S2E10 - Twelve Things You Can't Do As A Landlord, That You Probably Thought You Could

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Imti: Today we're doing a quick-fire one: 12 things you can't do as a landlord that catch a lot of first-time investors off guard. Because a lot of the time people aren't trying to do the wrong thing, they just assume the wrong thing. "It's my property. Surely I can do that." But as we're about to touch on with Skye, a lot of the time that isn't the case. So we're gonna go through 12 common landlord questions and give you the highlight reel version of them, and that way you can move into your first investment purchase with confidence.

But before we jump into the 12, this one's really for the first-time investor who wants to avoid getting caught out by assumptions. Skye, do you find most landlords get into trouble deliberately or by accident?

Skye: Definitely by accident. I think, and I will die on this hill, I think most landlords are always trying to do the right thing, and if they are making mistakes, it's not because they're trying to disadvantage the tenant. I think it's just more they're looking out for their own interests and not seeing the bigger picture of how it impacts a tenant.

Imti: Mm-hmm. [00:01:00] And Pete, why do you think this topic catches so many first-time investors off guard when you're helping them on the purchase side of the fence?

Pete: It's quite a complex area. Residential laws are always changing. They're different in every state. And some of it is common sense. You assume that you can do whatever you want because you own the property.

Skye: Mm.

Pete: So from a common sense point of view, it's probably fair to think that.

Imti: Mm-hmm.

Pete: But there's a lot more complexities to it, and I think it's just the legislative landscape that we're in at the moment, that's what complicates it.

Imti: Mm-hmm. That a lot of the common sense stuff isn't actually common sense and is actually illegal.

Pete: yeah.

Skye: Yeah.

Pete: But it is common sense from the tenant's point of view.

Skye: Sometimes.

Pete: that's the thing, it's hard to balance. You're never gonna make the landlord and the tenant happy. There's always gonna be one side who's gonna be upset. It's just trying to find the balance and trying to make it fair, although it doesn't seem fair as a landlord at the moment.

Skye: Yeah. The reality is it's slanted towards the tenants.

Pete: It is, yep.

Imti: Mm-hmm. On that note, let's jump into our list of 12 that we've got.

First thing that I'll say is we're based in Adelaide, so a lot of these answers do translate over to national level. But we would say don't take them as gospel. If you're in [00:02:00] a different state, just double-check.

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Imti: Number one. Can you end a tenancy at the end of a fixed term?

Skye: No. And this one trips up 95% of investors because it's like, well, what's the point of a fixed term? I agree, there isn't really a point now. So since 2024, there are prescribed reasons that you're allowed to end a fixed term tenancy, and the main ones are that you are moving back into the property or a close family member. So it can't be Auntie Barbara.

Imti: Mm-hmm.

Skye: It needs to be someone within your immediate family, that looks like your child, your mum. That's about it. The last one is significant renovations, and a lot of people think significant renovations mean I'm replacing the flooring.

No. You're replacing the kitchen and the bathroom. You have to be prepared to justify why that tenant can't live in the property to have those renovations done. It's really not that simple.

Imti: So it all really boils down to it's more so a fixed term, and when we say fixed term, could be a six-month lease, 12-month lease or whatever.[00:03:00]

Skye: Mm.

Imti: It's a fixed term tenancy for the tenant, and then at the end of that period, really the power sits with them.

Skye: Yep. They can stay as long as they want. And I think a lot of tenants aren't even aware of this at the moment which I think is no bad thing for landlords in all reality. but that will change. The assumption is that the tenant has the right to remain in the property until they choose to leave, so you have to make sure that you choose that tenant correctly.

Imti: Mm-hmm. So they've got the right to stay even when the fixed term ends.

Skye: Yeah.

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Imti: Let's talk about number two on our list, which is, can you end a tenancy when the tenant is behind on rent?

Skye: No.

Imti: Wait, really?

Skye: Yes. So going back to our fixed term example, let's say, you issued a breach notice, once throughout that fixed 12-month term.

Imti: Mm-hmm.

Skye: That's not grounds to end the tenancy, and that's assuming that the tenant caught up on the rental arrears. If you look at the other process of the tenant doesn't catch up on their rental arrears, the process specifies that the [00:04:00] tenancy is over by force of this notice.

So your breach notice says the tenancy's over, but the confusion is you actually can't just go marching back in and take back the property. You have to apply to tribunal, request your vacant possession, and the reality is In the current environment, there is a national directive to sustain tenancies, not end them. So landlords need to be prepared that you could be at tribunal two, three, four times before you even get close to getting a vacant possession, and your rent is late through that process.

Imti: If we wanted to wind that back and be a bit more proactive with it, what would you say to a landlord to make sure that they don't end up with a tenant who does end up behind?

Skye: Mm. That comes back to tenant selection, ensuring the tenant can afford the property firstly.

Pete: What's the threshold you use?

Skye: Oh.

