managemyproperty

We Have Lift-Off!

2012-02-01T09:52:00.001+13:00

Summer, such as it's been here in Wellington, is making its presence felt. It's definitely warmer, but the rain is a bit persistent! And from the moment we got back to the office, the phones have been ringing and emails flying - everyone is on the move and the market has awoken from the long dark winter of discontent.

But don't get complacent. This doesn't necessarily mean that you're going to get trampled down in the rush from tenants wanting to rent your place, although it can happen. Here's a wee story that blew me away, and it's from personal experience.

We have a new client who owns a house in the heart of Wellington, with four bedrooms on two floors, and a distinctive "student" feel to it. It's got heaps of character (you know, wooden staircase, high ceilings, giant sash windows, creaky old cupboards and a Victorian bathroom) and it's close to almost every educational seat of learning the capital of New Zealand has to offer.

Our new client signed up on a recent Friday morning, and two hours later put a full advertisement up on Trade Me, with some good photographs. Within five minutes of the advert going up, we started receiving phone calls, texts, and emails. Our text shortcode service went crazy with people texting for details. When that level of interest is sparked, it's time to arrange an open viewing really quickly.

So that Sunday at 3.30pm on a wet, windy and unseasonably cold afternoon, I drove to this lovely old property to spot a small group of about ten people patiently braving the elements outside the house. Little did I know that this group of ten were the tail end of a queue of people stretching down the path to the front door. I squeezed past them all and opened up the empty house and starting letting people in.

the stream of people didn't stop! I soon had a stream of people going up the right hand side of the stairs, and another stream coming down the left hand side. Every room had a crowd in it. The kitchen and dining room had people furtively grabbing application forms and shouting for pens to fill them out. I had to explain to large groups on each room that applications should be done online (www.apply.net.nz) and tell them what makes a good tenant.

It was CHAOS!! The best kind of chaos, from a property owner's perspective.

Within the next 48 hours, we received over seventy applications online, and a whole bunch more were handwritten, scanned, emailed, posted and handed in to our office. Phew!

So how do you choose from this tidal wave of fresh faced and bushy tailed prospective tenants? Where do you start?

Well, three particular groups stood out for me, and what they did was very simple. In fact it amazes me that more people don't do this as a matter of course when applying to rent a property. Each of these groups presented me with printed information on each of the applicants in their group. They had their names, ages, references with phone and email details, a list of work and education experience, and an explanation of how they all knew each other and why they wanted to move in together.

They also each explained that, as students, they were looking to have a place to study towards their exams, rather than setting up Party Central and wrecking the place.

Simple, but real genius. I've lost count of the number of people who turn up at a property viewing who want to take the place, but when I ask them for good references, they seem bewildered and unprepared for this obvious requirement. Kind of like going to an auction and then being surprised when someone tells you you'll need money to pay for anything you buy there.

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managemyproperty is an independent Property Management company based in Wellington, New Zealand. Richard Horne remains a tireless and energetic investor and commentator, running an experienced eye over the property market.

Visit the website at www.managemyproperty.co.nz

Wellington Market Review – December 2011

2011-12-02T11:22:00.001+13:00

According to Tony Alexander of BNZ – “Our eighth survey of over 10,000licensed real estate agents throughout New Zealand has found that overall theresidential real estate market is moving up, but with the past month revealinga rise in the number of vendors wanting to make a sale. That is, things havemoved from broadly neutral to being more of a buyer’s market. But there is alsostrongly rising buyer interest – from first home buyers but not from investors.For the fifth month in a row the perception of agents on average is that pricesare rising. But at a net 12% positive this reading is the lowest since the net5% in June feeling prices were falling.”

What’s Happening with Advertised Rents?

I might just stick my neck out and say that rentshave now hit bottom and are starting to show a little regrouping at the moment.In the weeks before Christmas, we’re finding enquiries are up and someproperties have let for good and fair rents. The word from tenants on thestreet is that there’s not much for them to choose from so available propertiescan get snapped up quickly.

However there is norhyme or reason to some properties being vacant, and it can hurt an investor’spocket when the mortgage needs paid but there’s no rent coming in. Here’s what’sgoing on out there right now in Wellington region:

Top Range:

Steady turnover, but of course with the New Yearlooming, enquiries from embassies, consulates, and our corporate clients arerising weekly. You should be able to rent at this level fairly easily for thenext three months.

Mid Range:

Good standard housing stock still rents okay, butthere have been some properties advertised for long periods before finding atenant. Best that you prepare for extra down time still, and if you rent yourplace quickly, that’s a bonus.

Lower Range:

One bedroom units and smaller two bedroomproperties are renting much more easily. In fact they just might be the nexttarget for savvy investors as they are cheap to buy and relatively speakingthey offer a good return while renting more easily.

If I was advertising a property now, what can I expect?

You’ll need to be more flexible with your viewingtimes, and make an extra effort to get people through your property to get thebest chance of signing someone up. It’s frustrating, but everyone seems to wantto look at a rental on a weekday evening, or right in the middle of a sunnyweekend when you’d rather be on the beach.

My advice? Get aproperty manager.

Happy Christmas!

How NOT to Let a Vacant Property!

2011-10-12T21:02:00.000+13:00

I recently encountered a property investor who told me he wasn't very happy with his property manager. He explained that his rental was currently vacant and had been for about eight weeks, and he wanted to know more about what level of service we could offer him if he changed over to us as his property manager.

Never one to miss an opportunity to promote our company, I told him more about what we do. I also explained that we don't have a silver bullet that will cure the problem of a vacant property, especially in a flat market like Wellington is going through right now. Vacancies are more common at the moment, and sometimes changing your property manager doesn't necessarily mean you're going to get a better result.

However, what he told next made me realise that service levels in this industry can be set pretty low sometimes! It seems that his current property manager did not show his property on the weekends, or in the evenings, or indeed anytime outside business hours.

Moreover, his property manager was not keen to show the property after dark! That might explain why the place was still empty....

So did the property investor become a new client owner for me? You bet! And to answer the other questions popping up in your head:

Yes we show properties on the weekends
Yes we show properties outside "business hours" AND after dark
Yes we found a new tenant within a week

It's my view that property management cannot possibly be done only within "business hours", and any property management company whose telephone message informs you that "Office hours are from 9am to 5pm Monday to Friday" is not offering a level of service that's acceptable.

Property management is a 24/7 commitment, and managemyproperty are more than prepared to meet that standard.

managemyproperty is anindependent Property Management company based in Wellington, New Zealand.Richard Horne remains a tireless and energetic investor and commentator,running an experienced eye over the property market.

Visit the website at www.managemyproperty.co.nz

Wellington Market Review - October 2011

2011-10-08T12:26:00.002+13:00

Here in the Capital, the market has been bumping along the bottom for some time now. With bank rates at an all time low and property sales prices depressed, things have been static and/or receding. However, there are signs that things are slowly thawing and improving.

