Big Congratulations to All Blacks winning the first back-to-back Rugby World cup!! Go ABs!!
It was a convincing win and so inspiring for us to watch. The All Blacks confirmed themselves as a really special team and the benchmark the rest of the world must chase. All Blacks really made New Zealand proud and they demonstrated nothing short of pure class.
As corny as it sounds, watching All Blacks making history as the first back-to-back champions and see how humble they are after going through so much on and off the field, we can’t help but feeling the desire and motivation to lift our standard, lift our game, to be better, to be setting ambitious goals and to be the best that we can be.
All Blacks, you have done us so proud and indeed you are the best in the world.
Are you Too Busy to Grow Your Auckland Portfolio?
When you look at the average Property Management portfolio, most landlords get stuck on one or two properties and fail to grow their portfolio to the levels that they could. Why is it that so many landlords fail to achieve their goals when they get into Property Investment?
There are two main reasons for this. The first is failing to plan and not having a strategy. However, probably the main reason is that people get too busy to search. This is where your Property Manager can assist you. Your Property Manager will understand the local market and they will be able to inform you regarding realistic rents for potential investments. They can also assist you with identifying what type of property your potential investments will attract. This will give you a good indication of potential income for your property.
Your Property Manager will also be able to give recommendations on how to increase the rent through renovations and décor. This can important as the right advice can see you add capital value to your portfolio and increase the income through higher rents.
The ability to do this means that you can then use the new found equity in your property to leverage and grow your portfolio. However, you have to ensure that you do your homework and know what the income and the outgoings are likely to be.
Take into account repairs and maintenance – you have to allocate a percentage of income towards this. It will vary depending on the age and type of property. For example an older weatherboard property will probably cost more to maintain than a two-bedroom apartment in a city.
To succeed in property investment you need to build a great team around you. Your Property Manager should be vital to your success.
Landlord Insurance: Why You Need It
Being a landlord can be expensive and it is always tempting to see if you can save money. One item that many landlords believe that they do not need is landlord insurance. The landlord often believes that they do not need landlord insurance for items such as missed rent. This is why I have a property manager isn’t it?
Having a Property Manager does not guarantee that things will not go wrong. Good tenants can go bad and even the best Property Managers in the world have to deal with disputes on a regular basis.
What having landlord insurance does is that it virtually guarantees your income if your tenant defaults on rent. It will likely also cover for damages caused by the tenant.
An example of where it is so important is around the growing and disturbing trend of Methamphetamine production in rental properties. Meth contamination can be devastating and can cost in excess of $100,000 to clear a property of it.
The Christchurch earthquake was also another example of why having landlord insurance is so import.
Our advice will be to ensure that you have landlord insurance in place and your Property Manager can assist you in sourcing the best landlord insurance for your investment
Spring Investor Activity Set To Soar
As the cold winter season moves on, Spring is often seen as the time when many people will put their properties on the market.
With low interest rates fuelling a busy market, we are seeing increased investor activity throughout the country. Increases in prices outside of Auckland are also a factor as many people start to look elsewhere.
One place that has seen a cooling off period is Christchurch, as supply now seems to be meeting the demand. Prices have levelled out which again may mean that investors will start looking at Christchurch as having a greater potential for capital gain in years to come.
Bright-line test for the sale of residential property
Effectively means from 1st October 2015 tax is payable on any profit on the sale of residential property where the property has not been owned for two years.
There is and always has been a statute that allows the IRD to tax persons who buy and sell land with the purpose or intention of disposal later. Speculators are caught by existing legislation, which is section CB6(1) of the Income Tax Act 2007. However, the issue for the IRD has always been one of enforcement difficulty, and it is suggested that the Bright-line test will do away with this.
One of the issues with the new legislation is that whilst it may catch the speculators, who it is targeted against, it may well detrimentally affect local tax payers ie NZ tax payers who need to quickly sell a property within two years of purchase due to unforeseen personal circumstances.
There are exceptions to this bright-line test where the property is the seller’s main home, inherited from a deceased estate, or transferred as part of a relationship property settlement.
Capturing land transactions is to be done by way of requiring the investor to provide a New Zealand IRD number as part of the land transfer process. In addition, non-residents will need a New Zealand bank account number in order to be able to buy a property.
A non-resident for the purpose of being issued with an IRD number will be defined as an “offshore person”. In essence this will be a person that is not a citizen or permanent resident.
These two requirements are now contained in the Taxation (Land Information and Offshore Persons Information) Bill 2015 (34-1) introduced on 22 June 2015. This information will be collected by conveyancers from property vendors and purchasers and provided to Land Information New Zealand which in turn will provide the information to Inland Revenue.
All non-resident buyers and sellers must also provide their Tax Identification Number from their home country along with current identification such as a passport. Primarily it is the obligation of lawyers to collect the information and prepare and file the Land Transfer Tax Statement, but vendors and purchasers need to be aware prior to entering into any residential property transaction that the required information will need to be provided.
Methamphetamine contamination – big problem for landlords
Nearly half of all properties tested in New Zealand are meth contaminated, according to new data which shows that landlords are right to be worried about the issue. Drug testing company Meth Solutions new data illustrates that meth contaminated properties are a big problem around the country.
In Northland 51% of properties tested were meth contaminated, while Bay of Plenty (47%) and Coromandel (46%) had the second and third highest percentages of meth contaminated properties. The South Island had the lowest percentage of meth contaminated properties – but, at 35%, it was still over a third of those tested.
In Auckland, 43% of properties tested were meth contaminated. When the Auckland figure was broken down further into the regions the percentage of meth contaminated properties was still high.
In both Waitakere and Papakura 48% of properties tested were meth contaminated. Even in the Auckland regions which had the lowest percentages of meth contaminated properties when tested (North Shore, Auckland City), the figures were still above 30%.
These are worrying figures for property investors and landlords – particularly as a property’s meth history often simply disappears into the ether. According to Meth Solutions, a property’s meth history only ends up on a LIM report if the police are involved and inform Council or if a disaffected tenant or buyer provide a meth report.
But properties contaminated by meth pose serious health risks and the costs involved for property owners can be astronomical.
Changes to Tenancy Act Puts Pressure on Compliance
Early in July, Housing Minister, Nick Smith announced significant changes to the Residential Tenancies Act that will see a greater emphasis on compliance.
The changes are predominantly around insulation of rental accommodation and smoke alarms becoming compulsory. There are other changes as well around laws regarding abandonment of tenancies and further protection for tenants against landlords who issues notices in retaliation.
However, the main focus is clearly on the gradual improvement of rental accommodation. The government has moved away from the controversial Building Warrant of Fitness with suggestion that it goes too far and will be an ongoing cost to landlords that will ultimately be another burden for tenants to pay.
As of 1 July 2016 all landlords will have to stipulate the level of insulation in walls, ceiling and under floor in new Tenancy Agreements. This will be a significant undertaking for many landlords and Property Management companies. Failure to state the level of insulation will become a breach of the Residential Tenancies Act and landlords may face fines for failure to do this.
By 1 July 2019 nearly all-residential rent accommodation will have to have adequate levels of insulation in the ceiling and under floor. All the Housing New Zealand stock will be retro fitted with insulation by 1 July 2016. There are estimated to be approximately 180,000 rental properties throughout New Zealand and with many Kiwi’s being priced out of the market in Auckland, a lifetime of renting looks a real possibility.
The other change is around smoke alarms. The new smoke alarm standards will require a minimum of one working smoke alarm in the hall or similar, within three metres of each bedroom door.
The landlord must ensure the alarm is operational at the beginning of a tenancy and the tenant will be responsible for replacing batteries during the tenancy.
Contractors are a Vital Part of the Team
Most professional Property Management companies will work very closely with a select number of contractors. With current Worksafe legislation being passed through Parliament, Property Managers will be forced to work with contractors that have specific Contractor Agreements with their agency.