Pete: Like income to rent.

Skye: Do you know, that's a great question. It used to be 30%, but then inflation.

Pete: Yeah.

Imti: Mm-hmm.

Pete: It's hard.

Skye: And I think 40 percent's probably common these days. I did just approve a tenant this morning [00:05:00] for 46%. The reality is there isn't anything in her income bracket that would put her at 30%. And she's actually been paying 80, $90 a week more for the last year, so she's got a proven track record that she can ... She'll actually be in a better position in our property. It's a guideline. And then common sense is applied depending on the situation. So ensuring that you've got someone who can afford it. The other thing that you can do obviously, whether you've got your property managed professionally or you're doing it yourself, but acting quickly is the way we can manage that. So that starts from day one of rent arrears. We're not waiting five days.

Imti: Mm-hmm.

Skye: We're actioning it from day one.

Imti: Yeah. And I think that's really important when it comes down to such a lengthy process that's involved. If you do need to take it down the route of tribunal, for example. Pete, you and I, when we're talking about planning a purchase with a client, it's always about preparing them around if the rent doesn't come in, usually it's through the lens of, if the property's vacant, what do you do? I know on my end, I'm really big on the whole have extra [00:06:00] cash in the bank, whether that be three to six months' worth of loan repayments just in case. But I feel like that also translates over into if a tenant goes in arrears, it covers you for that as well, right?

Pete: Yep, 100%. You got insurances too, but you still gotta fund the gap.

Imti: Mm-hmm. And I know, Skye, you have some horror stories about evictions, but we'll get into them on another episode because they're a saga in themselves.

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Imti: Let's go to number three. This one really comes down from an old-school mentality, but also probably just watching a lot of American TV as well. Can I just change the locks if they're not paying rent?

Skye: Mm. A lot of people do think that. It comes up more often than not

Imti: Which is surprising, but-

Skye: But again, I understand why they think that way. It's their property.

Imti: Mm-hmm.

Skye: Right? And someone's not fulfilling the obligations. What can we do? I've certainly heard the, "I'll send the goons round." Highly recommend you don't do that.

Imti: Or admit it to anyone before you do it.

Skye: Oh, yeah, we just don't wanna know about it. But the importance of acting within the law, there are significant fines to landlords doing the wrong thing. But it's [00:07:00] about not disadvantaging the tenant, too. The law's there for that reason, but if they're not paying rent, it's about following that process, which can be very long and drawn out, and why we all coach our clients to ensure they have buffers in place because you may be expected to bear that loss-

Imti: Yeah

Skye: for many months.

Imti: Well, yeah, the realities are that if you own an investment property, it will be vacant for a period of time or you won't get rent for a period of time.

Skye: Yeah.

Imti: whether it's through vacancy or whether it's through tenant arrears, and it may not even be, like, a quote-unquote dodgy tenant.

It could just be a really great tenant going through life stuff, right? But you've gotta be prepared to burden that If the rent's not coming in. The locks thing is a really good transition to number four.

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Imti: So I can't put locks on my property if they're not paying the rent.

Skye: Mm.

Imti: If I own the property and it's rented out, when can I go into the property or onto the property?

Skye: There are various different access rules around depending on what your purpose for the access is. I'll never forget the landlord who actually had a [00:08:00] prearranged agreement to do the gardening, but he thought it was appropriate to go there every Saturday morning and potter around in the garden-

Imti: Mm-hmm

Skye: 'cause it was his home before he chose to rent it out. So he thought that was fine. The tenants were very uncomfortable with that. So there are rules in place for a reason. Let's say for example you needed to do a repair, there's still rules involved unless it's an emergency, versus if you needed to access the property for a routine inspection, that's different timeframes again. So understanding how much notice you need to give, you can't just go to the property whenever you feel like it, and that includes you can't drive past it-

Imti: Mm ...

Skye: and then whinge that they're not mowing the lawn.

Imti: All the time.

Skye: Constant. Yeah.

Imti: What you said in terms of organizing a time and giving them notice, that's the key thing there, right?

Skye: Yes, because they're entitled to peace and privacy of the home that they are paying for.

Imti: Hmm. ' Cause it is their home.

Skye: Yes.

While you rent it out, and that's the distinction. Landlord's like, "No, it's my home."

Imti: Mm.

Skye: No, you've rented it out. It's currently their home.

Imti: Mm-hmm. Talking about boundaries

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Imti: Number [00:09:00] five, can I ask how old potential tenants are?

Skye: Absolutely not.

Imti: Why

Skye: not? And this one trips up everyone. They're like, "Why can't I ask?" We can work it out because they are required to submit identification. So this legislation came out in 2024, and it is obviously very backwards because they came up with this privacy rule of you can't ask someone's age, but you can ask them for identification and work out how old they are anyway. So it's one of those things that why would you need to know someone's age? I do stand by the fact that sometimes that's useful. Let's say, for example, you've got a family with children. Have you got a family with three two-year-olds or- have you got a family with one 15-year-old child? That helps you decide how many people are living in your property.