What’s the Government saying?

http://www.minhousing.govt.nz/market-rent. You'll find the Department of Building & Housing statistics interesting reading. Generally though, rents haven't changed much in the last month.

What’s Happening with Advertised Rents?

A gentle reduction over the winter months has possibly started to turn around at last. Some apartment complexes are attaining improved rent rates as tenants move on, and there have been modest gains with inner city quality apartments. Flats, units and smaller houses are still flat but seem to have stopped falling.

Top Range:

Large and top quality family homes remain quietly popular. Very few remain empty for long, and as the summer warms us all up and the New Year brings inevitable changes, these properties will fill quite quickly now.

Mid Range:

Still flat, but rents don't seem to be dropping much more. Vacancy times can still be extended, but the student market and young couples are starting to appear at open viewings and these properties are also showing signs of activity.

Lower Range:

Rents in this sector remain relatively healthy, and there are some good property deals out there from what we are seeing. Investors in Wellington seem to be favouring this property type, and I've seen a good number of new owners bring their one and two bedroom units and flats to us for management.

If I was advertising a property now, what can I expect?

You should have your property listed and advertised in at least six different media formats so that you are reaching as many potential tenants as possible. As has been the case over the whole winter, expect to work hard to catch your next tenant. You can lead a horse to water, but you can't make it move in and pay the rent. Your best option would be to stop advertising your property yourself, and get it managed by a professional Property Manager.

Good luck!

managemyproperty is an independent Property Management company based in Wellington, New Zealand. Richard Horne remains a tireless and energetic investor and commentator, running an experienced eye over the property market.

Visit the website at www.managemyproperty.co.nz

Wellington Market Review - August 2011

2011-08-02T16:29:00.009+12:00

If there is light at the end of the tunnel, then it’s very dim…. The market remains obstinately quiet, with activity levels verging on flatlining. I realise that this is NOT the news that you want to hear, but our current experience in the Wellington rental marketplace is proving to be frustrating.

Rental owners should be using this quiet time to work on maintenance issues and do all that they can to freshen up their properties. If your rental is tenant, your tenants will love you for taking care of the place and looking after them. If your place is vacant, a lick of paint or a new carpet will work wonders towards securing your next tenant quicker than the rest of the advertisers on TradeMe.

What’s the Government saying?

For what it’s worth, check out what’s happening in your area by visiting http://www.minhousing.govt.nz/market-rent. However, you should be aware that the Government’s figures are not only historic, but are also now quoted over a six month period rather than the three month period as before. That little manoeuvre flattens the averages out a bit more and could skew the available statistics.

What’s Happening with Advertised Rents?

Over the last few weeks we’ve had to go back to owners and suggest that they drop their advertised rents as we’re not getting a huge reaction to our available listings. Newspaper and online adverts are running longer, rents are slipping back, and we’re finding that on changeover of a tenancy the new rent can be 10% lower than before.

Top Range:

What is commonly referred to as the Executive market steams ahead quietly and performs in much the same way as it always seems to. That’s not to say there is vacancy downtime, but it’s less of a concern than the rest of the market.

Mid Range:

Flat, with rents dropping still, so I can’t really add much to that. As a property manager, I hate dropping rents, so if your property manager suggests lowering the rent to get a tenant in, there’s a very good reason why they are suggesting it! Listen, and make a quick decision.

Lower Range:

Still bumping along. As I said last month, rents have steadied at this level and good ones get snapped up quickly, but it seems to be steady as she goes as the winter progresses.

If I was advertising a property now, what can I expect?

Expect to be asking yourself “Where has everyone gone?”. You can reasonably expect things to be much quieter if you’re advertising a vacant property - fewer phone calls, and fewer email enquiries. Open homes on the weekends can often be a no-show, which will frustrate you, but be prepared to lower your rents.

Good luck!

managemyproperty is an independent Property Management company based in Wellington, New Zealand. Richard Horne remains a tireless and energetic investor and commentator, running an experienced eye over the property market.

Visit the website at www.managemyproperty.co.nz

Wellington Market Review - July 2011

2011-07-05T15:32:00.004+12:00

There’s activity in the market, that’s for sure. That’s a pleasing development over last month, but it doesn’t really signal a change in what’s happening out there. I can sum it up quickly for you – quiet. It’s winter, after all.

Tenants are now expecting a lot more for their dollar, and offering a property with mould on the ceiling, ratty old curtains, tatty carpets and a turn-of-last-century kitchen and/or bathroom just doesn’t cut it. If you don’t already have a maintenance plan in place to update your property, then now is the time to start thinking that way.

What’s the Government saying?
Does anyone actually listen to what the Government is saying? Well, in the case of rental statistics, it’s always worth taking into consideration their published numbers. You’ll find them at http://www.minhousing.govt.nz/market-rent and you’ll see what properties have been renting for in your area over the past three months. It’s not ideal, but you’ll get a broad impression of rents.

What’s Happening with Advertised Rents?
Advertised rents have been steadily dropping (yes, dropping!) as vacancy times have increased. Some landlords are offering heat pumps, big screen TVs, and rent holidays to attract tenants. However, my feeling is that we are pretty close to the nadir of the rent cycle as we’re seeing investors starting to buy again since returns are improving.

Top Range:
As always seems to be the case, upper bracket quality properties are renting quietly but well, with good fair prices being achieved. Apartments in this bracket are also renting well, but there doesn’t seem to be a premium in renting a place fully furnished.

Mid Range:
More active than last month, with the emphasis on the standard of a property. A rental with a modern(ish) kitchen and bathroom, in good decorative order, will get a good rent. Let your place run down, and wave goodbye to good returns. Three bedroom houses are renting well, although townhouses have been challenging lately.

Lower Range:
Bumping along. Here is where a good return can be had for renovating one and two bedroom properties. Rents have steadied at this level and good ones get snapped up quickly, so things are starting to lift in this range.

If I was advertising a property now, what can I expect?
You can expect few calls if your rent is too high, or you have a poor advert with fuzzy pictures of the front door and the kitchen sink. You can also expect tenants to ask about whether there is heating or insulation in your rental, what the water pressure is like, and whether it comes with whiteware. Get those things sorted, and you’ll get a better result.

If you get no response, DROP THE RENT!

managemyproperty is an independent property management company based in Wellington, New Zealand. Richard Horne remains a tireless and energetic investor and commentator, running an experienced eye over the property market.

A Parable for Property Managers

2011-06-20T09:51:00.000+12:00

This is not one of my stories but it did happen. I wish I could say such a sequence of errors is not common but a look around the industry suggests otherwise. Here is how this particular parable went:

The tenant, who we will call Shannon, received a phone call from a plumber looking to make a time to fix the leaking tiles in her bathroom. Somewhat surprised, she politely explained they must have the wrong number as she was not aware that any such work was scheduled for the flat.