Contractors will be forced to supply copies of relevant qualifications and Public Liability insurance. Without this, Property Management companies will be taking a risk by engaging unknown contractors. Any damages or injuries that occur as a result of maintenance work on rental properties may result in the Property Management company being held liable if it was negligent in the way it selected the contractor.
3 Qualities of a Dream Tenant
If you’re buying for investment, there is still the task of finding the right tenant to sign your lease. There are many ways of going about this, from searching through the internet, to asking around your friend groups, all the way to engaging a professional property manager to handle the process for you.
But if you’ve decided to do this yourself, you might be unsure what to look for in a tenant. We have a lot of experience in this area, and so here are three qualities that we think every dream tenant should have.
It’s next to Godliness, and more importantly, saves you time and stress! A clean tenant is less likely to have mould or mildew build up in your property, won’t have a problem with you when you want to inspect and also makes your inspection process so much easier!
Not to mention, it also reduces the risk of damage or long term wear and tear to your property. This can be hard to gauge solely on personal appearance, however, and might require some past references from landlords before you can be certain.
Timeliness shouldn’t just apply to the rent payments (although that is fairly vital!). When we say get a timely tenant, we mean someone who responds to your emails promptly, is not late to any meetings and generally doesn’t waste your time as a landlord.
Of course, this is a two-way street. Treating your tenants with respect is just as important for building a dream relationship with leaseholders, so make sure to also be timely in your communications with them should they get in touch!
It’s important to have tenants who can afford to pay the rent. As a landlord, you want to check this out before the lease is signed otherwise you might have a stressful lease period chasing up money. If you have a central city apartment with a high rental price, make sure your tenant is someone on an income that can match!
It’s very important to remember your responsibilities as a landlord, but don’t cut corners when you choose your tenants. Take the time to make sure the people who sign on to live in your property have the right qualities, and you will be sitting pretty for the future.
Small but ideal?
Do your tenants whisper these words as they peruse your rental property?
Or is there more of a pointed stare into inadequate wardrobe spaces and a pantry far too economical on shelving?
Your rental property might be small. It may not have much room for storage or anywhere to put things. But there are clever space-saving ways to overcome this issue to help your property stand out from the crowd.
There is value in creating inbuilt wardrobe space and ideally, providing some drawers for clothes. A garden shed and garage shelving are great options.
Good storage allows a greater choice of tenant. It increases the rentability of a property, which saves time.
The last thing you want is tenants fixing the lack of storage problem themselves, causing potential harm to walls and doorways as they attempt a temporary DIY or drag storage units inside.
Increasing return on investment
If you have the space and the budget, adding a garage or carport on to your property can be a great way to increase its value.
Often overlooked and taken for granted, the humble garage is actually a desirable property feature. Not only does it provide a home for the car, but it also provides storage space. For this reason, investors looking to boost the value of their portfolio should consider adding a garage, or carport, on to properties that don’t have them.
A surprising number of properties don’t have off-street parking, let alone covered parking space. And yet most people want it. This means that, for a landlord, having a property with even a modest garage on it is a real bonus. Not only does having a garage improve a property’s attractiveness with potential tenants, but it adds value to property. Therefore, adding a garage can boost rental returns, as well as increasing equity and return on investment on resale.
Realestate.co.nz national property management specialist Vesna Wells says that, nationwide, tenants tend to be willing to pay more for a garage. “Wells says the amount of additional rent that can be achieved, along with the potential capital gain, should form part of the decision on whether to build a garage.”
Consider all your options. Adding a garage to a property may be more complicated than it initially appears. Costs can be significant and it is necessary to navigate the consent process. However, the investment pays dividends. Not only will having a garage increase the value of a property, but it will make it more attractive to good tenants and is likely to boost rental income. Therefore investors who add one will reap the rewards.
We suggest you do your homework carefully and discuss with your property manager the possible return on investment should your property offer secure car parking, before embarking on such a project.
Induction is the Key to a Successful Tenancy
One of the most common mistakes made by private landlords is failing to do adequate background checks and spending quality time educating and inducting their tenant at the commencement of a new tenancy.
Thorough background checks such as credit checks; detailed references from previous landlords and ensuring that the tenant has a sufficient income to afford the property are vital for a successful tenancy. However, this is only part of the equation. Once satisfied with the background checks it is imperative that you spend quality time with the tenant going through the Tenancy Agreement and establishing their rights and responsibilities as a tenant.
This is an area that many private landlords get wrong as they are not educated themselves as to their rights and responsibilities as a landlord. Most professional property managers will spend as long as an hour inducting their tenants, ensuring that they are educated and that the tenant is fully aware of what to expect as a client.
Issues such as rent payments, inspections, who is responsible for gardens and what to do in emergencies are just some of the many topics that will be discussed. Quality time at the commencement of a tenancy can prevent many unnecessary disputes along the way.
Vital paper work required during a tenancy
Other than the tenancy agreement, the ingoing and outgoing condition reports are two of the most vital documents to be held during the management of your property.
We pay great attention to detail in our condition reports to protect your property and your interests. Our reports not only detail the cleanliness and state of repair of the property, but also appliance brand names and model details, the number and colour of window coverings and light fittings. We also take numerous photographs to illustrate the condition of the property.
The ingoing condition report details the state in which the property is handed over to the tenant and we use this report as a direct comparison to the outgoing report at the end of the tenancy when we determine the refund or otherwise of the tenants’ bond.
Should a bond dispute arise at the end of the tenancy our detailed condition report and photographs are vital – particularly should the matter be elevated to a tribunal hearing.
In such instances the tribunal member will rely solely upon the information contained in our condition report which prevents the misrepresentation of facts and minimises disputes.
End of tenancy cleanliness
We have all seen and heard the stories of the ‘tenants from hell’ – usually when a tenant vacates, but not every tenancy ends on a bad note. We find that most tenants do their best to do the right thing during and at the end of the tenancy but as with anything – things can go wrong.
In order to minimise the potential for damage or the need for cleaning at the end of the tenancy, we issue your tenant with a pre vacate checklist. Our pre-vacate checklist not only outlines the date that the keys are to be returned and rent is to be paid to but also includes a cleaning guide. Our cleaning guide incorporates the areas that require additional attention room by room and appliance by appliance.
In our experience, we find that most bond disputes centre around the cleanliness of the kitchen and bathroom areas and cleanliness of carpet. There are often differing interpretations of fair wear and tear and our cleaning guide is designed to eliminate such confusion by clearly setting out our expectations before the tenant vacates. The aim is to avoid the tenant being able to come to us and state: “we weren’t aware of what we had to do or I didn’t have to do this where I rented before”.
Our pre-vacate checklist is designed to ensure that all steps are taken by the tenant to leave the property in good order and that the tenancy ends well for all concerned. The ideal is that the property is vacated in good and clean condition and the tenant receives a full bond refund.
By pre-framing the vacating requirements we are setting clear expectations and minimising the possibility of confusion and upset for all.
Generation Rent: Lifespan of tenancies set to extend
Earlier this month Economist Shamubeel Eaqub released a book based on the changing face of home ownership in New Zealand and how many hardworking Kiwis are now faced with a lifetime of renting.
Certainly in Auckland house prices continue to head north and owning a house for many families is now simply out of reach. Over the last 10 years we have seen the average length of a tenancy extend from 1 year to approximately 2 years. Expect to see this grow even further and over the next two years I would anticipate the average length of a tenancy to double.
In a recent article in the New Zealand Herald a journalist described how demoralizing it was to try and find a rental property in Auckland. When you get a situation where demand outweighs supply it is easy to overlook the client as there are plenty more consumers waiting. However, it is vital more now than ever to look after tenants as they could well be your clients for years to come.
In his book; Generation Rent, Eaqub calls for tighter and clearer legislation around the Tenancy Law in New Zealand. He argues that the notice period should be extended and there has to be clearer expectations on how fast repairs are done or what state the tenant should leave the property in.