Imti: Mm-hmm.

Skye: And also to understand what life stage the tenant's in.

Imti: Mm-hmm.

Skye: So tenants may not like that we know their age, but it helps determine if that tenant is a right fit for that landlord and their plans with the property.

Imti: Mm-hmm. So stepping it back another layer, and Pete, you could probably add to this as [00:10:00] well, what kinds of screening questions do you find cross the line but come up really often in terms of, a landlord might want to know something, but it is actually crossing the line and they're not allowed to ask it?

Skye: It's always cultural. Discrimination's a big thing.

Pete: Yeah. Yeah, the cultural stuff.

Imti: Pete's having a little giggle.

Pete: Yeah.

Imti: For everyone who has never seen Pete, he's from a Greek background. So it's jumping into the cultural side of things around screening questions.

Yeah. Is that something that comes up really often?

Pete: Oh, yeah, all the time, and clients have different ways of saying it as well. Mm. And they don't mean anything bad by it, it's just the way they say it or the way they deliver it. But yeah, cultural is definitely a big one.

Skye: Mm.

Pete: And as a landlord myself, I can see why they ask those questions.

we-

Skye: As a property manager, I get it too

Pete: ... yeah, we've got different living standards here- Yes ... to the rest of the world, and if people are fairly new to Australia, they might not be up to date with that in terms of how we ...

Skye: Yeah. So I used to work in student accommodation, right? Yeah. And we rented to a lot of people from Asia. And the reality is there's a very [00:11:00] large discrepancy between the haves and the have-nots in Asia.

Pete: Mm.

Skye: So you've either got people who have endless amount of money and they have servants, and then you've got other ones who haven't, so that range of how people live was really apparent. And that's not necessarily a cultural thing, but it's different to Australia

Pete: I had a good example when I was talking to a client the other day. They got new tenants in, and their tenants are complaining they've got mice running around which they've never had that issue in this place in the past. And it's because they're keeping the foods out. Uh, it's just part of the culture.

Skye: And it's attracting it.

Pete: Yeah, exactly, and They had the oil left out, hot oil.

Skye: Mm.

Pete: And they just left it out, and they must just keep it out for a while. I don't quite understand why, and I guess that's part of their culture and they don't

Skye: think- See it that way ...

Pete: yeah, they don't see it as an issue, but obviously being here in Australia-

Skye: But

Pete: then

Skye: it becomes an interesting conversation, who's responsible for that? Exactly.

Pete: Yep. Yeah. Who's responsible for the pest control. I mean, they've done the pest controls and they've tried all that stuff, but it's just not fixing the issue.

Mm.

Imti: Yeah.

Skye: Yeah.

Imti: But I think at the end of the day, even then, the onus is on the tenant to just maintain the property, right?

Skye: Correct. Yep. That's their obligation.

Imti: And so the [00:12:00] biases around someone's background or whatever, it makes no difference when you step it down to are they meeting their obligations of managing the property right? Even the question being asked, it really doesn't make much sense, 'cause it doesn't make much of a difference, ' cause the onus is on the tenant to look after the property full stop, no matter who they are.

Pete: Yeah. Just the wear and tear component, too. Mm. Yeah, again, it's how many people in the family? I ask the same questions, too. How old are the kids? They won't tell me, but where are they at? I can actually plan for that.

Skye: Well, effectively That all comes back to being able to make a decision.

Pete: Yeah, yeah, that's right. Yeah.

Skye: Right? Like, you as the landlord, generally you're using an agent.

Pete: Yep.

Skye: You haven't met the tenant. You're trying to make a pretty long, as we've worked out, big commitment-

Pete: Mm

Skye: ... on something that you've got maybe three sentences on. So you're trying to build a bigger picture and go, "Well, yeah, do I wanna work with this tenant in my property for the next four years?" However long they decide to stay.

Imti: Mm-hmm.

Skye: ' Cause if they're no good, I can't get rid of

Imti: Again, tenant selection and fixed term leases, right?

Pete: Yep. Mm.

Imti: A really good transition to something more practical.

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Imti: Number six, can I increase the rent every 12 [00:13:00] months?

Skye: In South Australia you can, but it's, nuanced. So a lot of owners just assume that they can just increase the rent every 12 months, which in South Australia you can increase it every 12 months for that tenancy. In Queensland, for example, it's connected to the property, so that's where it will change, and if your tenants were to break the lease, that changes again.

So it's not just an automatic 12 months every With every tenancy Mm-hmm.

Imti: And I think that line of thinking's automatically, embedded in landlords, right? "Oh, the lease is up for the 12 months, we're gonna increase the rent." What do landlords tend to miss when they're thinking about this? Pete, probably a good one for you.

Pete: Well, I don't even think the 12-month assumption is fair. A lot of people just think I can up it every year.