Having initially dismissed the call, Shannon became concerned it was not just a garden-variety wrong number. The plumber, seemingly equally confused by her answers, did have all the correct details for the property and mentioned the correct property management company. However, Shannon knew she had not requested the work, there had not been an inspection in three months (at least that she was aware of) and she had not been notified by the property manager of any plumbing work being scheduled.

Shannon rang the large property management company to find out what was going on. The first person who answered the phone knew nothing about any plumber and advised her to ignore it entirely. Unsatisfied with that response, Shannon called again later, got a different person and heard a different story.

As it turns out, the property management company had indeed called the plumber a week or so earlier. The tile problem had apparently been noted in the inspection three months earlier. Naturally, Shannon had a few problems with this explanation:

- A near three-month delay in even calling for a plumber was way too slow, particularly if there was a serious problem involving water leaks.
- The inspection had picked up a couple of loose tiles around the shower which was what the plumber had been instructed to fix. However, it had missed the loose tile on the bathroom floor which was probably more significant.
- When Shannon asked why a more recent inspection had not occurred, the property management company replied – and I quote – “we have lost the keys. Can you drop in another set tomorrow? It’s quite urgent we have them.”

Let me sum this up gentle readers: The property management company wanted the tenant to get keys cut at her expense and then deliver them urgently because they had “lost them”, even though they took nearly three months to make one phone call which they then forgot to tell her about. That does not sound fair to me!

There was a happy ending for the tenant. She put her foot down and got the company to pick up the key and reimburse her for the expense. The plumber came in and fixed the shower and the floor. It turned out the water damage was minimal but it was useful to address the problems before they got any worse.

It was not such good news for the property management company though. Shannon has told this story to a fair few people around town over a cup of coffee or a glass of wine. You can be certain that she named the company involved.

Wellington Market Review - June 2011

2011-06-02T17:30:00.000+12:00

Cold, clear and sunny – that’s the weather we’re enjoying in Wellington at the moment. The property rental market is not, however, displaying quite the same clarity. There has been a little lift in the level of activity, and our current “Available” list has shrunk considerably. There are still some properties that are not letting very quickly, and some that get snapped up immediately, and if I knew what got me a tenant quickly, I’d do that all the time.

So there’s not really much to note this month as the market appears to be keeping its head down and bowling along much the same as it has been for the last few months. It’s frustrating, and some of our clients are still feeling the pain of vacancy and lack of rental income.

What’s the Government saying?
Again, no real change on last month’s commentary, really. Rent statistics on the Department of Housing website are historical and so don’t accurately reflect what’s going on right now. They are a reasonable indicator though, and they currently show that in many areas of Wellington, rents have receded.

What’s Happening with Advertised Rents?
Newspaper adverts are growing fewer and fewer by the week, and that’s not just because things could be slowing down for winter. TradeMe has definitely wrenched the baton from the print media’s trembling hands and run well ahead as the medium of choice for advertising. In fact, if it ain’t on TradeMe, it ain’t available!

Some adverts are stilling hanging around on the web for weeks at a time, and advertised rents are certainly being trimmed back by private owners and property managers.

Top Range:
This sector consistently seems to steer a steady course, perhaps because upper bracket properties don’t come available as often as the rest of the market, and they attract a different tenant profile. We’ve had no real problems with letting top end properties at over $800 per week.

Mid Range:
A little lift in activity as mentioned before, although rents being achieved are most definitely down on the start of the year. The phones are ringing and email requests to view properties are more frequent, but prospective tenants are often expecting flexibility with the asking rent.

Lower Range:
Also quiet, and just as challenging as the mid-range, rents have not really altered very much. Again, a little lift in activity here too, which is encouraging.

If I was advertising a property now, what can I expect?
Be prepared to put a bit more effort into your advertising. Write a great description of your property, take sharp and clear pictures on a sunny day, and review your rent rate often. The simple rule of thumb is, if you don’t get any calls, the rent is too high – so drop it.

Are you seeing something we’re not?
If you have a different view, please let us know. Call 04 475 7766 or email us at office@managemyproperty.co.nz and tell us what you are experiencing.
_______________________________________________________

managemyproperty is an independent Property Management company based in Wellington, New Zealand. Richard Horne remains a tireless and energetic investor and commentator, running an experienced eye over the property market.

Visit the website at www.managemyproperty.co.nz

Follow us on Twitter: Click here

Wellington Market Review - May 2011

2011-05-11T16:20:00.000+12:00

And so winter is almost upon us, the clocks have changed, and quiet descends on the whole of New Zealand. It’s certainly quiet in the property market, with sales figures down, average sale prices down, and rents depressed. Unless of course you’ve been fooled by the media reporting that rents are skyrocketing and tenants are queuing out the door and offering more money to rent places.

The media seems to be broadly reporting that there is an over supply of rental properties. However I feel that there’s an under supply of tenants. No-one wants to move house in these uncertain and (potentially) inflationary times.

What’s the Government saying?
The Department of Housing has statistics on their website which are only marginally helpful in getting a handle on what’s happening in the rental market. Their numbers are historical and cover the last three months. However, the numbers reflect the market, which is generally static. In some areas rents are still sliding backwards.

What’s Happening with Advertised Rents?
Lots of properties have been listed in the press and on TradeMe for weeks and months with no takers. Rent deals with free televisions, heat pump installations and other sweeteners are starting to become more frequent. Generally, rents are being cut back by landlords and property management companies across the board.

Top Range:
This sector never seems to change, as top quality executive properties always attract only a few prospective tenants, and there doesn’t seem to be any change in that. We are finding top end properties just as uncomplicated to let as ever, so no change in this area.

Mid Range:
Rents are sliding. One example is a 4 bedroom house which was rented for $580 per week, and is now advertising at $490 per week, and still no takers. More tenants are asking for a better rent deal when they come to open homes.

Lower Range:
One and two bedroom flats remain active, with rents fluttering around the same range as 12 to 18 months ago. There are bargains to be had though.

If I was advertising a property now, what can I expect?
As always, if your property is clean, tidy, warm, well maintained and secure, and it’s still not tenanted, then the rent is too high. If no-one is calling or visiting your open viewings, lower the asking rent. Make sure your TradeMe advert has plenty of good clear photos, not dark and dingy pics of the laundry tub or the carport out the back. Also work harder on your description of the place – too many adverts have a two line description and one bad photo of the vanity sink in the bathroom. Don’t be lazy – put some effort in!

As I said last month, the light may be at the end of the tunnel, but it’s not getting any brighter just yet. The property market in general is tipped to improve later in 2011 and start moving more strongly in 2012, so hang in there!

Are you seeing something we’re not?
If you have a different view, please let us know. Call 04 475 7766 or email us at office@managemyproperty.co.nz and tell us what you are experiencing.
_______________________________________________________

managemyproperty is an independent Property Management company based in Wellington, New Zealand. Richard Horne remains a tireless and energetic investor and commentator, running an experienced eye over the property market.

