Who would you rent it out to?

DH and I are renting our unit out when we move. I am in a dilemma in that my brother's friend in interested inrenting our place out. He is married with a little boy (about 8mths). We have listed it with a real estate agent and they have said that the Dept of Housing is interested in our unit. There are a few other units in our block which the DoH have rented out to tennants. Bro's friend has come to look at the place and is willing to rent, but asked us to drop the rent a bit $10-20, but said if we couldn't, he is willing to pay what we have asked for. We will still be going through the RE no matter if it's him renting the place or not. He said he will sign a 6mth lease, but could be here for a year or more (I haven't spoken to him about taking out a longer lease though). DoH is likely to just take the rent at the price it is and will pay no matter what and they will probably sign a long lease too.
For some reason I have a feeling that I should rent the place to Bro's friend. Bro will be coming to the place to visit his friend regularly etc. DH wants the DoH to rent the place as it is a gov't agency and will most likely be a more stable option. We don't plan on coming back here and would be renting the place out til (if) we sell in 5+++ years.
So what would you do??

Without intentianlly causing offence to anyone who may be in govt housing, if you rent it to DoH then you have no control over the tennants that they put in the house.
If you rent it to anyone else you get to deicde based on their applications and have a better idea of the sort of tennant you are getting.

Hard to say. I would lean towards your bro's friend. Do you know him well enough to answer these questions:
Does he normally pay his bills on time?
Is he a clean person?
Have you been to his current residence? Can you assess whether he would look after your property?
Why is he moving?
I would also make him pay the higher amount as I would be inclined to believe he is just trying to get a cheap deal from you. You can always tell him any less wouldn't cover your repayments so you just can afford to drop the rent.

DOH might be more likely to pay but do you get any right to veto their tenant? You just don't know who the DoH will let in IYKWIM. I would be scared that they would put in the type of tenant you see on ACA. I know that type are the minority but you have to consider the possibility.

Having said that, in both cases, take out landlord's insurance. It's not expensive and will give you peace of mind. Also make sure your agent does a reference check.

I was thinking that. DoH might end up being more drama's than someone you know you can trust.
I guess they would repair any damage done, & hopefully be reliable. Some good people rent through DoH, but on the other hand, some aren't so good.
I don't know, I've seen alot of not so good DoH renters. More than good ones, but thats probably just where I grew up.

hmm tough one hun. i agree with pandora, i really wouldnt go the DoH route, to risky, u dont know what condition ur house will be in at the end of it (ACA horror stories come to mind! eek!)
as for the friend, i wouldnt do that either, ppl tend to take advantage of situations even though u think they wont, ei oh i dont have rent this week i'll give it to u next week....next week...heres part will have the rest next week IYKWIM?

if it were me i'd rent it through the real estate, atleast that way they HAVE to pay rent, and if they dont u can kick them out and u can screen potential tenants and get the weekly rate ur after

Thanks ladies, most of the reasoning you have all pointed out WRT DoH are issues I had. I am trying to open minded about it, I know not everyone through DoH is, but there are so many dodgy tennants through DoH. (So sorry if I have offended!)
With my Bro's friend we will be going through the RE anyway. If he rents, it will be through the real estate because we will be 900km away. I want the RE to be in charge.
I have a gut feeling we should go with Bro's friend. I know if we went with DoH they would be responsible for any damage or lost rent, ect, but I still have reservations. I just can't explain that well to DH or with sensible reasoning, to him having a gut feeling isn't good enough. Though lately I have noticed I have been trusting my gut and it's always right. If I can get Bro's friend to pay the full rent and sign a 1yr lease, DH will be happy.

I used to work as a Property Manager, and to be honest, I personally would not lease any of our investment properties to DoH. Only because I have seen first hand what can happen. Of course, this is generalising DoH a lot, and I know there are some lovely tenants that rent through them. But as a whole, nope, wouldn't do it. You don't know who you're rent to. Whereas, with bro's friend, or any other tenant for that matter, the RE can do the proper checks on them, and you know (to a certain degree) who you are renting to. And if there are any problems with vacating, rent, etc, the RE deals with the tenants. Dealing with a Govt agency regarding this is a nightmare.

I have a rental property, about to sell it though ;) But I would rent to Bro's friend through the agent.

Some DoH renters a great, really clean respectful, others not so much and as you can't control who you get I wouldn't rent it out to DoH, it is your investment and I wouldn't like to take the risk IYKWIM.
Goodluck :hug:

Rent it to me ;) :)

Go with your gut. Personally probably the bros friend.

When my family moved to melbourne, mum bought a great flat in a great block. We lived there for 13 years (mum and little bro still do). Only downside; one of the flats was rented out to the DoH. I know not everyone in govt housing are bad people, but over the course of my 13 years living there, there is no way I would rent your flat out to them, sorry. We have had drug dealers, bashing, police there at all hours. Our property was stolen and damaged. The owners of the flats were the body corporate, we got new gates and a new driveway put in; gates were smashed by 'friends' of the people in the DoH flat. It all came to a head with some people going upstairs to a neighbours flat and bashing her son who was visiting from Japan, right in front of his wife and 6 week old baby. You will have no control over who comes and goes. I'd go with your bro's friend, as at least you will be able to have your bro visit and you will have that piece of mind. Hth.