Skye: Oh, yeah, whenever I want.

Pete: Like a beginner. Yeah, yeah, beginner and first time investors will just assume that. If it's under market rent by a hundred bucks, their first question is always-

Skye: Mm.

Pete: "Oh, that's all right. We can still buy it."

Skye: We'll up it.

Pete: "We'll just up it after purchase."

Imti: Mm.

Pete: But little do they know the lease renewal was a month ago.

Skye: Yeah.

Pete: So they've got at least

Skye: They're locked

Pete: eleven months on that. Yeah, that's right.

Skye: Locked in.

Pete: Mm.

Imti: Mm-hmm.

Skye: Yeah and I think some of [00:14:00] the earlier conversations back to your fixed term and you can't end the tenancy for just any old reason, the response is like, "Oh, well we'll just increase the rent."

Mm, no, the tenants still have rights to reasonable rent increases, so you can't just increase the rent to get rid of a tenant either.

Imti: Mm-hmm. Well, that's a really good follow-up question. We've touched on the fact that you can increase the rent theoretically after the 12-month fixed term.

Skye: Mm.

Imti: What's the limit to that?

Skye: In South Australia, there is no specified limit. A lot of people assume CPI, and some people assume a percentage, which makes sense and is probably the case in commercial, not residential.

Pete: Yeah.

Skye: The key word is reasonable.

Imti: Mm-hmm.

Skye: And how tribunal will define reasonable is historically it's been 10 to $20 as reasonable, whereas the agent's job is to justify what the market supports. And tenants have the right to understand that.

Imti: Mm-hmm.

Skye: About why a rent increase has been put in place, where that's coming from.

Imti: Yeah. So it's really if it [00:15:00] meets the market or it passes the sniff test, it'll be okay, but if it's unreasonable or you're trying to ramp the rent to get rid of a tenant that you don't like...

Skye: It won't work. Because let's say you're like, "Well, we don't like this tenant, let's up it $90 a week, and if they pay it, happy days."

Imti: Mm.

Skye: The tenant can-

Imti: But what happens if they do pay it?

Skye: Well, then happy days, right.

Imti: still got the person that you didn't want.

Skye: Yeah, but the tenant-

Pete: For $90 more

Skye: ... can take it to tribunal, and you're ordered and locked in to a $10 a week increase.

Pete: Yeah.

Imti: Mm.

Skye: You might have had more success with, say, a $30 a week increase because that's reasonable, but when you end up in a tribunal situation, the choice is taken from you.

Imti: Mm-hmm. And a conversation that I have with clients really often when we're looking at restructuring their loans, which is usually coincidentally in line with when their leases and stuff come up, is asking the question, yes, you can, but should you?

Skye: Mm.

Imti: There's two camps, right? There's people who are like, "Oh, just maximize rent as much as you can. Boost, boost, boost. Churn and burn." and to be honest, they're probably not the clients that we spend a lot of time with.

Pete: Just when you say churn and burn, you mean [00:16:00] churn and burn tenants.

Imti: Yeah, yeah. 'Cause I

Pete: think that's an important

Imti: point. Yeah. Yeah. It's like churning

Pete: and burning- Tenants ...

Imti: people. And there's a whole bunch of costs that are associated- with that for you as the landlord in terms of reletting and advertising and all that-

Pete: Yeah

Imti: sort of stuff. But the biggest risk for me when I have had to review tenancies for my own properties has always been, has this tenant given me a headache over the last 12 months?

Skye: Mm.

Imti: Have they been happy? Has every request that they've put through been reasonable and I've jumped on it in a reasonable time period?

Skye: Have I maintained the property as well as I should have?

Imti: Yep. Have I taken care of it?

Skye: Because if you haven't, guarantee they're gonna be looking at all that to get value for their money.

Imti: 100%. And so-

Skye: You'll be getting an uptick in repair requests.

Imti: Mm-hmm. And when you look at all of that and then go, do I really wanna run the headache of having two weeks worth of vacancy for something that didn't give me a headache the last 12 months?

Skye: Absolutely. And that's where a good agent will guide you through those pros and cons.

Imti: Mm-hmm.

Skye: Because sometimes that $10 a week isn't worth it.

Imti: 100%. It's, you can, but should you?

Skye: Mm.

Imti: Maybe not.

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Imti: Let's [00:17:00] roll into number seven, and this one has had a lot of changes recently. Can I say no to pets?

Skye: No, not really.

Body corporate laws sit above this legislation, so just putting that out there that in a unit or townhouse environment, it's the body corporate first, and then if the body corporate allows it, then it's the property owner's decision, but you can't unreasonably deny pets. My advice every time is you might as well be open to it, because let's say you say no pets, they move in, day two, written request, "Can I have a pet?" you can't say no.

Pete: Pet they had all along. Yeah, yeah.

Skye: 100%. They're just-

Imti: The pet that was on a holiday.