Visit the website at www.managemyproperty.co.nz

Follow us on Twitter

Find us on Facebook
_______________________________________________________

Are you smarter than the Residential Tenancies Act?

2011-04-18T15:38:00.000+12:00

When I published my Dirty Dozen common misconceptions about property management – to great critical acclaim I must note – I included the classic line “I’ve managed properties before - I know all this stuff.” My initial rejoinder on the list was that this was “unlikely because regulations and rules change frequently.”

Even that is probably an understatement. There was a huge suite of changes to the Residential Tenancies Act passed just last year. A key part of my job is keeping on top of these constant changes and new requirements to ensure all our work is above board. Ultimately, the pace of change means that behaviour which was okay even couple of years ago is often not allowed today and the penalties for breaches can be severe. Trying to run a property now the same way you ran your previous rental is a recipe for disaster.

For once, this story is not about me. It is about one of my neighbours who owns a rental property and decided to run it himself. His reasoning was that he had done it before and, after all, how hard could it be? At this point, it is time to open up what I call the “Dumb DIY Landlord Files”. There sure are a lot of them. Agent Mulder would have a field day with this one, Agent Scully could have a field day with me… but I digress.

My neighbour – who for the purposes of this story is called Alan – arranged for a lady to rent the main house on his property and a single guy to rent the small one bedroom unit underneath. I will be the first to say that was great set-up – there were two steady rent streams and the owner built a cordial relationship with his tenants. Then Alan just had to go and tempt the property gods by saying, and I quote, "they are really nice people. What could possibly go wrong?"

Cue ominous music as half the readers start nodding. They know precisely what is going to happen because it is so common. As much as I would love to produce a surprise Quentin Tarantino ending to prove them all wrong, I can’t. It all went down like this.

Alan’s two tenancy property had one power supply and one power meter. That set-up is not uncommon and is certainly not unworkable. He estimated how much power each would use and then set up an arrangement where one of the tenants paid an extra $20 per week to cover their additional electricity.

For a while, the arrangement worked fine but then the meter reader called. Two weeks later and the power bill was suddenly no longer an estimate. It was an actual bill and it was HUGE.

Alan then approached the really nice tenant and told her that they would have to pay more for their electricity which meant an extra $20 per week in rent to cover it. She was understandably not too pleased about this development. However, then she went all ‘bush lawyer’ on Alan. [Insert appropriate deity here] save us from bush lawyers. In situations like this, a little knowledge is indeed a very dangerous thing.

“You can’t put my rent up,” she yelled “you need to give me 60 days notice.” “The power bill was much higher than we all expected, that needs to be covered,” Alan countered. “That’s not fair,” said the tenant, “I will take you to the Tribunal!” The tenant’s daughter got involved, the argument went on, it got quite heated and Alan felt harassed, stressed and frankly angry about the whole thing.

The situation escalated to the extent that Alan did what any sane reasoning person would do - he told his tenant they were evicted and they could bugger off out of it. The fatal flaw is this strategy is that you just can’t do that.

In this case, Alan did not know the rules and regulations. As a result, the whole business ended poorly for him, both financially and emotionally. Part of a quality property manager’s brief is to be fully familiar with all the regulatory requirements and the legal framework so they can properly look after properties on behalf of owners.

Alan has never said property management was easy since then.

Wellington Market Review - April 2011

2011-04-05T11:44:00.000+12:00

Autumn generally means the market slows down a little. However, the slowing down started earlier than usual in February with vacancy rates up and rents static and receding. It’s becoming tougher to let some places, and there are any number of reasons for this.

The recession, increased GST, the Christchurch earthquake, Government staff cut backs, and new apartment complexes coming on the market have all played their part in keeping Wellington rents depressed.

What’s the Government saying?
Remember, the government figures on rents are historical over the past three months, and so are already out of date. However, our experience at the moment is that actual rents are slightly lower than the Department of Housing statistics.

What’s Happening with Advertised Rents?
Landlords and property managers are still expecting healthy rents in their advertisements, but many adverts online and in the To Let columns have been up there for a long time (some adverts on TradeMe are three months old!), and advertised rent rates in the papers have been pegging back quietly for months now.

Top Range:
Always strong and steady, but on a smaller scale. Top quality executive properties with all mod cons are always in demand.

Mid Range:
General stock of two and three bedroom properties can sit empty and untenanted for a lot longer than before, and some landlords are resistant to lowering their expectations for rent. There are definitely not as many tenants looking. Also, the new apartments available has meant some rents in this range have had to drop to compete.

Lower Range:
One and two bedroom flats and the student accommodation sector are still fairly mobile, and the start of the year meant a flurry of activity in Wellington. However, as we head into winter this has also quietened down considerably.

If I was advertising a property now, what could I expect?
If your property is clean, tidy, warm, well maintained and secure, and it’s still not tenanted, then the rent is too high. If no-one is calling or visiting your open viewings, lower the asking rent.

The light may be at the end of the tunnel, but it’s not getting any brighter just yet. However, the Auckland market is romping away with the simple “supply & demand” effect, and this could well trickle down through the rest of the country. The property market in general is tipped to improve later in 2011 and start moving more strongly in 2012, so hang in there.

Are you seeing something we’re not?
If you have a different view, please let us know. Call 04 475 7766 or email us at office@managemyproperty.co.nz and tell us what you are experiencing.
_______________________________________________________

managemyproperty is an independent Property Management company based in Wellington, New Zealand. Richard Horne remains a tireless and energetic investor and commentator, running an experienced eye over the property market.

Visit the website at www.managemyproperty.co.nz

Follow us on Twitter: Click here

Find us on Facebook! Click here

Register for regular updates HERE

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We deal with this stuff so you don't have to!

2011-03-23T14:52:00.000+13:00

In a previous post, I shared my personal Dirty Dozen statements about property management which never fail to crack me up. One of the most common is “I can do it all myself.” Now, often that is simply not true but, even assuming it is, the key question is “do you really want to?” Today I’m sharing a story of what I go through so landlords don’t have to.

Our company looks after a tenancy in one of the lower socio-economic areas of town. The tenant – we will call him Bob even though that is not his real name - has lived there with his wife and three kids for eight or more years. On the face of it, that makes him a model tenant. In reality, Bob is quite a pompous little man with a vastly exaggerated view of own importance and a rather tenuous grasp on the realities of life.

My early encounters with him left me feeling a bit angry and frustrated. Actually, pissed off is probably the best description. However, over time I’ve made dealing with him into a bit of a game and it is actually quite entertaining. It keeps me amused at least. The reason I’m sharing this story is not just that I find it amusing, but it also provides a snapshot of the kind of people I sometimes have to deal with as a professional property manager.