Our belief and desire is to treat the tenant as a valued client. Whilst they live in the property, it is their home and they need to be treated with respect. Repairs need to be carried out quickly and professionally. Look at ways to increase capital value through renovations and improving interior décor. Every attempt should be made to extend the lifetime value of the tenants whilst still providing a good source of income for our owners.
Why do private landlords miss out on so much rent?
There is a misconception by landlords that they are saving money by managing the property themselves.
Why should I pay someone to look after my property?
One key reason is that many landlords simply forget or choose not to do rent increases. Many landlords believe that by putting up the rent they will scare off a good tenant. The number of times I hear a private landlord say; ‘The rent is cheap but they look after the property.’
The question I put to the landlord is; ‘So if they paid market rent would they stop looking after the place?’
Of course they wouldn’t. It is also unlikely that they would leave as it would cost them more rent to move into another property. Plus you have to take into account the cost of moving and the emotional burden.
We are not suggesting fleecing good tenants of all their money. What we do suggest is that you do regular rent increases little and often. Keep your rent at about 95% of what the market is charging. Professional Property Managers understand this and they will ensure that you get what you deserve for your property.
How is your investment property working for you?
What is the market rate for rents in your area?
Making sure you are getting the right amount of rental income for your investment can be a tricky task. Your property manager will provide you with the best indication of what your rental income should be and also advise you on when you should be increasing the rent and by how much. Remember, you want to make sure that the rent you are asking for is competitive in the market so that you attract good tenants while also getting a strong rental return.
Are you growing your assets?
Natural capital growth is great but don’t just rely on that. Actively add value by making sure your investment asset is in tip-top shape. Again, your property manager will best advise you of what changes you could make to your investment for a greater return. This will present your property in the best possible light and attract better quality tenants.
Are you insured?
Insurance on rental property goes beyond insuring the building against fire or natural disaster. Landlord insurance is an important part of helping protect your investment portfolio. Your Property Manager can point you in the right direction.
Are you reviewing your loan?
The lending market is highly competitive and new products and packages are constantly being released, so you may be able to reduce the interest or fees you are paying. Make sure that you review your loan to ensure you are getting the best deal in the market.
Have you maximised your cash flow?
Take full advantage of negative gearing benefits for your investment property. Expenses such as loan interest, municipal/council rates, insurance and maintenance can be claimed against rental income. Make sure you claim everything to which you are legally entitled to. You can always consult a depreciation expert for more information if you are unsure of all your entitlements as a property investor.
New Zealand’s legislative framework and the Overseas Investment Act
A large number of investments do not need approvals beyond the normal legislative business framework for New Zealand-based companies.
The Overseas Investment Act 2005 regulates the acquisitions by overseas entities of 25 percent or more ownership or control of interests of sensitive New Zealand land and significant business assets.
- Sensitive land (eg farm land, historical landmarks, regional parks)
- Significant business assets (eg New Zealand securities or assets, or the establishment of a business, worth more than $100 million)
- Fishing quota (an interest in fishing quota or securities in a person that owns an interest in fishing quota.
The Overseas Investment Office (OIO) assesses applications from overseas investors seeking to invest in sensitive New Zealand assets. People who are not New Zealand citizens or who do not ordinarily reside in New Zealand must apply for consent to invest in these assets.
To be successful, the proposed investment must meet a number of criteria set out in the Overseas Investment Act 2005.
Owing rental property has been a popular investment for many Kiwis over the years. The difference between an investment property and your own home is that you earn an income from it. Returns from property investment come from rental income and from any increase in the value of property over time.
Returns from property
Property has two types of potential returns. One is from rent paid by tenants and the other is from the property increasing in value – called capital gain. Property investments are not considered to be ‘liquid’ because you can’t withdraw your investment quickly. To get money out you need to sell the property or increase the mortgage.
Risk of investing in property
Property investment is often described ‘safe as houses’. Yet there are risks, for example:
- Your lender can ask you to repay the mortgage unexpectedly and you may not be able to sell, or sell for enough to cover the mortgage.
- If the investment property is mortgaged with the same bank as your own home, there is the risk that the bank could sell both properties if you run into difficulty with paying either mortgage.
- You might need, for some reason, to sell the property at a time when it has dropped in value, and be left still owing the lender money after the sale.
- Interest rates may increase, so the money you make from the property is reduced.
Paying off the mortgage as fast as you can, reduces these risks.
Government strengthens residential tenancy laws
The Government has announced plans to strengthen residential tenancy laws. photo/Doug Sherring
• All rental properties must be insulated by July 2019, though exemptions apply to properties where it is physically impractical to retrofit insulation.
• Smoke alarms must be installed in all rentals from July 2016, but tenants will be responsible for replacing batteries and notifying landlords of defects.
• New powers to prosecute landlords for breaking tenancy regulations, particularly where there is risk to tenants’ health and safety.
• The changes also ensure tenants can take concerns to the Tenancy Tribunal without fear of retaliatory evictions.
Every rental property in New Zealand will have to be insulated within four years, Government has confirmed.
Housing Minister Nick Smith announced plans this morning to strengthen residential tenancy laws, including requirements for landlords to provide smoke alarms and insulation, and to declare the standard of insulation on tenancy agreements.
“The new law will require retrofitting of ceiling and underfloor insulation in rental homes over the next four years,” Dr Smith said in a statement.
The requirement would apply from July for Government-subsidised social housing, and from July 2019 for all other rentals including boarding houses.
There would be some exceptions, such as in houses where it was physically impossible to retrofit insulation.
Smoke alarms would be compulsory from July.
“Regulations will make landlords responsible for ensuring an operational smoke alarm is in place, and tenants responsible for replacing batteries or notifying landlords of defects,” Dr Smith said. “The Ministry of Business, Innovation and Employment will have new powers to investigate and prosecute landlords for breaking tenancy laws as part of these reforms, particularly where there is risk to the health and safety of tenants.
“The changes will also ensure tenants can take concerns to the Tenancy Tribunal without fear of being evicted for doing so.”
Dr Smith said landlords would save money in the long run from investing in insulation. “The insulation retrofitting is expected to cost $600 million, with benefits of $2.10 for each dollar of this cost.”
The minister said smoke alarms would save the lives of three people every year. 180,000 New Zealand homes required insulation and 120,000 homes needed smoke alarms.
“The health benefits of this will be reduced hospitalisations from circulatory and respiratory illnesses, reduced pharmaceutical costs, and fewer days off work and school,” Dr Smith said.
The Government said the average cost of retrofitting both ceiling and floor insulation was about $3300.
Landlords could apply for a subsidy through the “Warm up New Zealand: Healthy Homes” scheme, but funding for that programme was only guaranteed to run till next June.
The new smoke alarm standards required a minimum of one working smoke alarm in a hall or similar area, within 3m of each bedroom door. In self-contained sleep-outs or caravans, at least one working smoke alarm would be needed, in line with Fire Service recommendations. Based on the limited information available, officials estimate that about 270,000 private residential rental properties are inadequately insulated. These include 150,000 rental properties occupied by low-income tenants, but exclude properties where it is not practicable to insulate due to physical design of the property. Since 2001, the Government has spent $500 million to insulate all state houses where practicable and since 2009, subsidise retrofitting of insulation in 280,000 private residential properties.
Based on the 2010 Branz House Condition Survey, officials estimate that up to 70,000 private sector rental properties cannot have under floor ceiling retrofitted and up to 120,000 cannot have under floor insulation retrofitted.
Officials estimate 180,000 privately tenanted rental properties will require retrofitting of insulation in the period up to July 2019.
A Cabinet paper showed Dr Smith deemed a “Warrant of Fitness” trial for homes less cost-effective “for tenants, landlords or society” than the law changes announced today. The Cabinet paper showed properties sold and immediately rented back to the former owner-occupier for up to 12 months would be exempt from the new laws.