Skye: And look, even before the reforms changed, this was happening. People were hiding their pets because renting with pets has a stigma, will forever have stigma. Yep. The percentages of damage caused by pets is actually not that high.

Imti: I was gonna say, personally, I'd prefer to have a solo person with a pet than a family of six.

Pete: 100%.

Skye: Yeah.

Imti: From a wear and tear perspective.

Skye: That's a whole other episode. Are kids or pets worse? Yeah. That's a whole other one. But it's about [00:18:00] understanding your risks with pets, and you look at the application as a whole. Has this person maintained their previous rental history? Is there proof they've been renting and there's no issues with the pets? You look at everything. It's not just, "I don't want pets in my property," which does frustrate landlords because it's their property.

Imti: Mm.

Skye: But the legislation is around not demonising tenants for having a pet.

The statistics of pet ownership are huge. I don't ... Don't quote me, but, like, 60% to 70% of tenants.

Imti: I get it. More and more,

Skye: yeah. They've always been there, you just didn't know about it.

Imti: On that note, obviously the biggest fear is damage, right? Pets and damage is usually what goes through people's minds.

Skye: Mm.

Imti: Carpets, floors, whatever it may be.

Skye: Walls.

Imti: Mm-hmm.

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Imti: So number eight, can you charge the tenants for damage that they've caused?

Skye: Depending on what it is. And Pete, you had a good example before that you had a buyer who just assumed that the tenants would be paying the damage on the carpets.

Pete: Yeah, yeah. So the tenant had been there for six, seven years. The carpets were worn. [00:19:00] We could see there was damage on there, and the question from my client was, "Well, can we not take that out of the bond?"

Skye: Mm. "

Pete: And get them to pay for it?" And the response back ... And look, we got to ask the question. I knew it was very unreasonable, but as part of the negotiations you got to ask the question, and the advice back from the property manager was pretty much no.

Skye: Unlikely.

Pete: Because general wear and tear, it's been more than five years, and generally- Mm ... as well you should be replacing carpets every-

Skye: Every 10 years ...

Pete: 10

Skye: years, yeah. And every item within your property has a depreciation limit.

Pete: Yeah.

Skye: And people always forget about painting, but that is the number one thing that has actually a short lifespan on it.

Pete: Mm-hmm.

Skye: Um, carpets are another one. Yeah. Window furnishings, those things are high use, so the depreciation on them is less.

Imti: So flipping that on its head, when would you be able to charge a tenant for damage that they've caused? Mm.

Skye: Very rarely during a tenancy too. I find that, like, I just had one this morning.

Couple of hours. Well, I had one this morning that they accidentally drove into the wall in the garage. Like, it was an accident, right? Mm. They've owned up. They're like, "Tell us what you want us to do." They will pay for it, but [00:20:00] that's not all situations that you can just go, "Well, they've got to pay for it." A lot of the damages are generally dealt with at the end of a tenancy which landlords don't love, 'cause then they keep seeing that damage throughout. But not every tenant's in a position to be able to remedy an accident, 'cause accidents do happen.

Imti: Yeah, mm-hmm. And that flows into repairs really well.

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Imti: So number nine, do I have to action every repair request?

Skye: No. No, you don't. There are essentials, so things like your hot water services, ovens. There are things that we would, uh, potentially be at risk of compensation if you didn't action.

Um, but let's say- The tenant ... I'm trying to think of an example. Do you have any examples of things that you've opted out of repairing?

Pete: No, I actually approve everything. There's a strategic thinking though behind it. So I know I don't have to approve everything, but at the end of the day, I do wanna see rental increases every year, and I do wanna have happy tenants. So if I'm approving the requests-

Skye: Mm ...

Pete: then there's not gonna be any pushback on a $10 increase [00:21:00] in the next year. They're not gonna probably think about leaving and going to another rental, 'cause most renters are existing renters, right? They've been through bad landlords. Mm. They've been through, I guess, the cycle of not having things approved.

So I generally approve everything- Mm ... to be honest. I mean, I've never had an unreasonable tenant though, and I th- and I really think that's the reason. Mm. Because I'm not pushing back on them.

Imti: Yeah. I'm also in the same camp.

Pete: Yeah.

Imti: I won't say no. I'll get a WhatsApp message from my property manager at 11:00 PM or whenever he's been contacted by the tenant.

Pete: Mm.

Imti: And usually I'll just roll over, look at it, and just be like, "Yep," and send him a thumbs up emoji and send him on his way.

Skye: Mm.

Pete: It's not worth your mental capacity to think about things. Especially if it's a relatively cheap item to fix. We're in it to get a passive income eventually and have a passive investment.

You don't really wanna be an active investor. If you're an active investor, you're stressing about every little maintenance item. You're going down there to fix it yourself.

Skye: Mm.

Pete: It's just not the way you wanna do it. Mm.