Bob’s family have been in the house over eight years but they are far from perfect tenants. The garage is filled with piles of trash and – frankly – crap. This stuff would not sell on Trade Me even if they added a new section solely for “rubbish”. There are two cars parked at the back of the house which are slowly rusting to the ground. They might as well be up on blocks.

Everything the family cooks seems to be deep fried in a large vat of lard which means a permanent thin film of grease covers every surface of the house, including somehow the ceilings. The family dog is doubtless loveable but it likes to chew the walls in the kitchen (probably attracted by all the fat), uses the deck and lawn as a bathroom (which gives Bob an excuse not to mow the grass) and barks at any and all moving objects.

In the bigger scheme of things, that is not too bad. Over my years in this job I have seen a lot worse. What makes it tricky is that Bob has refused or ignored a number of requests to tidy the garden and clean up the garage. The situation got so bad that the owner actually fronted up some cash to get two very polite young men from Student Job Search to spend a few days trimming trees, chucking out rubbish and generally tidying up around the place.

In other words, they were doing stuff Bob should have done years ago and they were doing it for free. The average person would be quite pleased with that outcome. Bob is not an average person. I have transcribed the message he left on my mobile after day one of the Big Clean.

"Richard, this is Bob here. I am sick of all the demands to clear out the garage we are currently the tenants of. My wife and I will not be spoken to in such a disrespectable manner. What is worse is these kids turned up today to do it. They are not welcome on my property. If they turn up again they will be removed by me, my neighbour or the Police, whoever gets them first. They are not welcome and I am not happy mate. You have been told. Thank you.”

The end result was that I spent a frustrating hour early the next morning down at the house negotiating to get the students onto the property to tidy it up for the tenants at the owner’s expense. It was like being the United Nations except I actually got a result.

You might be able to do it all yourself, but would you rather Bob had your cellphone number or mine?

managemyproperty is an independent Property Management company based in Wellington, New Zealand. Richard Horne remains a tireless and energetic investor and commentator, running an experienced eye over the property market.

Visit the website at www.managemyproperty.co.nz

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Wellington Market Review - March 2011

2011-03-04T11:40:00.000+13:00

The question on everyone’s lips right now is “How is the rental market?”. Do I have an answer for you? Maybe……….

According to the inestimable John Campbell before his slide into disrepute over that Ken Ring interview, the market is rocking and rolling, shortage of properties, rents sky rocketing, queues of tenants out the door, people offering to pay more than the advertised rent, etc.

This particular Nirvana is not a true reflection of the market, but more a journalistic strategy to garner more viewers for John’s TV prog.

So what is happening in Wellington? It’s quiet. Too quiet. It wouldn’t be unreasonable for a property owner to expect things to pick up and start flying from the start of the year, and indeed we did experience a flurry of activity as plenty of our available stock was snapped up by incoming tenants. However, by the end of January that had steadied rather quickly, and the market remains steady but quiet right now.

Top Range: Not renowned for huge ups and downs, the top bracket continues to bowl along with no great changes, and good healthy rents being achieved.

Mid Range: Rents have stalled, and in some cases we’re actually getting above average rents from existing tenancies because the surrounding market has receded and rents have dropped a bit. I know you don’t want to hear this, but take your fingers out of your ears and read on.

Lower Range: Seems to be steady but quiet, with tenants getting a little more picky about what properties have to offer. Many tenants ask specifically about insulation and heating….

If I was advertising a property now, what can I expect?
You can expect to find a good tenant for a good property that’s clean and well presented. If it has views, parking, heating of any type, and is in generally good to great condition, then you should have no problems.

However if your property has a 100 year old kitchen and/or bathroom, prospective tenants will stay away in droves. At the risk of repeating myself, if your property is vacant, the rent is too high. As I always say, the right tenant will always come along – they just don’t always appear just when you need them to!

Are you seeing something we are not?
If you have a different view, please let us know. Call 04 475 7766 or email us at office@managemyproperty.co.nz and let us know.

It's official - people say the dumbest things!

2011-02-14T10:29:00.000+13:00

In any industry, occupation or trade, you always seem to come across seemingly normal people who ask the dumbest questions or have the strangest ideas about what precisely your line of work involves. I mean, we all try to go to work and earn a decent living. Similarly, we all buy things and (usually) try to act as reasonable customers.

I have to say that Telecom’s XT “service” might dispute my record as a reasonable customer given I was the guy who auctioned off the XT Lemon (an actual lemon with XT written in vivid on the side) on Trade Me. That was more an example of a (relatively) normal person pushed too far by a shoddy service and even shoddier customer service than any exceptional unreasonableness.

Sometimes though, even the best of us can get floored by the oddest comments and queries at our place of employment. Before I began my illustrious career in property management I used to work in retail. Most of the customers were fine, some were great, a dedicated minority were astonishing – but not in the good sense of the word. They would ask things like “how many items are in this six pack?” or “how much are the items in the $2 bin?”

There is a famous website called www.notalwaysright.com. It is basically a collection of stories which staff members have told about their customers. There is a customer at a supermarket demanding to know if the live fish swimming in the tank is “fresh”. Another repeatedly insists they want to buy a “paedophile” when they actually meant a “pedometer.” Then there is the client who can’t understand why her home wireless internet system in Los Angeles won’t connect to her laptop when she is on holiday in New York.

Some people believe these stories are urban myths, made up or exaggerated. Me? I’m a believer. Put the jug on, make a pot of coffee and be prepared to spend a while on the site laughing and nodding. Then check out www.peopleofwalmart.com and do it all again.

My field of property management is no exception. Here is my Dirty Dozen of (false) statements which never fail to amuse me. I’ve including my immediate responses to each in brackets:

* Property management is just money for jam (Ah… no)
* I can do all that myself (Unlikely, especially at 3am on a rainy Sunday)
* I’ve managed properties before - I know all this stuff (Also unlikely because regulations and rules change frequently)
* They seemed such nice people (Possibly true but…)
* Oh, they’ll catch up with the rent. I know they’re good for it (Road to ruin, good intentions, some sort of paving system)
* What’s an inspection? (Oh dear)
* I haven’t visited the place for years! (Unpleasant surprise inevitable)
* I wouldn’t put the rent up because they’ve been good tenants for years (Unwise)
* I just chuck their stuff out and change the locks (Unwise and dangerous)
* Never took a bond (Dangerous and dumb)
* I always keep my rents lower than anyone else (Unlikely and/or dumb)
* I visit the place every week – my tenants LOVE me (You are probably not nearly as LOVED as you think you are).

I don’t really need to say any more.

It's a Flat Market Out There!

2011-02-02T15:08:00.000+13:00

January is traditionally the slowest news month of the year. Politicians are on holiday (which is good news for us taxpayers), half the journalists have gone to the beach and the other half are basically reporting from the local internet café. In December, the managemyproperty phone rang regularly with people looking for comment about the state of the local rental market. This month, those calls have just intensified. So, here is what managemyproperty officially thinks of the current residential rental market out there.

