their agent, they have to pay the agent fee, not you. You have to make this known upfront to the tenant's agent, especially since the last time the agent co-broked with your aunt.

The amount of agent fees paid is just a guideline. Ultimately, it is up to the parties to agree on the agent fees to be paid by each party.

MMM wrote:3) For renewal, we are trying to minimise agent fees but we need to get the paperwork done too. What is the best way to do it? Eg. for extension, what is the market rate for agent fee for paper work? It doesn't make sense for us to pay them 1 month rental. Can we potentially do this paper work ourselves?


You can use the same template from the first agreement. Just need to change the rent and the term/duration of the new agreement, assuming the other T&Cs remain the same.

It is not difficult to do the paperwork yourself. You should do it yourself if time permits, or if you prefer to pay your aunt to do it. The tenant's agent should not get anything from you, unless you appoint her.

I thought stamp duties are typically paid by tenants? Why do you need to pay when you are the landlord? Does the Tenancy Agreement stipulate that the landlord pays for stamp fee? :?

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