Ahh, how much do we need to protect people from themselves?
They borrow 90-100% and then have so little in reserve and other cash that if a tenant defaults they have their backs against the wall in weeks.
For me, my rules was 75% finance, no more. Allow at any time you will not receive rent for up to a year or equivalent in repairs is required. Worse case in almost any scenario you walk away with nothing but debt free.
It's not so much the outright percentage that is the killer, it's the combination of the percentage and the amount it is a percentage of. 100% can be fine as long as you can afford the repayments etc come what may while 50% is too much if you cannot.
I actually have a rental unit in the Sutherland Shire of Sydney and the tenants (a couple of newlyweds) both lost their jobs pretty much as soon as things went pear shaped and gave notice that they wanted to break their lease as they were moving in with her parents. I was quite prepared to be fairly generous in those conditions but they had made up their minds they had to leave and have now done so.
I have owned the unit for 22 years, the mortgage is a distant memory, it is by not my only income, and if it sits vacant for a while it is not going to be a disaster. Yes I am lucky but something comparable arose in the rental market about 20 years ago, it sat vacant for several months, but even then it was more a a pain in the butt than an unmitigated disaster despite being hocked to the rafters at the time. It comes down to how stretched you are.
Finding a new tenant is proving problematic and the agent is giving it their best shot. They are aware of my slightly casual attitude and I asked them the other day whether our situation was typical and some of their other landlords were getting jittery about vacancy rates. The response was yes on both counts.
How the hell you could force people in a situation like my tenants to stay is beyond me and equally why would you want to.[/quote]
Thanks for your comments, interesting. I wonder how many will be headed home to Maa and Paa?
For it gets down to I want to sleep at night and reduce the need for me to have to lick my bosses a@$e for fear of loosing my income to pay for all this. But that's something I apply to everything in my life.
We have only on rental now and I wish we'd put more effort to get rid of it before. Living 700km away and dealing with tenants was bad enough, living OS, ugh! Anyway this guy claimed he couldn't pay, like you I was ready to put anything on the table, including up to 3mths 50 - 25% rent (not talking cut, actual) if needed. But I asked for proof, no was coming and under the threat of legal action he paid.
Our property is on a low income island that doesn't rent well during winter so I'd rather he stay until spring.
I suspect you will get tenants soon enough. At the moment no one is moving, but once this eases, if you willing to take a hit on rent for 12mth, you will get them in. The hard landlords or ones desperate will keep prices up. I normally just drop down to fill with a 5% increase the following year.