Flat.

Very flat.

Flatter than an already flat thing which has just been run over by a very heavy thing.

In other words, FLAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAT!

The harsh reality is that our phones are not ringing red-hot with reliable tenants looking for properties to rent. In fact, over 10% of our rent roll is available AND vacant, which has simply never happened before. The slump is being felt across the board because unfortunately there is a paradox in the current market which is hurting every landlords.

It all comes back to politics. Over recent years, our esteemed leaders decided that property investors were basically evil so they set about punishing such entrepreneurial self-responsibility. After all, who really wants ordinary people to take their financial destiny into their own hands when the Government seemingly sees its role as to tax, tax and tax some more?

As a result, a whole raft of restrictions, regulations and legislation were put into place. These were talked up by the pundits and experts on television and in the newspapers. Kieran Trass got a little out of hand saying he'd run naked down Queen Street if market prices didn't drop by 30% but, hey, he's an expert apparently. Thankfully, we haven’t seen him streaking through Auckland yet.

Every talking head and featured columnist wittered on about how rents would rise. According to their collective wisdom, all indicators were that the poor downtrodden renting tenant would have to cough up more of their hard earned cash just to rent a decent place.

Time for a reality check – it is not happening in Wellington, that is for sure. That is particularly ironic given this is the home of a Government which seems hell-bent on sqeezing every last tax dollar out of an already depressed real estate market.

As 2011 begins, we face a perfect storm - rising interest rates, depressed real estate prices,the prospect of a wet, cold winter and a tenant market that's largely staying put because of job insecurity.

Happy New Year… apparently.

www.managemyproperty.co.nz

All I Want for Christmas is... Property Management!

2010-12-21T10:59:00.000+13:00

The streets are filled with frenzied people doing last-minute power shops, every store is playing “Snoopy’s Christmas” on a seemingly endless loop and you can’t walk down the street without bumping into gaggles of office types off to lunch wearing Santa hats and reindeer antlers. All this simply confirms that the silly season is officially upon us.

However, just because everything else is closing down for the summer doesn’t mean we do. Your tenants and your properties are always covered by managemyproperty – 365 days a year. You know that rent, problems and disasters do not take a holiday. The team at managemyproperty take care of them so you don’t have to.

The managemyproperty office will be physically open from 8am to early evening right up to Christmas Eve. After that, we’re available 24/7 on email, mobile phone, office phone, text and through the website to deal with any queries or issues. We have trusted trades people available to cover all repairs and emergencies, even on public holidays.

For tenancies ending or starting over the holiday period, one of our managers will be on-site to cover all the formalities including signing in new tenants, opening inspections, closing inspections and taking the necessary photographs.

Property management is about providing a good home for tenants and creating peace of mind for owners. Summer is supposed to be a relaxing time and, for half the managemyproperty team at least, it sure will be. The other half of the team will be working through to ensure our owners and tenants are properly looked after all the way through the silly season.

Finally, managemyproperty sends seasonal greetings to our all our owners, tenants, trades people, support staff, suppliers, coffee providers, assorted associates and friends. Best wishes for 2011.

Who Are You - Really?

2010-12-06T23:25:00.000+13:00

Ah, the perfect tenant. Respectable, polite, neat and tidy appearance, and they seem so nice. What lovely people.

Don't be fooled, because (and I'm speaking from bitter experience here) all may not always be what it seems.

Believe me when I tell you that you should ALWAYS do reference and background checks on tenants who want to rent your place. That way there's a slim chance you won't end up with a tenant who sets up his shipping container business in your back bedroom, or starts supplying home brewed stimulants for pre-pubescent party crashers from your shed.

Let's also not forget the opportunity some "well meaning" tenants take to create all kinds of havoc for the investor by constantly requesting that repairs and improvements need done all around the place. Some tenants even offer to paint the living room or back bedroom 'for the cost of the paint'.

No! No! No! Don't let them do it.

Tenant checking is (or at least should be) another of your property manager's Dark Arts. Just meeting a tenant and sussing out how nice they are face to face just doesn't cut it when you're about to hand the keys to your investment over to them. You'll need to ask a few well aimed questions, and probe around to find out more about the new caretaker for your retirement plan.

So what to ask? Here's a few suggestions.

- Have you ever had a tenancy terminated before?
- Do you smoke?
- Ever been refused credit?
- Why are you moving from your current place?
- Where do you work?
- Have you ever been to Tenancy Court or mediation?
- Do you have any court orders against you?
- Do you have a criminal record?
- Can you provide me with some form of photo ID - driving licence, passport, etc?

But wait, there's more! You also need to speak to your applicant's references. People like their current and past landlord, current and past employers, family friend, team captain, former teacher, mum/dad/sister/brother, probation officer, former cellmate, etc. Try asking:

- Any problems with rent payments?
- Are you aware of any financial issues they might have had?
- Do they have any pets?
- Do they smoke?
- Will they treat me fairly as a tenant?
- Would you rent your own home to them?

And if you actually take the trouble to speak directly with your applicant's current landlord, try:

- Would you take them back?
- Will you be refunding all of their bond to them?

Hey, why bother? You should just make it easy for yourself and get a property manager. Preferably one who knows how to follow through on this process.
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You Can't Just Break In!

2010-05-14T07:59:00.001+12:00

Sometimes the property management Gods conspire to test you. Sometimes however, they are just plain BAD and want to drive you mad. Such was the day when I arranged for one of our maintenance team to visit a property in the centre of town and install a folding washing line frame to an exterior concrete wall.

Easy job this, but one that required some electrical power, so I told my trades guy to call me when he was on site and I'd arrange with the tenant for me to enter the property and plug a power cord in.

So far so good, or so you would think.....

My maintenance guy called me to say he was on site, so i jumped in the car and headed round to the property. I grabbed a power cord from my tool kit and headed up to the front door, to find that the washing line had been installed already and was all finished.

"How did you get the job done without the power connection?" I innocently asked, thinking he'd used his initiative and perhaps spoken to a neighbour to get power to do his job.

His answer certainly grabbed my attention.

"Oh, I just went into the flat through the bathroom window and connected my power cable in the laundry, but I had a little accident and broke their mirror."

Now this is not a good situation. The tenant has not given permission to enter the property, and this idiot trades guy has broken into the property through the window, entered and done some damage to the tenant's belongings.

You can understand that I went off like a fireworks factory.

So, the lesson to be learned from this is - communicate clearly and systematically with your trades guys, and let them know the rules you have to work by as a landlord. Also, don't use idiot trades people. Needless to say I won't be using THIS guy again.

www.managemyproperty.co.nz

Wellington Rents Review: May 2010

2010-04-26T09:56:00.000+12:00

The phones are quiet.... vacancy rates are definitely up at the moment. As autumn sets in, the market has proved quietly steady, although rents are a little less mobile than was expected at the start of the year.

