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Question for Landlords
Would you accept 12 months rent in advance?

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21 replies to this topic

#1 blondie82

Posted 09 April 2012 - 04:21 PM

As per the title.....so would you accept this from a prospective tenant?

Is that an attractive offer?

#2 mumma78

Posted 09 April 2012 - 04:24 PM

I had a friend who did this, offered that much up front, but no-one would accept his offer. Not sure why, I am interested as to why this would be.

#3 TwiceTheWoman

Posted 09 April 2012 - 04:25 PM

Hell yes.  It means the tennant is serious.  I'd be especially happy given today's economic climate.
P.S., Have had it offered only recently and accepted.

#4 Pompol

Posted 09 April 2012 - 04:27 PM

SIL accepted this from a tenant. They offered 12 months in advance but at $20 / week less. The market where she is was very competitive but she managed to save a bucket on interest on the mortgage so it was win/win.

#5 Guest_Cathode_*

Posted 09 April 2012 - 04:31 PM

As a Landlord, I would accept 12 months rent in advance - provided it wouldn't be on a cross over for a CPI (annual) or market review (we do that every 3yrs).

#6 Goggie

Posted 09 April 2012 - 04:36 PM

Yep. A friend of mine had a similar offer from a family that had fire damaged house and needed renovating and repair. It was an insurance payout so she was happy to take the money upfront for guaranteed tenant.

#7 Eeyolet

Posted 09 April 2012 - 04:38 PM

My Mum offered this as she was in between selling and building a house, the landlord gladly accepted.

#8 Madnesscraves

Posted 09 April 2012 - 04:40 PM

Yep. Doesn't bother me. 12 months upfront sounds good. Had 1 tenant offer 3 months advance but they backed out at last minute.

#9 sandy_1985

Posted 09 April 2012 - 04:43 PM

Sorry not a LL, but a renter.
We offered 8 weeks in advanced on our application, and when we paid the amount we said we would the RE was confused. Apparently they didn't see the offer.

We offered the extra upfront to create a positive relationship and to get some requested modifications through.

#10 opethmum

Posted 09 April 2012 - 04:50 PM

As long as their references check out then no problem and all the power to you. Also I would just request RE inspections just to check that they are not using your house/unit as a boarding house set up.

#11 JRA

Posted 09 April 2012 - 04:50 PM

The tax implications of getting 12mths in advance may not be worth it.

But I am not sure how you need to account for it as an individual when it has been received in advance as compared to a business.

So I would need to look into that.

If it is deemed to be income, even though you haven't as yet provided the service, no. It would bump up income too much (depending on the time of the year) and then push up the PAYE tax the next year a lot higher, when in fact it shouldn't be.

Edited by JRA, 09 April 2012 - 04:50 PM.

#12 mombasa

Posted 09 April 2012 - 05:14 PM

We would, our tenants currently pay 3 monthly.

#13 Guest_Retro_Mumma_*

Posted 09 April 2012 - 07:33 PM

No, id have to pay more tax that financial year.

Also if the market allows I usually put the rent up after 6 months depending on the rent review.

#14 Guest_holy_j_*

Posted 09 April 2012 - 07:45 PM

Another consideration, if you take that money and put it off a loan or something, then the tenants decide to break lease, you could have to cough up that money in a hurry.

#15 mum@work

Posted 09 April 2012 - 08:22 PM

We took 6 months in advance. It mean that it was in our account and not theirs. The only issue with that length of time might be that if you have to end their lease for any reason, you want to make sure that you have some of the rent if you need to return it.

#16 SeaPrincess

Posted 09 April 2012 - 08:50 PM

It wouldn't persuade me to take someone without doing all the proper reference checks, and I'd also maintain the normal inspection schedule. TBH, I don't think our property manager would go for it - when expenses come in, such as maintenance or rates, they are deducted from our rental income, so it's easier to be paid periodically anyway.


#17 casime

Posted 12 April 2012 - 01:03 PM

I did it once for a property that I rented.  I'd sold my place, and was waiting to build a new one.  It was easier to just pay the nine months rent in one lump sum at the start after my old house settled and not worry about paying during the tenancy.    

If the tenant concerned me in any way then I wouldn't take it, but if they seemed like good people and had good references, then I'd be happy to take it.

#18 lozoodle

Posted 12 April 2012 - 01:09 PM

I'd be hesitant to do that because it would affect the tax effectiveness of the property, wouldn't it?  Having that bulk amount come in up front would then mean that my income was more than my expenses on it for that financial year which would mean no tax break.

One of my main reasons for having an investment property is because it reduces my taxable income.

Or I could be wrong that receiving 12 months in advance would do that? unsure.gif

#19 Guest_tigerdog_*

Posted 12 April 2012 - 01:13 PM

QUOTE (holy_j @ 09/04/2012, 07:45 PM) <{POST_SNAPBACK}>
Another consideration, if you take that money and put it off a loan or something, then the tenants decide to break lease, you could have to cough up that money in a hurry.

This is what I thought, or if something happens and you have to sell the house (you could put it in mortgage redraw though, but then as PPs have pointed out, there may be negative tax implications).

#20 BetteBoop

Posted 12 April 2012 - 01:14 PM

QUOTE (JRA @ 09/04/2012, 04:50 PM) <{POST_SNAPBACK}>
The tax implications of getting 12mths in advance may not be worth it.

But I am not sure how you need to account for it as an individual when it has been received in advance as compared to a business.

So I would need to look into that.

If it is deemed to be income, even though you haven't as yet provided the service, no. It would bump up income too much (depending on the time of the year) and then push up the PAYE tax the next year a lot higher, when in fact it shouldn't be.

This is a good point.

My father accepted 12 months rent in advance so to offset tax, he put it straight on the mortgage repayments on the rental premises.

He negotiated a cheaper rate with the bank for paying upfront so it was win/win. But if you don't do this, it means you get all income in one financial year which could have a tax bill at the end of the financial year.

#21 Charlotte84

Posted 12 April 2012 - 01:15 PM

As a LL no I would not accept the 12 months for 2 reasons:

tax purposes mainly

and if for some reason the lease had to be broken who owes who what could get messy.  

Getting 3 months or so rent in advance can be attractive (not so much anymore for us) but personally that doesn't sway me as a LL. (I know some people would be different)

#22 Pearson

Posted 12 April 2012 - 01:18 PM

Why not just take 6 months up front?

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