Properties a landlord intended demolishing or substantially rebuilding within 12 months of a tenancy starting could also be exempt, as long as landlords provided evidence of relevant resource or building consent.
The minimum insulation standards were consistent with national requirements introduced in 1978. “We are not wanting to require the replacement of insulation installed since then. The greatest benefits are obtained from this first minimum amount of insulation,” the Ministry said in a related document. Meanwhile, landlords will be able to take control of abandoned properties faster than the law currently allowed. Dr Smith said the new laws would create a ten-day process introduced to enable “re-tenanting” of abandoned properties. He said the process currently took up to six weeks, leaving houses empty and landlords out of pocket.”These reforms are to be supported by a $1.5 million information campaign aimed at improving compliance with existing and new tenancy law requirements, as well as providing guidance on the practical ways that homes can be made healthier,” the minister added.
Tenants’ Protection Association respond
Tenants’ Protection Association (Auckland) coordinator Angela Maynard was thrilled by the changes which would help thousands of Auckland tenants keep safer and warm. But regulations around insulation and fire alarms were simply common sense which should have been introduced years ago, she said, and the changes did not go far enough.
“It’s way past when it should have happened and not before time. Any landlord who hasn’t provided smoke alarms in my opinion is remiss.”
Dr Maynard said as house prices rocketed across Auckland and wages failed to keep pace, countless residents were being shut out of homeownership and forced to rent for life. She wanted better tenure security for tenants like those in place in some overseas countries, notably Germany and Switzerland.
This would make Kiwi renters’ lives more pleasant and mean long-term rental arrangements were considered more acceptable and safe, “rather than something that is considered an alternative to the norm”.
“So people know that the house is not going to be sold out from under them.
“Living in a house and seeing it as your home rather than always having to look over your back, [worrying] that at any time it could be sold. There’s just no security in that and because a lot of people are going to have to rent for their lifetime there should be means for them to be able to do that comfortably and stay in one area … for community stability.”
Dr Maynard wanted enforceable regulations around the sale of rental properties to protect tenants’ long-term rights.
“If you’re going to commit to becoming a landlord and taking on a tenant then you have to commit to a certain period of time.”
Tenants’ Protection Association (Christchurch) manager Helen Gatonyi said the “superficial changes” were a good start which could signal the beginning of a significant change for New Zealand tenants.She welcomed moves to insulate homes and make smoke alarms mandatory. But she cautioned that thousands of properties would either be exempt from insulation rules because of their physical layout, or retro-fitting would make little difference because the properties had broken windows or failing electricity.Ms Gatonyi said one of the biggest changes was addressing “retaliatory notices” – where residents were given 90-day eviction notices by landlords simply for reporting faults with the property.The association had seen a big increase in 90-day notices in recent years and wanted them banned. In some case landlords used the notices to get rid of tenants so they could put up rents. “That’s not retaliatory, that’s just greed.” Ms Gatonyi also welcomed changes requiring landlords to stipulate the level of insulation on a property.
“All of this is contributing to better upfront arrangements and better information for tenants when they’re entering into tenancy agreements. “Landlording is a business and like any other business they should be required to meet the business standards.”
Labour and Greens react
Labour and Greens have been lobbying Government to introduce warrants of fitness for rental properties.
Green Party co-leader Metiria Turei said today that insulation and smoke alarms alone would not fix the “appalling state of rental stock in this country”.
She reiterated that Government should introduce a wide-ranging WOF with enforceable minimum standards.
NZ Herald – http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11478193
Why you need landlord insurance – real cases
Your Property Management team is dedicated to provide you the best service to protect your invested properties and maximum your potential investment income. However, we cannot completely eliminate risk from your investment strategy. Sometimes unpredictable things happen beyond a property mangers control. To purchase landlord and building insurance is a good investment strategy to minimise your exposure to risk.
In July, there was an accident happened in one of our managed property. The tenants were a family with little kids. As winter was coming, same as most of the families, they used the fireplace to warm up the house. One day, a little kid put toys with battery inside on the top of the fireplace, not long after, the Lithium shell exploded because of the heat. The whole house was totally contaminated with smoke and dust. The tenants had to move out, the ceilings, floors and walls were all needed to be cleaned and repainted. The accident caused serious loss to both the tenants and the landlord. Luckily, both the tenant and landlord had insurance, so the cost was covered. We learned from the case and property mangers also started to educate the tenant that they need to be careful not to put any inflammable things on top of the fireplace. However something like this is really unpredictable.
Another case is that, one day, we received a call from a neighbor of our managed property. The neighbor told us they saw the tenants were smoking P (Methamphetamine, referred to as “meth” or “P” is a synthetic neurotoxic psycho-stimulant) in the house. The property manager immediately contacted the landlord and organized a Meth test. The test result shown the house was affected due to previous tenants smoking P inside. So the current tenants were moved out for several days, the house was cleaned and tested again. After we were sure the house was safe to live, the tenants moved back in. As you can image, there was a big cost and income loss during the time, such as costs of the tests and cleaning, loss of the rent, etc. But as the landlord had the insurance, the insurance company had covered all the costs.
As a landlord, here are some facts about Meth you may want to know,
- There are short term and long term health effects associated with being exposed to meth residues in property. Where these residues are at low levels and limited to use only, the effects on health are less severe than if a lab has been operating. It should be noted that the effects on children tend to be more pronounced. Children are closer to the contamination, absorb proportionately larger amounts of contaminants and less well developed metabolisms. Studies into long term health effects associated with living in properties that have been used as meth labs are not widely available. However, the effects of the chemicals associated with manufacture are understood. So, living in a property increases the risk of the following: cancer; Nervous disorders/Tremors; Damage to kidneys and liver; Birth defects; Reproductive problems; Death.
- Police officers with years of experience and training, cannot always spot houses that have had labs operating in them, let alone houses where lots of use has occurred. That is why they use and rely upon based lab testing.
- Cost of sorting out meth problems can vary wildly. Where a low level of contamination may be no risk to health and not need anything doing, as a worst case scenario, properties can need to be destroyed. Costs for detailed testing often range from $3,000 to 10,000. Decontamination $2,000 to $50,000. Then there is cost of reinstatement. Sorting things out can take months. If it is an existing rental, this can lead to significant problems with loss of rent. Most people should expect to spend between $10,000-$50,000 plus the cost of reinstatement.
- Property which has been used as meth manufacture will get into LIM report, when Police get involved and they have enough evidence to strongly indicate, or actual confirmation that meth manufacture has occurred. A history of Police involvement, but no reference on the LIM to meth manufacture, DOES NOT mean a property is free of meth issues.
Be wise and systemise your investment property
The key to successful property investment is not just getting the highest rent or appointing a property manager to do the job for the lowest fee.
There are a number of factors that prudent property investors take into account to ensure that their investment has the best return in yield and capital growth;
- Do an annual stocktake on your investment. Prior to the end of financial year, review the condition of the property to check if all areas are well maintained and in working order. Get these items repaired at this time to take advantage of the tax savings you can maximise.
- Appoint a property manager who understands your investments and whose role it is to maximise the income and minimise the expenses of your investment. As with your accountant and solicitor, you are paying a fee for a professional service and advice. Although appointing a low fee property manager is enticing, remember that the person you appoint is the custodian of your investment.
- Ensure that your property is fully occupied by tailoring your lease to the peaks in the market place in order to avoid the lease expiring in the low demand times in the market.
- Create a budget for your investment. Set up a bank account in which funds can be placed to cover future costs such as painting, carpeting and replacement of appliances. Just as in your own home, these items need to be budgeted for to meet your investment needs. By adopting this approach you will have funds on hand rather than having to dip into your personal budget to meet the cost.
With some strategic planning in the above areas, you can be assured that your property investment will meet your needs for wealth generation.