Skye: Interesting perspective from you both. Yeah. Yeah. A lot of my landlords do approve every repair- Mm

but over the years, there have been some unreasonable repairs. Not everything does have to [00:22:00] be fixed if it feels like it's unreasonable. But again, your point, look at the bigger picture. Is it worth denying?

Imti: Yeah. And I think it also just comes down to a partial repair, right? It could be a situation where they ask for something to be replaced, whether the stove's not working, and they're like, "Oh, can we just replace the whole stove?"

And it's like, "Oh, well, I can get a tech out for you tomorrow that replaces that one burner that's not working." it's one of those things where it's a delicate balancing act, right?

Skye: Makes sense.

Imti: you said it at the very start, Skye, that most people generally are just trying to do the right thing where if it's a reasonable request, generally you'll just get a yes. At a legislative, do I have to action every repair, the actual answer is no, though.

Skye: Yeah, because it may not be required. It's not an essential item. So let's say, for example, there is a hole in the carpet and it's just, it's not a tripping hazard. It's in the corner. It just might be a bit ugly,

Imti: mm.

Skye: You don't have to repair that.

Imti: Yeah.

Skye: 'Cause your tenant's gonna be happy.

Imti: You're not gonna rip up all the carpet.

Skye: Yes. But look at the bigger picture and what the end goal is

Pete: Do you send [00:23:00] everything to your landlords, though? Like, if you get an unreasonable request, can you as the property manager just not send it or have the conversation with the tenant and be like, "You know what? This is unreasonable. I can send it over"- Kinda still kinda-

Skye: No, I would be sending everything to the landlord-

Pete: Okay. Yeah

Skye: ... because that would probably form part of their annual review where we're like-

Pete: Yeah

Skye: ... How is the tenancy going? Well, they've reported nine unreasonable repair requests. While we're not reviewing that to look at, you know, let's get rid of the tenant because we can't, it's just part of that bigger picture, and also part of showing landlords what the reality is. Hiding that sort of s- information, or not sharing it-

Pete: Mm

Skye: ... probably is a better word, doesn't do them any favours 'cause they think everything's going great.

Pete: Yeah.

Skye: And I'm like, "Actually, your tenant's a pain in the ass."

Imti: Mm-hmm.

Pete: Yeah, that's fair.

Imti: Yeah. And anyone who gets really hung up on this point probably shouldn't be investing in property.

Skye: Mm.

Imti: In the sense that-

Skye: Yeah, we've long said that ...

Imti: like, if you go into- 'Cause you can't afford it ... yeah, if you go into investing in property and understanding that, you know, you're providing housing to someone, and someone lives in the house, houses break, things get old, [00:24:00] things have a usable life. If you can't accept that, which is a fact of the matter, then you really shouldn't be getting into property investment. Or if you are, you really shouldn't be getting cranky that you're getting repair bills-

Pete: Mm.

Skye: Mm

Imti: ... because-

Skye: It's your asset ...

Imti: stuff breaks, it needs to get fixed.

Skye: Yeah.

Imti: But let's talk about the more ridiculous side of things.

10

Imti: Number 10, can I stop the tenant from painting the property pink?

Skye: No, you cannot. As long as they return it to the original condition when they leave, you absolutely cannot. And this one floors landlords when I tell them ' cause they're like, "But it's my property."

Imti: Mm.

Skye: Yeah, but they're renting it. They're living in it. Yeah. And under the 2024 reforms, they can do what they like with written permission. They actually can't do it without that. That's a very clear point I've had to explain to a few tenants. But the, the, the key wording is the landlord can't unreasonably deny.

So if they say, "I wanna attach some swans to the wall"-

Imti: Mm

Skye: ...

you can't unreasonably deny, but they have to patch that wall when they leave. So think that's a ... And that covers everything. They could replace the [00:25:00] kitchen-

Imti: Mm ...

Skye: if they chose to, and put your old one back in if they leave. I've had upgrades made to properties by tenants. They can take that with them when they leave.

Imti: That's so interesting.

Pete: Yeah. Actually, we were looking at a property a couple of months ago, and the tenant had put this shed up and he was taking the shed with him.

Skye: 100%.

Imti: Yeah, 100%.

Pete: And it's a big shed,

Skye: We see it a lot with shower heads. Tenants will upgrade a shower fitting- Mm ... 'cause they want a better everyday experience.

Imti: Yeah, 'cause the landlord spec shower head's horrible.

Skye: The landlord special's terrible.

Pete: Yeah.

Skye: And it's slow flow, so then the landlord's sees this in the routine inspections. They're like, "Oh, yeah, there's a beautiful rainfall shower."

No, that's the tenant's.

Imti: That's coming with me when I leave.

Skye: You gave them permission to modify it, but that's theirs-

Pete: Yeah

Skye: ... if they wanna take it.

Imti: Mm-hmm. And that's the key thing here, right, is that it's understanding that, yes, as the landlord you own the property, but it's the tenant's home.

