Too many property managers are opening themselves and their clients to unnecessary risk by allowing fixed-term leases to become periodic, one industry trainer has said.
Speaking with Residential Property Manager, managing director of Irevolution Jo-Anne Oliveri said it was one of the main concerns that experienced landlords have with property managers.
“We find that a lot of agents give the wrong answer when a landlord asks whether they prefer fixed-term or periodic leases,” she said.
“A lot of property managers will say there’s really no difference between the two, but fixed-term tenancies are far better for the agent and the property owner, as well as the tenant.”
Property management departments without proper leasing processes fall into the trap of letting the tenant house-sit for months, or even years, on a periodic lease without any renewal.
According to Ms Oliveri, fixed-term tenancies reduce the risk factor by giving stability to the landlord’s cash flow as well as the office’s rent roll.
“Because we know all the tenancy terms are nearing an end we have the ability to increase the rent at a scheduled time. While on a periodic term, property managers tend to lose that ability, and tenants can leave if they’re not prepared," she said.
“On periodic leases, the tenant can also advise you that they’re terminating their tenancy at a moment’s notice. They could do that during a period where there’s an oversupply of properties, which can severely disadvantage your client.
“As a property owner, it allows them to manage their cash flow better because there are no surprises when a tenant leaves, so they can budget for it.”
In her new book, Find Your Property Manager Now, Ms Oliveri shows landlords how to separate good property managers from the rest.