Would you live in your investment Property?
As winter approaches and the cold weather kicks in, property management companies traditionally see an increase in requests from tenants for adequate heating and insulation. This has been a major focus over the last few years as tenants rightfully expect to live in warm and dry housing.
Your property is more likely to rent quickly and achieve a higher return if the property is sufficiently heated and has adequate insulation. A simple question to ask is whether you would be prepared to live in your investment. If not why would you expect your tenant to?
Ensure that the property is well ventilated and consider installing a ventilation system as this automatically removes dampness from the property. Your property manager will educate your tenants in their responsibilities as tenants.
A small investment now has the potential to save thousands of dollars in the future. It will also help attract a better quality tenant who will be prepared to pay that much more rent in order to have a dry, healthy home. Building warrant of fitness has been well documented in the news in recent years and will continue to be – especially around this time of year. Eventually standards will be set, so make sure that your investment is warm and dry.
Education is the key to a successful tenancy
A common mistake made by many private landlords is that they have a lack of understanding of tenancy law and cannot educate their tenants sufficiently on their rights and responsibilities.
They may also fail to do adequate background checks and then blame the system or the courts when things go pear shaped. Knowledge is power so spend quality time inducting and educating your tenants at the start of a tenancy. Or – do what I (and many other smart investors) do and ensure that you engage a professional property management company.
January, February and March are typically the busiest renting months for property management specialists and this year is no exception. The median rent for Central West reported by MBIE for a 3 bedroom is $620, 2 bedroom $430 and for 1 bedroom $350 per week. For Central East, the figures reported by MBIE are not too dissimilar with 3 bedroom apartments being the exception at $577, 2 bedroom at $450 and 1 bedroom at $350 per week.
Renters are continuing to look for good quality housing and with the warmer weather the winter heat pump turning into a cooling air conditioner is a plus. Tired, neglected and unloved properties tend to sit longer and attract higher vacancy rates than well cared for and neutral toned properties that continue to appeal to renters.
Realestate.co.nz have reported the following top 20 rental searches with the spectacular summer being experienced around New Zealand, beach and swimming pool featuring amongst these. Here are the top 20 searched words: Furnished, Garage, Fully Furnished, Rural, Pets OK, Double Garage, Pets, Pool, Beach, Short Term, Pets allowed, Pets negotiable, Unfurnished, Swimming Pool, Christchurch, Car park, Fenced, Fully Fenced, Carpark The rental market continues to be buoyant and property management specialists continuing to be very busy. Good quality photographs and descriptions of the rental property continue to attract renters to make the call or email for a viewing. (Article from Realestate.co.nz.)
What’s important in an investment property?
Pinpointing the right time to buy an investment property takes thorough research. There are many variables to consider, such as current and forecast interest rates, local employment opportunities for tenants, and appealing amenities like supermarkets, cafes, parks and public transport. And the opportunities can disappear quickly – once word has got out about an emerging area, you may have missed the chance of buying at an attractive price. Pay attention to the factors which will influence an investment. It’s a good idea to start following the news: pay close attention to dynamic issues including farming and international production, the position of the national economy, the state of tourism and immigration, and government moves which may influence the cost of living.
The challenge comes from knowing how to read these signs and making an educated guess about when the right time is to enter the real estate market. For example, if there is news about an upcoming housing shortage, low vacancy rates and a stable economy, it could be a good time to consider taking the plunge and invest in property.
However, it’s good to remember that investment isn’t an exact science: some people even advocate going against the tide of popular opinion. One such advocate is world-renowned investor Warren Buffett, who famously explained his strategy: “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful”. Doing market research also assists in determining where investment opportunities can emerge. There are a number of reports released by industry analysts including CoreLogic, RPNZ which detail price movements in various markets, including New Zealand’s capital cities.
Auckland CBD has seen unprecedented growth.
In 1991 the CBD had approximately 1400 permanent residents. 2004 saw the CBD move to 16,000 residents so a new residential suburb was well and truly born. Large apartment blocks meant a different lifestyle and culture – cafés, restaurants, parks, supermarkets. 2010 saw permanent residents around 40,000. 2015 with immigration at its highest level for many years. Immigrants arriving predominantly from China and India. Inner City living with associated benefits – close proximity to everything, language schools, colleges, cafes and bars have seen new apartment blocks sold out before being built.
Over the past year many Auckland families have enjoyed the more relaxed pace of our regional cities and towns. Many Aucklanders are looking to cash up their family home and move to more affordable locations such as Tauranga, Papamoa, Matamata and Te Awamutu. Some even further afield to Hawkes Bay and Central Otago.
This trend will continue especially for older Auckland folk who are sick to death of the transport woes, increasing rates, insurance and the hustle and bustle.
Moving Home Checklist
Moving home can seem like a mammoth undertaking, but if you follow this step-by-step checklist, you may find it a whole lot easier…
Before the move…
1. Look for and book a moving company. Or, if moving yourself, shop for and book a rental truck.
2. Prepare an inventory of everything you will be taking with you.
3. Have a big clean up and throw out. Organise a garage sale, give away to friends, sell your items online or donate to charity.
4. If relocating long distance, give notice at your job and/or schools.
5. Also, if moving long distance, book travel arrangements.
6. Confirm new school and childcare places if they have been pre-arranged. If not, explore the options and apply for places.
7. Talk to your children about the move.
8. Compile the contact details of friends and colleagues.
9. Let the relevant people and organisations know you are moving.
10. Investigate local health facilities and sporting and social clubs in your new area.
11. Organise a farewell party (or delegate it to family or a good friend!).
12. Give notice to your landlord or agent, if you are in rented accomodation.
13. Organise boxes and packing materials.
14. Start using all food items in the freezer.
15. If possible, visit your new home and start getting familiar with the local area.
16. Check your insurance to make sure your goods will be covered during the move.
17. Get packing! Have a plan and do one room at a time, leaving just the essentials out until the last week.
18. Check on how best to move pets and plants.
19. Keep important documents, receipts, bank statements and final bills in one place.
20. Organise new homes for plants that won’t be going with you.
21. Arrange utility disconnections and reconnections.
22. Organise to have your mail redirected with New Zealand Post.
23. Arrange to have the carpets professionally cleaned just before you move out.
24. If necessary, organise a babysitter for the day of the move.
25. Clean and defrost the fridge and freezer.
26. Back up your computer files before your equipment is packed away.
27. Prepare the stereo, DVD player and white goods for packing.
28. Collect dry cleaning and return videos, library books and any borrowed items.
29. Cancel any deliveries (e.g. of newspapers, milk and groceries) – and organise them to start up at your new home.
30. Arrange an inspection with the landlord or agent so that your bond can be released.
31. Collect the keys for your new home.
On the big day itself…
1. If moving yourself, collect the rental truck on time.
2. If using a moving company, make sure the driver has the correct details of your mobile number and new address.
3. Dispose of food, empty bins and leave the place neat and tidy.
4. Check that all items included in your Tenancy Agreement (if applicable) are intact.
5. Check that nothing belonging to you has been left behind.
6. Make sure you have valuables, essential items, food (e.g. sandwiches and snacks) and drinks with you.
7. Read meters so that you won’t be overcharged on any utility bills.
8. Leave a note with your contact details for the new owner / tenants.
9. Make sure that the property is secure and that the lights, hot water system, gas meter and electricity switchboard are turned off.
10. Leave the keys with the appropriate person or agency.
At your new home…
1. Double-check that everything in the property is in order and meets the terms of your purchase contract.
2. Check that the electricity, gas, hot water and telephone connections have been switched on.
3. As you begin the unpacking process, check for damage or missing items.
4. Check security. If you are concerned, arrange to have the locks changed.
5. Update your electoral enrolment details to ensure you’re correctly enrolled to vote – go to www.elections.org.nz to enrol or update your address Freetext your name and address to 36 76 or call
0800 36 76 56 for an enrolment form.