Skye: Mm.

Imti: And so they can do what they wanna do, so long as they hand it back to you in the same state that they got it in.

Skye: Yeah. Just a side note to that, where I see this being a challenge is when it's been [00:26:00] someone's owner occupier home.

Imti: Mm.

Skye: And they've moved out and rented it out. With, and you probably understand this, Pete, but when people have purchased it intentionally, they've never lived in it, I don't see that crossover happening as bad.

Pete: They don't care.

Skye: No. They want their tenants happy- Yeah, yeah ... because it was intentionally an investment. It wasn't ever their home.

Pete: Yeah.

Imti: It's that big emotional attachment, right? If you did used to own the home.

Skye: It's a physical, tangible asset. Yeah.

Pete: Almost insulting to change something.

Skye: Yeah. Yeah, yeah. Like, what do you mean?

I lo-

Imti: That was my red feature wall ...

Skye: I love my, I love my pink house.

Pete: But that's where the ingoing report is so important.

Skye: Protects you.

Pete: Yeah.

Skye: Yep. Mm. So that you don't have to deal with that pink paint when they leave.

Imti: Yes, but-

Skye: So there's proof that it was white first.

Pete: Yeah, you need the proof. That's it. Yeah.

Imti: Yeah, yeah. So for anyone who's wondering what a ingoing report is, I'm sure we'll cover it in more detail.

11

Imti: Number 11 on the note of the tenant doing major works, can the landlord do things like replace a kitchen or renovate a bathroom while the tenant's still living there?

Skye: Mm. I feel like I want you to open this, Pete, 'cause you started talking about it, and then I was [00:27:00] like, well, actually, I will encourage landlords to consider it for the tax deductions versus doing the repairs before the tenant comes in. How can we manage repairs with the tenant in place while not upsetting said tenant?

Pete: Yeah.

Skye: And that looks like are we offering some discounts? How are we managing the inconvenience for the tenant?

Pete: Yeah. I completely agree on that side. It's all about what the tenant wants, yeah.

Skye: Yeah.

Pete: I think from my end it's with the buy side where it probably needs work.

Skye: Mm.

Pete: And I don't know why.

Some re- some clients and investors will just get hung up on things, and they then start to become emotional about it.

Skye: Mm.

Pete: And they'll be like, "That kitchen's ugly."

Imti: Mm.

Pete: "Maybe we should renovate that. Doesn't matter if the tenant's in there, let's just fix it."

Skye: Yeah.

Pete: 'Cause they're like, "Oh, we'll get a quick equity uplift on it, and then we might be able to do a whole

Skye: To buy again ...

Pete: Yeah.

Skye: Yeah,

Pete: refinance it out. Let's do a renovation and take the money back out to buy a second property, and they just overcomplicate it, and then just assume that they can do that while the tenant's in there.

Skye: Mm. And-

Pete: At market rent and all that kinda stuff.

Skye: Yeah

Pete: Which is just not fair

Skye: And that's the key point, I think. I've managed a bathroom renovation with a tenant in place, [00:28:00] and we were marketing the property, and the bathroom was horrific.

Imti: Mm.

Skye: And this was a while ago, but, let's say market rent was 350.

We marketed the property with the deal of for as long as the renovation takes, your rent's only 200 a week.

Imti: Mm-hmm.

Skye: And then it's going to step up. And the person who grabbed it was so grateful for the opportunity to actually save money. So there's ways around doing it, but I think it's the landlords who don't understand that it has a pretty big impact on the tenant.

Pete: Yeah. Especially if it's a long-term tenant because they're happy with the place. So as a new landlord, you don't wanna go in there and mess it up for them.

No. Unless they're open to it. But I do- Yeah ... find if they're there six, seven, eight years, they're pretty happy with how it is.

Skye: Interesting, 'cause I'm going to be doing some content on this that might disagree with you, Pete.

Pete: Yeah, yeah.

Skye: That sometimes if you've had a tenant in place for eight years, you're not looking at those little upgrades, and the tenants will choose to leave because you haven't upgraded-

Pete: Well-

Skye: 'cause you're assuming they're happy.

Pete: Yeah.

Skye: So I think that's that communication piece-

Imti: Mm ...

Skye: with the tenants that your property manager should be having conversations around. Mm.

Imti: Yeah. If [00:29:00] we were to boil it down to, let's say, two sides are butting heads, the landlord wants to rip out the kitchen and do a renovation, and the tenant's like, "No, I don't want my quality of life impacted," who wins in that argument?

Skye: Tenant. It's their home.

Imti: Mm-hmm.

Skye: And that's what frustrates landlords.

Imti: Mm-hmm. '

Skye: Cause they f orget it's not their home anymore. It's the tenant's.

Imti: That's the common theme that we keep on hitting, right?

Skye: Mm.

Imti: Is that you may own the house. It's the tenant's home.