Properties in good to excellent condition and new development properties are attracting the top end of the market, while the regular market is showing signs of improvement over the past three months. Tenants are clearly showing a preference for more modern kitchens, updated bathrooms, and heating and insulation are also high on tenant wish lists.

Other things like garage or off street parking are premium, and the two appliances heavily favoured are dishwashers and heat pumps. Investors are also quietly getting back into the market, with several of our clients purchasing more property and new investors approaching us for management options.

Top Range: large executive properties and expensive apartments are not renting impressively fast right now. There seem to be a lot of people who've tried to sell their home without success, so the next solution would be to rent it out.
A steady supply of new apartment developments also means this end of the market has an over-supply.

Mid Range: Steaming ahead as normal, albeit quiet. Rents are not moving much, and our regular rent reviews are not showing too many opportunities to raise rates.

Lower Range: Active, and bottom end rents are reasonably strong as you get closer to the city centre, but still not as active as it should be.

If I was advertising a property now, what can I expect?
Your phone won't be ringing off the hook, and don't expect a bus party of prospective tenants at your open home on the weekend. Prepare for some down time, but use that time to take care of things like trimming back the section, painting the interior, checking all windows and doors, and other maintenance items.

If you’re advertising right now and you’re not getting any calls, it’s time to drop the rent. Better to have a tenant paying less than you’d like than to expect what you want (or need) and get nothing.

As I always say, the right tenant will always come along – they just don’t always appear just when you need them to!

www.managemyproperty.co.nz

They Seem Like Such NICE People!

2010-04-19T19:31:00.000+12:00

Now here's a turn up for the books. I signed off on a tenancy that's just finished today. Dropped by the property, did an exterior check, met the tenant, went inside and completed a full tour of the place, making sure everything was ok.

No problems or issues - happy outgoing tenant, happy property manager (me). So far so good.

So we get down to the nitty-gritty of signing off on the bond, and I already have a prepared bond refund form with everything filled out except the tenant's bank account. Only this time the tenant wants me to complete the 'Old Landlord' section of her bond transfer form.

On the other side of this equation, it's a practice of our property managers to not accept a promised bond transfer before giving new tenants the keys to a property. Why? Well, that would mean the incoming tenant has control of the property before paying a bond to us, AND the incoming tenant's old landlord has signatory control over a bond that may mean we don't get the full bond. In short, it's not a great position to be in as a landlord.

GOLDEN RULE: No money, no keys. Show me the money.

So I casually expressed mild surprise to my tenant and asked her who her new landlord is. When she told me, I have to say I was surprised. I know this property management company, and I thought back over the last few weeks from when my outgoing tenant gave us notice to end the tenancy.

Funny, I don't remember them calling us for a reference on this tenant. So I asked my tenant, and she said "No they didn't actually seem to call any of our references. Maybe they thought we were just nice people."

Hmmmmm.....maybe they did. (Incidentally, they are, but that's beside the point)

Or maybe they need a swift kick up the bum for not following up on references. It's such a fundamental process, essential to quality property management, and serves as a protection for the owner of the property. It's not rocket science - a few phone calls, a detailed search of selected databases, and an advanced Google search usually turns out any skeletons.

To NOT do any form of reference check and just take a tenant on because "they seemed such nice people" is brain dead in the extreme.

Got me thinking though. Back in the office, and I did a little check, and here's what I found. Over the most recent twenty tenancies, we've checked at least three or four references on each incoming new tenant. For the corresponding outgoing tenants, we've had only ONE call from another landlord asking for a reference from us. For the others - NOTHING!

Reference checks are SO IMPORTANT!!!!! I can't stress enough how important it is to know as much as possible about the tenant you're about to hand over keys to. Especially if it's someone's investment property. My clients rely on me and my team to look after their capital asset to a high degree, and not checking up on a (prospective) new tenant is simply plain stupidity masquerading as service.
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There. I've said my piece. Now visit the website to find out more about how we go about looking after your investment property:
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www.managemyproperty.co.nz
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Spellcheck for Dummies

2010-04-05T09:52:00.000+12:00

It's a giggle really. Small ads for properties in the newspapers and on the web do throw up a few howlers. Here's a couple I've seen recently:

- "Desirable property in a much sort after location"
- "This house is in a quiet colder sac...."
- "an investment that provides piece of mind..."

I also received a very nice email from one of our tenants who owes us a little back rent. He explained why he'd fallen behind, outlined a payment plan, and pointed out that he knows he's four days "in the rear" with his rent.

Love them all!

Send me your best contributions to richard@managemyproperty.co.nz
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Expect The Unexpected

2010-03-04T08:44:00.000+13:00

Ever had your expectations all set up, only to have your hopes dashed when faced with the reality of it all? You know, when you finally pluck up the courage to ask out the best looking girl in your class at school (the really hot one with the legs), and she turns out to be rather dull, but with a rabid interest in White Supremacist politics.

Such was my experience recently. A potential client called to ask me to complete a rental appraisal on a city house which he described as “a scruffy student flat at the lower end of the market”. Using the word “lower” as a descriptive implies that there’s possibly still a little way to go to get to the bottom of the scale.

The address of the property led me into thinking this would be a pretty good addition to our rent roll. After all, it was an inner city house in a quiet and desirable street, walking distance to the city, and had three bedrooms and a garden. What could possibly be wrong with that?

Thus I found myself standing in front of a classic city homestead which the local historical society had seen fit to slap a preservation order on, preventing the owner for several years from doing what he wanted to do – skittle the building and develop two townhouses on this slice of prime central real estate.

“Can tell us how much rent we could get for this?” said my client.

I’m not sure if it was the tall tufts of grass sprouting from the buckshot-riddled spouting, or the front porch walkway leaning at a jaunty 30 degree angle, patched with springy chipboard and full of holes, that gave me the first indications all was not well.

A cursory glance through the (opaque with grime) windows forced me to re-evaluate. “Oh’” I thought. “Oh, oh dear, oh dearie me….”

Closer inspection brought the full terror of reality hurtling towards me. Scrim walls with waves a Raglan surfie would salivate at were rippling in every room. Tired, chipped and stained paintwork on every surface, a carpet that looked like the Melbourne Cup race had cantered across it, and a livingroom with what I can only describe as a ‘fire-hole’ rather than a fireplace.

The wooden floor in the livingroom wasn’t polished, waxed or sealed – someone had just one day decided to rip up the carpet, and left it at that. For about 50 years.

The kitchen had a Victorian air to it, and I don’t mean Victoria, Australia. There was a two ring electric stove cowering in one corner that really should have been in a Te Papa exhibit a long time ago, and the whole area was covered in a thin but tactile film of dust-covered cooking fat. The only thing on the menu from this kitchen must have been pork chops and deep fried whale blubber.

