Monday, January 28, 2008

A Tenant At Last (2)

After a lot of negotiation on the terms of the lease, the prospective tenant for my only vacant property has finally become an actual tenant (about a week after I had hoped to sign them up).

Not surprisingly, the most difficult part of the negotiation related to whether the tenant could leave early should the exterior renovation works take longer than the management office is telling owners. My position was that this was wholly outside my control and I would not be held accountable should it be delayed. In the end the compromise was to simply leave in the usual break clause after 12 months (although in a market where rentals are steadily rising, landlords are starting to remove them from leases). In effect, the risk lies with the tenant for the first 12 months and with me after that.

In any case, they have signed and have paid the deposit and the first month's rent. The only open issue is to get them onto auto pay to reduce the risk of late payment.

I am now back to 100% occupancy and no tenants in default. This will have a positive effect on my cash flow and, combined with the interest rate cuts now starting to be reflected in my mortgages, will leave the portfolio with a healthy positive cash flow. Amid the downturn in the equity markets, this is a welcome development.

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