6. Update your will – this should happen whenever your financial circumstances change.
7. Introduce yourself to the neighbours and get acquainted with the neighbourhood.
8. And finally, but certainly not least… crack open that bottle of bubbly, set a date for a housewarming party and start celebrating your new home!
(Article from realestate.co.nz)
Fixed Term Tenancies
The majority of properties that are privately managed have tenants in a periodic tenancy rather than a fixed term tenancy. The majority of managed properties (by an agency) have tenants on fixed term tenancies. So, what’s the difference between fixed and periodic?
Fixed term leases are locked, so to speak, so a tenant must see the tenancy term out. If they break their lease for any reason they must continue to pay rent until the end of their agreement or until a new tenant is found. A tenant on a periodic tenancy is only required to give three weeks notice to vacate the premises and is not liable for rent past this notice period.
There are also some other, less obvious costs associated with periodic leases. For example, in the event that you wanted to give notice to your tenant on a periodic tenancy you would need to give them 90 days notice. With a fixed term, you only have to observe the date noted in the agreement.
Another cost occurs when the tenant on a periodic tenancy moves in a quieter time of the year (generally winter). During this time you can expect longer vacancy times and less tenants to choose from, often resulting in a lower rent yield. An average $300 a week property will be vacant for 2 weeks longer than in the peak re-letting time, achieve up to 10% less rent ($30 or $1,560 per annum), giving you approximately $2,160 less for the financial year. What’s more, you cannot afford to be as selective with your tenant choice.
Another hidden cost is that rent reviews rarely happen with a periodic lease. With a fixed term lease, the rent is reviewed at the end of the agreement, whether it is increased or not.
With over 70% of properties in New Zealand being managed by private owners, there is quite a bit of diversity around the way that tenants apply for properties.
For the most part, private owner/managers tend to trust their gut when selecting a tenant. Gut feel should not be discounted as a means of tenant selection, however, it is only one part of what a sound application process involves.
When applying through an agency, a tenant will need to provide ID to confirm who they are. This assists with ensuring that the person renting the property is in fact who they say they are. The ID also allows the property manager to run a credit check, which is another proactive measure an agency will typically take to ensure the tenant’s ability to pay.
Some other aspects of a sound application process include the many reference checks by; current employer, personal referees and past Landlords. Most agencies check these thoroughly not just the most current ones available.
New initiatives to improve tenancy services
Building and Housing Minister Dr Nick Smith announced “changes to the delivery of key tenancy services are set to streamline and speed up processes for landlords and tenants.”
A new FastTrack Resolution service will be available from 17th November to all landlords and tenants to help resolve rent arrears disputes in a faster and more efficient way. A new online system for Tenancy Tribunal applications is also up and running, which will reduce processing times significantly,” Dr Smith says.
“FastTrack Resolution means that landlords and tenants who have made a substantial agreement about the repayment of debt will be able to have their agreement formalised by a confirmation conversation, rather than a full mediation. Now a process that could previously take up to 12 days can be completed in as little as 48 hours.”
“This will hugely reduce the time it takes to resolve the rent arrears disputes that make up 76 per cent of the 43,000 applications received by the Tenancy Tribunal each year.”
FastTrack Resolution was launched in February this year by the Ministry of Business, Innovation and Employment, and since then it has been progressively rolled out to high volume Tenancy Tribunal users, including large property management companies and Territorial Local Authority (TLA) housing providers.
“This successful pilot scheme showed that FastTrack Resolution freed up staff to focus on more complex mediations, in turn leading to shorter customer waiting times and better tenancy relationships,” Dr Smith says.
“The new FastTrack Resolution system is part of the Government’s practical improvements in tenancy services. The next priority for the Government will be in upgrading the tenancy bond system to an online service.”
Further information on the new initiatives is available at: www.tenancy.govt.nz.
The goal when we have a vacancy is to obtain the best tenant in the shortest possible time. Write compelling adverts! The first word after location is very important (delightful, sunny, spacious etc). What does the tenant want? Put in as many benefits as possible. Find out what works and save it. When fielding calls this is where the selling process begins. Expand on your advert, record contact details and continue to take contacts until you have an unconditional tenancy agreement in place with paid rent and bond to back it up… no rent + no bond = no key!
Trust your Gut Instinct!
Although not a 100% fool proof method for tenant selection, gut instinct should not be ignored. Sometimes applications can look good, tick all the boxes and all references come up trumps, but there may be some underlying doubt.
Look at the application as a whole, does the scenario’s given in the application and discussions with the prospective tenant line up. If there is still a question mark, it may better to reject an application rather than take a risk on the unknown and deal with a less than ideal tenant. Alternatively look at a shorter term lease and extend if the initial period goes well.
Capital gain required to justify investments
A long-run capital gain of 4.4% per year is required to justify the average New Zealand house as an investment at the moment, Westpac’s economists say.
As part of its monthly Home Truths report, it has looked at the rate of capital gains that an investor would require to justify buying a house.
The net rental yield on residential investment properties, once maintenance and management fees are considered, is usually less than the mortgage rate required to finance the purchase. Westpac said: “Investors are willing to accept such low yields only because they anticipate capital gains – the kicker being that those capital gains are tax-free, whereas other investment returns are taxed.” During the early part of last decade, just 3% year-on-year capital gain was required to break even because interest rates were low and rents were relatively high compared to house prices.
But as house prices and interest rates rose, it became harder to justify investing. During 2008, a long-term capital gain of 5.7% per annum was required to make investing pay off. That has since dropped and now 4.4% is required, based on today’s interest rates. In September, prices had increased 4.1% year-on-year.
Westpac’s economists said things could get out of step again when interest rates rose. “Should interest rates rise in the future, as we suspect they will, the required capital gain may once again rise into unrealistic territory.”
Clean: 4 Sneaky Places to Deodorize
Knowing you have guests coming in a few days, plan ahead and deodorize or steam clean your carpets. Carpets are like sponges- they absorb everything that settles on them. If you’ve ever noticed your home has a certain ‘smell’ to it, we highly suggest getting to those carpets. Your carpet has to deal with foot oils, pet hair, that tv dinner that spilled last week and the candle wax from the last power outage. The last thing you want is for people thinking your house just smells weird. The easiest (and cheapest) way to deodorize carpets is to use baking soda. Sprinkle a generous amount on your carpets, let it sit for a few hours, then go back and vacuum it up. For best results, use a brush or straw broom to brush it into the nap of the carpeting. You likely will have to vacuum over it a few times to remove all remnants of baking soda. A bonus for you is this also cleans your vacuum! If you’re not a fan of baking soda, there are plenty of carpet deodorizers that will leave your carpet smelling like your favorite scent- if you’re into that sort of thing. Alternatively, you can either rent or purchase a steam cleaner. Be mindful that steam cleaning can take 24-48 hours to dry depending on how it’s used, so you’ll want to do that well in advance. If you don’t have the time to do it yourself, you can always outsource this service to a reputable company to save you the extra hassle.
You sit on your dining room chair. You sleep on your couch. You curl up on your bean bag. But how often do you care for these pieces of furniture? One of the cheapest deodorizing and bacteria killing products is vinegar. Put a mixture of water and vinegar into a spray bottle and you’ve got a cost effective furniture deodorizer. It’s always a good idea to test on a small area before using it. Vinegar can be sprayed directly onto a fabric, let it sit and with time, the smell of your butt (and the vinegar) will dissipate. Just like with carpets, baking soda can also be used on fabric. You’ll want to lightly coat the surface you want to deodorize, leave it overnight, and vacuum with a fabric brush the next day. If you have extra money to throw away, a 1:1 ratio of vodka and water spritzed on fabric can help to eliminate odors. It evaporates quickly and leaves no alcohol scent behind. For those of you looking for that ‘fresh smelling clean’, a mixture of 2 cups baking soda, 2 cups fabric softener and 4 cups warm water can compete with the best of those store bought ‘fabric fresheners’. As always, test a small area before potentially causing damage to a delicate fabric.