Skye: Mm.

Imti: And you can't really encroach on that.

Let's talk about the end of the journey. So we've had the property for a while now. We're looking at selling.

12

Imti: Number 12, can I sell the property empty? So can I decide if I sell it vacant possession? Can I decide if I sell it tenanted? How does that work?

Skye: Mm. Previously when the reforms first came out in 2024, that was a hard no.

You, you wanted to sell your property, you were selling it with the tenant in place. Luckily, they realized that was idiotic, and they did make amendment to that reform. [00:30:00] So now you can issue minimum 60 days notice before the end of the fixed term and you could sell it empty at the end of that fixed term. But let's say you've got tenants in there for another 10-month term and you need to sell it now, you're selling it with the tenant in it. Now, if it was a situation that you had to, I'm having that conversation with the tenant of, "Look, this is what's happening."

they're having to sell. Can we perhaps help facilitate a move now, i.e., some cash?" help you cover your moving costs. Can we make this easier? And you start looking. You've got time to look. But chances are your tenancy's coming to an end anyway." So it's just that negotiation to make it happen, but otherwise, no, you're selling it with the tenant in place, which can affect your bottom dollar for your sale price depending on your tenant.

Imti: What about flipping that on its head? What if it's a owner-occupier purchaser who wants to buy tenanted property?

Skye: Mm.

Imti: Can they just on settlement day be like-

Skye: Move in ... "

Imti: See you later"?

Skye: Yeah, no. Yeah, that's a really common one [00:31:00] that they assume because they own the property they can move in, but the tenants are protected for the term of their fixed term regardless of who owns the property.

Imti: Mm-hmm. So you couldn't even take over ownership and give them 60 days notice.

Skye: No.

Imti: You'd have to ride it out until the end of the lease.

Skye: Correct. I mean, there's nothing stopping the sales agent having a, again, a discussion with the tenant and financially motivating them, but other than that, no.

Imti: Mm-hmm. So when it comes down to selling the property vacant, really your only chance is last 60 days of the lease that are left.

Skye: Mm.

Imti: You give them notice, and you can then essentially list the property on the market as vacant possession after settlement.

Skye: Yeah. Which is why it's something to think about when you're looking at that rent renewal process. Like, okay, were you definitely holding it for another 12 months, 'cause you haven't got capacity to change your mind six months in.

Pete: Yeah, and I don't believe you get the best price when it's tenanted as well.

Skye: 100%.

Pete: Sale price. Like, I've never really seen a property-

Skye: I've never seen it

Pete: with a lease that's got 10 months left.

Skye: I've never seen it.

Pete: Yeah, and you get a good price for it. '

Skye: this [00:32:00] isn't to slam on tenants either.

Pete: No, no, no. But

Skye: if you've got the luxury of either having it fully empty, clean, no one in it, or you've got the luxury of being able to professionally style it-

Pete: Mm

Skye: it's guaranteed a higher sale price.

Pete: Yeah.

Imti: Mm.

Pete: Switched on owner-occupiers won't be making any offers on a property which is tenanted for another 10 months.

Skye: No, 100%.

Imti: And emotional owner-occupier purchasers tend to be the big swings.

Skye: That's where we get the big dollars. Yeah.

Imti: That's where we get the big dollars, right.

Skye: Yeah, it is. That's the reality. And I've seen it really go quite far the opposite way, where a tenant will actually cost you a sale.

Pete: Mm. Yeah

Skye: When it's poorly handled

Pete: You're trusting them to have it ready for the opens every weekend

Skye: You're asking them to clean it Yeah, exactly for no benefit of their own. That's pretty unfair when you think about it. They've gotta get out of their own home

Imti: Yeah

Skye: Make sure it's clean, disrupt their weekend every weekend for a month or however

Pete: And if you've been a shit landlord Yeah, they're they'll get you back

Skye: 100%. I'll never forget

Pete: Always comes full circle

Skye: there's one tenant who sat on the couch through every open inspection glaring at every [00:33:00] buyer that came through

Pete: Yeah, I've had

Skye: That property did not sell

Pete: Had a few opens like that too.

Imti: Mm.

Pete: Yeah.

Imti: Mm. that's a really strong point to bring us home on, is that there's a lot of confusion around what landlords can and can't do, but a lot of this conversation has actually flowed around should you

Skye: Mm ?

Imti: Because everything kinda comes full circle. If you look after that tenant through the whole journey, do the little repairs that you don't have to but you should, when it comes down to if you're looking at selling or if you wanna do major works or even just general maintenance of the property, they'll generally give back to you,

Skye: right?

Cooperation, yeah. It's give and take. That's what the whole relationship is always.

Imti: Great, and I think that's a awesome place for us to wrap up. If you do want to connect with us on socials or want help on your property journey, we'll leave our details in the show notes.

If this is your first episode, welcome aboard, and if you're a return, thank you for coming back [00:34:00]