If this is an investment, how do the figures stack up? If DoH cover any repairs and you are guaranteed the income (with no downtime in rent while it is vacant), then you'll more likely be ahead in the $$ dept. Sure, it's not great that it might get damaged, but worst case scenario is unlikely and really, a lot of RE agents are not that great in vetting tenants anyway. You don't have to live there and while I'm sorry for everyone whose had to put up with bad DoH neighbours - Kel's going to be far away!

The biggest cost is when the unit is unrented. If your Bro's friend moves out after 6 mths (even 12) and the unit sits vacant for a few weeks, you've probably already ended up behind. And there's no guarantee if a normal tenant does enough damage/doesn't pay their rent that the bond will cover that. What about the next tenant (not your Bro's friend)? And I know how much landlords get hassled about every little thing that goes wrong (plumber, electrician, light bulbs need changing - seriously!). While a RE agent can take over all of this, it will cost you.

Emotional feelings aside, what's the comparable return between both options? If this is a business scenario that's the most important consideration. Five years of guaranteed rental return with no break where the unit sits empty might be more than enough to cover the cost of renovating, especially if DoH is responsible for a portion of costs with any damage. JMHO!

I wouldn't rent it to either. And I would be very hestitant about taking on the REA who suggested renting to DoH.

If the 'friend' of your Bro's os already asking for a reduced rent, this is a warning sign to me. Obviously it depends on how well you know him, but at the most I would be telling him that his is able to apply to rent it through the REA, just like any other potiential tenants. Keeping an armslength between yourself and you tenant is a good idea, being a landlord is like running a business.

DoH - I think everyone has already said everything about that. ;)

Arrrgh!!! I'm sooo confused!

Spoke to the RE this arvo, and DoH is interested, but hasn't given any difinitive answers. But they will take out a 3yr lease with us. Rent is optimal, and paid in full for 3yrs. They will also raise it $15 each year. My gosh that would be $410 in 3yrs!!! For a 2br 2bth unit! Wow...That's phenominal! DH and I have no intention of moving back here. RE said they have tenneted 5 units in our block to DoH. We have never had any issues with anyone in our block of units.... I have called Bro's friend and told him about our position, I told him I would give him a definate answer with in a week... Financially, giving the place to DoH would be our best bet. Oh man...decisions! I'm getting anxiety thinking about it!

Kel - you've just answered your own question. You're a guaranteed income for 3 years, an increase of up to $410 over that time. This is a business transaction, and don't forget you're not going to be working in your new life - you need that certainty to make the repayments on your investment.

Move emotion away from the flat, you're not going to return, it's a business transaction. Look at the figures ... also, if it was anyone *but* your bro's mate, would you even be considering renting? In reality, he's a stranger who your brother hangs around with. :hug:

Ask the DOH if you get ANY say in who they give it to babe... we have BRAND NEW flats next door... trashed.
And once a property is DOH, everyone knows it. VERY hard to rent out again later for a good price, especially if there are more in the area.
Not sure if its the same as it is here, but once you put too many DOH places too close, the whole area is ruined. (no offence to DOH folks, but is it true here for those that know where I live)
You may find its good rent for awhile, but your resale in a few years will drop dramatcially. We only have 2 in our whole estate, and we have already lost alomst $90,000 in value.
The couple across the road have lost more than us, and cannot even afford to sell because they would still have a mortgage left over.

Will DOH buy from you later? A private buyer wont pay much for exDOH here at all, might be different where you are though....

Hmm, at the mo (for 2 more weeks, woohooo!!!!) we live in a pretty low socio-economic place anyway. The sale price hasn't risen much since we've had the place anyway, but rent is through the roof! We are going to try to keep the place as an investment. Plus there are DoH places in the block of units we live in anyway (about 4-5 the rent out from owners). We are looking at it being a fairly long term investment property hopefully considering everything goes to plan, lol!
I asked the RE if we have any say in who rents the place with DoH and he said no. He said they are much stricter with who comes into places now and that if we want them out they will evict them....not sure how right he is though or if he's just trying to go the easy way out for himslef??
Financially DoH is our best bet...

I would just make sure that regardless of who you rent it to you have landlords insurance so any property damage is covered.

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Without intentianlly causing offence to anyone who may be in govt housing, if you rent it to DoH then you have no control over the tennants that they put in the house.
If you rent it to anyone else you get to deicde based on their applications and have a better idea of the sort of tennant you are getting.

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That's basically what I was going to say - through DOH you won't know who it is going to be renting.

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I asked the RE if we have any say in who rents the place with DoH and he said no. He said they are much stricter with who comes into places now and that if we want them out they will evict them....not sure how right he is though or if he's just trying to go the easy way out for himslef??
Financially DoH is our best bet...

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Babe, he is lying.
We have a neighbour who is a convicted felon who has abused ALL the neighbours, yelled and sworn at kids, threatened me and my kids, trashed the whole estate and made everyones life hell.
The owners had no luck getting them out. They have been here for a year, with 4 more to go. DOH will openly tell you they try to leave tenants permantly, and wont move them. You will have no rights as far as I know. DOH even refuse to take complaints from anyone in the estate now because they get too many, so there is nothing we (or the owners) can do. They literally dont care what they do.

ETA... they have literally ripped up carpet and thrown it over the fence, rubbish everywhere, trashed the fence, have beer bottles everywhere and we have heard him punching walls all the time.
After an inspection, they are still allowed to stay 4 years as they were told they get it for 5 years.

We were also told they are stricter... we actually spoke to the head office in Sydney... that loosly translates into they are stricter who they let rent... the more needy get them, not the best tenants!!!