It’s inevitable- Toilet bowls are used for nasty business and no doubt have a certain ‘je ne sais quoi’ smell to them. But nobody needs to know that. Try adding a cup of vinegar to your toilet bowl, let it stand for at least 5 minutes, then scrub and flush. If you want to get your hands into some seriously good scented, deodorizing power, use this quick recipe. Mix 2 cups water with 2 tablespoons of baking soda. Next, add 2 tablespoons of vinegar. You can pour into a spray bottle now, or if you like a particular smell, you can add a teaspoon of your favorite essential oil. Shake it well and spray it on the inside of your toilet. Let it sit for at least 20 minutes- when you come back, just scrub with a toilet brush and flush away to remove any loose debris. Finally, a toilet that doesn’t smell like shhhhhh-.
Although baking and cooking can make your house smell delicious, a combination of smells can lead to a weird odor overall. If you’re cooking on a stove top, place a bowl of white vinegar on the stove while you cook. It will absorb any smells emitted from whatever you are cooking at the time. Once you’re done using your oven, you can also add an oven safe tray with a bit of vinegar inside at a low temperature to help defeat any lingering or trapped smells. This will also make it easier to clean your oven later – a win-win situation! Sometimes while multitasking, messes are made. To prevent the smell of burnt or bubbled over food from fumigating your home, add salt onto drips if you can’t clean it immediately to prevent the smell from becoming airborne. If possible, opening a window can be helpful to air out your house before company arrives. Make sure to take out the trash as that can be a huge source of stink in the kitchen. In a last resort scenario, scented candles, incense or a diffuser can be used to distribute a more pleasant smell. Bear in mind that these types of products tend to mask the smell more than eliminating it completely, but it would be a better route than spray air fresheners as many aren’t good for your health.
Fair Wear and Tear!
A final inspection is done at the end of tenancy to determine the final condition of the property and bond refund. When damage has occurred it could be as a result of ‘malicious damage’ or ‘accidental damage’ both of which are the responsibility of the tenant and the third is ‘fair wear and tear”.
‘Fair wear and tear’ is something that occurs through normal use or normal changes that take place with the ageing of the property. It is a broad term and can be open to interpretation. So where is the line drawn? What is a tenant responsible for and what is a landlord responsible for?
If a bond refund was to be determined by the tribunal/court, they would consider the following;
- How long have the tenants resided in the property? How many tenants have resided in the property previously?
- Age of the property, fixtures & fittings (i.e. age of the carpets or last date the property was painted, etc)
- Current depreciation status of the items in dispute
- How was the property presented to the tenant at the commencement of the tenancy?
Some grey areas that can be open to interpretation could include:
- Marks on walls, carpets, curtains, etc
- Holes in window and door screens
- Cleanliness (i.e. oven, stove, windows, light fittings, light switches, skirting boards, exhaust fans, etc).
By being prepared you can help to determine the best outcome. Send the tenant a Final Inspection cleaning guide. Highlight important areas that need to be addressed prior to the tenant vacating.
Tips for an Open Inspection
Advertising a set open time each week on your property advertisement simplifies the process of seeing the property for both you and the potential tenant. Advertising the property address is a must. Taking special note about the tenant’s behaviour at the open is key. Some things to observe include dress, language used, if the potential tenant’s shoes came off before they entered the property.
It’s important to have set times and regular open inspection times. 10-15 minutes is adequate, and amongst other things it creates completion and in turn urgency with potential tenants getting their tenancy applications submitted.
Other things to consider include; ensuring the lawns are being cut whilst the property is vacant. Turn the lighting on throughout the house. Depending on the time of year using heating and cooling that is available is a good idea. Pulling the curtains and blinds. Air fresheners are ideal to use prior to an open inspection. Opening the garage door for easy access/viewing.
Professional Marketing Means Lower Vacancy Periods
Marketing your rental property in the best way possible will ensure you achieve the best possible tenant in the shortest period of time. So, what are some of the best practice principals for marketing your property?
Newspaper advertising – Advertising in the local newspaper on the days the bulk of advertisements are placed – typically Wednesday’s and Saturday’s. Ensure the property address is noted so that interested parties can do a drive by.
For rent signs – the property should have a for rent sign placed on the front fence. If there is no front fence the ideal spot is inside the front windows facing the street front.
Rental Vacancy Listing – listings noted on agency vacancy lists are ideal as they get a high volume of people looking at them.
Agency website – Rent agency website listing.
Trademe/realestate.co.nz – there are other common sites used to list properties, but certainly these 2 sites are the two most common sites for listing and marketing your rental property.
Photos – photos often sell the property. There needs to be a lot of them and they need to be of good quality. A good photo will get a prospective tenant to the property. Likewise a bad photo will discourage a prospective tenant from attending the property.
Video tour – showing the property remotely saves the prospective tenant time. It ensures those attending the property are serious candidates for occupying the property. This also minimises vacancy.
For rent flyer drops – flyer drops of the prospective property in the surrounding suburb is ideal, but can be time consuming. Another form of flyer drops would see that relevant local groups requiring accommodation are contacted with up to date listings. For example, the hospital, local large employers, varying community groups.
REAL Landlord Insurance Policy
The Landlord Preferred Policy is specifically designed to protect the Income and Assets of landlords who own long term Residential Properties, and complements your standard building insurance (it does not replace it) but provides cover for;
LOSS OF RENTS
INTENTIONAL DAMAGE including UNLAWFUL SUBSTANCES
LANDLORDS CONTENTS, left in home for the tenants use.
LANDLORDS LEGAL LIABILITY
ONE EXCESS if deemed to be one event.
LANDLORD RETAINS BOND. From Loss of Rents Claims Only for the purpose of getting the property re-tenanted.
The Landlord Preferred Policy is only available to landlords who entrust the care of their investment properties to REAL Approved Property Management Companies; they do not insure private landlords self-managing their properties.
If you wish to know more about REAL Landlord Insurance, please call toll free on 0800 00 35 45.
Have You Been Hopping Around Tenancy Problems?
Protecting your Income, Protect Your Landlords Income. We have taken examples of claims that we have paid out for your Landlords.
BUILDING/CONTENTS/LOSS OF RENTS – Intentional Damage
The property was found to have traces of Methamphetamine after tenant vacated and the home was deemed un-inhabitable. Loss of Rents paid until home was cleaned and habitable.
Loss of Rent – Intentional Damage – Paid retrospectively each month
Total claim payable $ 3,120.00
Drug Testing Services
Testing of property- positive $ 287.50
Further Drug Testing $ 1,689.12
Further Testing $ 828.00
Final Testing $ 677.58
Cleaning $ 3,465.56
Replaced Carpet $ 736.97
Replaced Drapes $ 711.89
Painting $ 86.25
Papering $ 992.30
Sub Total $ 9,475.17
Less Excess $ 500.00
TOTAL CLAIM PAYABLE $12,095.17
When you think of your rental portfolio can you say?….
“Not one of my properties requires
REAL Landlord Insurance.”
No you cannot! The risk is too great without
LOSS OF RENT – DEFAULT
Tenant failed to make rent payments – after the Property Manager went through the due process and received a possession order the tenant appealed the decision twice with the tenancy tribunal, delaying the enforcement of the order. Unfortunately the Landlords loss increased throughout this time whilst the Justice System impeded the removal of the tenant. As soon as possible the enforcement of possession took place. Loss of rent is paid to the maximum claimable under Defaulting tenant as per policy conditions.
Loss of rent (111 days) $ 11,021.19
Less Rent In-hand $ 40.00
Less Excess $ 695.00
TOTAL LOSS OF RENT CLAIMED: $10,286.19
Reduced to 14 Weeks –Maximum Claim Payable $ 9,730.00
Less payments Recovered by tenant $ 80.00
TOTAL CLAIM PAYABLE $9,650.00
LOSS OF RENT – DEFAULT
This is a Classic “Great Tenant” All inspection reports were glowing, tenant was very clean, neat and tidy, each inspection showed full photos to prove this, the grounds were immaculate and the rent was paid on time, What could possibly go wrong………
Tenant lost his job!
Tenant was unable to make regular payments, Landlord requested tenants vacate within 90 days inspection report during this time was as per previous inspections, then in the final weeks the tenant lost it! Holes in Walls, Lights, blinds and alarm system smashed.
Loss of Rent (50 Days) $ 3,000.00
Less Rent in hand $ 50.00
Alarm System $ 935.00
Repairs to Walls / Doors $ 2,648.60
Blind $ 204.84
Electrician $ 415.59
Lights X 2 $ 130.00
Total Claimed $7,284.03
Less Excess $ 500.00
TOTAL CLAIM PAYABLE $6,784.03
Who needs Real Landlord Protection?
Everyone who owns a Rental Property!
Ten Things to Consider When Moving Money Overseas
Real estate, investing overseas or paying overseas mortgages, fees or invoice?
Here are ten things to consider when transferring capital.
1. You will need to open a bank account in your new location, but you do not have to use that bank for the currency transfer. Using a global international payments specialist can give you the option to move the funds prior to or after arriving in your new destination.
2. Ensure that you know the currency of your new location- not all countries in Europe use the Euro for example!
3. Time is your friend. The more time you have to understand the currency pair you are following the better. Having the luxury of ‘choosing’ when to transfer as opposed to being forced into a conversion, (often at less than attractive rates) is a far more appealing option.
4. If you have decided to move, sold your assets, and want certainty on the amount of currency you will arrive with- consider a Forward Contract (hedging is a very common tool, that can provide some certainty).
5. Evaluate historical data to understand where the rate has been previously, but try to look at more recent rates as apples to apples comparison, delaying the transfer to achieve 3:1 rates last seen 8 years ago, may be a little optimistic.
6. Consider the benefits for transferring the funds to your new location, even when the exchange rate appears to be unattractive, for example what you may lose in the conversion (when comparing against previous highs) you may gain in additional interest in the local bank account, or by paying less interest on a mortgage.
7. Consider splitting the transaction into smaller parcels, rather than one big transfer. If you have the luxury of time, talk to a Foreign Exchange dealer about ‘limit orders’ at different levels, or target a specific rate and set an ‘order’ for when this desired rate is achieved.
8. Use technology to assist, in the modern era, rates, charts, alerts, commentaries and announcements are available 24 hours a day on FX websites and specific FX apps are available for mobile or internet capable devices.
9. Get advice – talk to a dealer about the impending economic announcements of the two countries in question, this local data, and global information should be considered as part of a short term currency view.
10. It is human nature, to want to achieve the best possible exchange rate, to ensure the most local currency in your account when you arrive in your new location, and by using the resources available you could very well achieve that goal. However unforseen events outside of your control, may well determine the actual rate you receive. Often several days/weeks/months may be spent worrying about when to transfer, could have been better spent with no stresses or worries by exchanging when you are confident rather than certain the timing is right. Rarely will the decision be that obvious- remembering also that major corporations have teams of experts and all of the technology available…and still get it wrong some of the time- hindsight is a wonderful tool that none of us have the luxury of using.
This article has been provided by NZForex Foreign Exchange Services
Looking Ahead in Real Estate
With the election behind us real estate is full steam ahead. Obviously with no capital gains tax investors will be confident and proactive.
First home buyers will be excited and ready to pounce as the Key Government implement their first home buyers package and hopefully remove the LVR criteria.
Auckland / Christchurch dominate the activity in sales. But many Kiwis are realising there is some very reasonable homes eg weatherboard homes on full sections available for less than it would cost to build them. The regional towns are full of them and they present very good value for money often with a healthy return.
Interest rates seem to be on hold at present which will also give the consumer confidence.
Immigration is not about to slow down with more and more people arriving weekly all needing to be housed.
Worldwide there is a shortage of property for sale in many cases there being more buyers than properties on the market.
If you were contemplating selling now is the hour. Marketing property for sale without a price and a set date for sale will remain to be the most favoured method in Auckland and Christchurch as “nobody” knows the price of real estate today, it’s better to let the marketplace decide.
Some regions still predominantly utilise a price when listing a home for sale
NO EARLY OUT FOR A FIXED TERM TENANCY
For a variety of reasons, landlords sometimes wish to end a tenancy before its term has finished. This can happen when the landlord decides to sell the property and wants it vacant during the sale process. Or, it may be a case of someone renting out the family home who wants to move back in earlier than expected, due to a change of circumstance.
Unfortunately, in these cases your rights are limited. A fixed term tenancy cannot be terminated by notice from one party to the other. It is designed to provide security of income for the landlord, and certainty of accommodation for the tenant for the agreed upon term. One way a lease can be broken is by application to the Tenancy Tribunal on the grounds of hardship. The burden of proof is on the landlord that their hardship is greater than the tenant’s from having the tenancy broken. This is not easy to prove.
But you can ask the tenants for a change, and if they agree in writing, the tenancy can be ended early. A tenant may be enticed to leave early with the offer of a rent holiday, compensation for moving costs, or a settlement offer for the rent remaining during the term.
CHANGES TO ENFORCEMENT PROCESS AFFECTING LANDLORDS AND PROPERTY MANAGERS
8 April 2014: A number of changes that will streamline court processes for collecting fines and civil debts come into effect on 14 April 2014, as a result of the Courts and Criminal Matters Bill. The Bill is the biggest change to civil enforcement since the District Courts Act was passed in 1947. The following information has been provided by the Ministry of Justice.
The two most significant changes affecting landlords and property managers are:
1. Changes to the Attachment Order process
Parties can agree at a Disputes Tribunal/Tenancy Tribunal/District Court hearing or tenancy mediation that the debt can be enforced by attachment order. An attachment order is when the Court orders that payments be deducted directly from a person’s income and paid to the Applicant This agreement is recorded in the Order. The parties must provide the following information:
- Debtor’s employer or benefit details, contact information and date of birth.
- Creditors contact details and bank account.
- Details of the payment amount and frequency
How: Once the order is made and sealed by the Tribunal either party can file the order with the Collections Processing Unit. There is a $30 filing fee payable at the time the order is filed with Collections.
Note: An agreed attachment order can only be used for recovery of debt where the debt and an agreed repayment plan is finalised. An agreed attachment order cannot be added to a conditional order where ongoing current rent plus debt repayment are included in the enforceable terms of the order.
2. Changes to the eviction process
There are also changes to civil fees impacting on the eviction process. There will be a renamed form – ‘Application for eviction warrant’, which must be used for all eviction applications – both final and conditional possession orders. No affidavit is required.
- There will be a $200 fee for filing the application.
- The application will allow landlords to apply for an attachment order or financial assessment to recover the $200 fee along with any debt included in the Tenancy Tribunal order. These options are included in the application for eviction warrant at no extra cost
- The application for eviction warrant will still be filed with the Collections unit.
- A court bailiff will still carry out the eviction.
Applications and further information are available on the Ministry of Justice website .
HOW TO FIND A GREAT TENANT
Every experienced property manager will tell you that the secret to success in rental management is finding the right tenant for a property. Troublesome tenants cause all manner of havoc for property owners. The most common issue is unpaid rent, but there are a host of other problems, such as disturbing the neighbours, damaging property or criminal activity.
That’s why one of the most important services your property manager provides is screening candidates for your property carefully.
We interview the candidates personally and check references, to ensure the tenant is a reputable individual with a stable income and a good rental history. Finally, we select the candidate with the best qualifications for a steady and successful tenancy.