“And where is the toilet?” I innocently asked.

“Oh, it’s an outside toilet. Just go out the back door…”

So I advised. It probably wasn’t what he wanted to hear really, but he listened anyway. Drawing on my years of experience in the property arena, I considered all the options, asked a few pointed questions to grasp an understanding of his plans and intentions, and following some deliberation I delivered an option that I felt was the only suitable course for him to consider.

“Stick of dynamite, mate. Blow the thing up.”

His blank stare could have been interpreted as disbelief at what I’d just said, but deep in his facial expression there was something else. A hint of something flashed in his eyes, and it took a while to figure it out. I really thought I’d stepped over the line, and insulted my client, but after a second or two his expression changed.

He was relieved. His whole demeanour changed, and he started to become quite animated.

“I knew it!” he exclaimed. “I tried to tell everyone, but they wouldn’t listen” he exalted.

Now it was my turn to be confused. But as he spoke, the story unfolded. This property was in the centre of a family dispute, with one faction wanting to sell, one faction wanting to keep the status quo, and one faction wanting to develop the site.

They’d been constrained by the preservation order, unable for years to do something about a property which I’m sure the neighbours already had plans to burn down quietly one night. It was an eyesore, a blight on the genteel landscape of this enclave of prime inner city real estate.

And now they had a demolition consent, and the last piece of the jigsaw puzzle was being told they couldn’t rent it out in this state. The best course of action was to drive a digger through the middle of it, erasing this carbuncle from the face of the city, and begin to make the land work for them as an investment.

So what did I learn from this? Well I certainly discovered that some people have pretty low standards that they’re prepared to inflict on someone else and expect to get paid for it. And I learned that, at some point, common sense has to kick in and open your eyes to what’s staring you in the face.

But I think the big learn for me was to expect the unexpected, and I thank Douglas Adams for that.

Tenants - Who Needs Them?

2010-02-13T09:32:00.000+13:00

Tenants. Love 'em or hate 'em, all investors need them. Need them like a jail needs prisoners - neither would get by without the other, but both are a pain in the ass anyway.

Or so conventional thinking would have it. But I don't think conventionally, I'm rather proud to say.

There are exceptions though, and if you think back down the many tenancies you have presided over, I know you'll be able to conjure up that one tenant whose bright aura cut through the darkness of your landlording efforts. Let me recount my latest little ray of sunshine.

I have a five bedroom house which I manage for an overseas owner. It's a big old place, on two levels, and until last weekend was populated for over two years by a group of young lads in their twenty-something years. You know, Playstation tan, drumkit in the sleepout, booze bottles outside the garage, no discernable floor surface in any bedroom, bathroom standards interpretive.

Lovely guys, a little untidy, and 'flexible' in their rent settlements.

So this tenancy finally came to an end, and with four days of rent outstanding, I met with the one remaining tenant for a closing inspection. What I expected was to find a list of things needing attention, and a house in dire need of a hand grenade.

What I found was a five bedroom house shining like a (nearly) new pin. This head tenant had taken it upon himself, on his own, to wash and iron (!) the curtains, scrub the two bathrooms, and shine every surface. He had fitted new brass window stays to about six windows at his own expense, and done a repair to one bedroom window that a builder had quoted $600 for. this repair was seamless, and beautifully done.

The inspection went extremely well, as I cruised from room to room increasingly amazed at the fabulous state of the place.

Sorting out the four days outstanding rent was simple, and my offers of reimbursement for the work he had done was turned down. Several times, actually.
What a guy. If the property owner had been available I would have dragged him out there to meet this wunder-tenant. What a diamond!

Now I had to ask myself, did I feel lucky? Well, did I?

You bet I did!

A glowing reference went to this tenant's new landlord, and I waved him off with a tearful farewell as he rode off into the Wellington sunset. Well, he drove off in his immaculately detailed car, and the sun wasn't really setting, but you get the idea, right?

Could I have another four hundred or so like that please?

Capital Gains Tax Will Make Property Prices Drop – Yeah Right!

2010-02-03T12:50:00.000+13:00

So the proposed capital gains tax has got some of you spooked. You’re tossing and turning in the wee small hours, unsettling your soundly snoring partner, and nibbling the edges of your nails as you wrangle with this latest conundrum.

Will a capital gains tax make property prices drop? Well, you’d think that, wouldn’t you? I mean, it stands to reason, doesn’t it? The government slaps a tax on something, so fewer people will want to buy it, so prices will head down.

Hmmmm. I’m not so sure. How about this: the government slap a capital gains tax on property sales, and to cover the tax (because you’ll easily be able to work it out) you just make sure that amount is added to your sale target figure. Presto! Prices rise accordingly.

What do you think? Agree? Disagree? Don’t care?

Let me know: richard@managemyproperty.co.nz

Let’s Tax The Bastards!

2010-01-21T09:14:00.000+13:00

The Tax Working Group have spoken from the mountain in a loud and authoritative voice – “The tax system in New Zealand is broken.” What a sound byte THAT was, and mana from heaven for the media. You could almost hear the twittering of Blackberrys the second those words tumbled from the mouth of Bob Buckle. Did no-one edit his notes before he went on?

So what’ the deal? How do we fix it? Let’s pound the property investors into the ground. Let’s make ‘em pay for their largesse. Let’s really stick it to them with a capital gains tax, a land tax, increased GST, and several other taxes that I can’t remember the names of right now. That’ll show ‘em!

Nice idea, although perhaps a bit knee-jerky when you think about it. Will these tax moves bring property investors weeping to their knees, begging forgiveness for their capitalistic sins, offering forth the keys to their rentals with bowed heads, and plunging their ill-gotten gains into the powerhouse that is the New Zealand share market?

I think not. You can lead a property investor to the share market, but you can’t make him buy shares.

What’ll happen is that (yet again!) the poor old working person, the ordinary man or woman in the street with rent to pay, shopping to buy, and bills to cover, will get done over. Raise GST and those hard working wage slaves will lose an additional $2.50 for every $100 they want to spend on consumer goods. Slap a capital gains tax on the sale of property, and the regular property market will contract, while the real property investors just simply won’t sell, and instead will hold their property and pass it on to their kids.

Put a land tax in place and the property investor will just calculate the dollar cost of that tax and add it to the rent. Rents will go up, and whom will that inconvenience? The poor old rent-paying man-or-woman-in-the-street who’s already carrying the burden of extra gst (which you’ll notice the property investors and business owners can claim back), that’s who.

Sorry guys, you’re going to have to go back in there and do better than that. Remember though, you’re getting paid to prolong discussions, and I’m sure your expenses are claimable…..

DIY Property Management? - Yeah, right!

2010-01-15T09:01:00.000+13:00

Perfect example of why you should use a property manager to look after your investment property. I've just had a call out at 7.30am today from a neighbouring tenant who reported that one of my other tenants (he's a bit of a drunk, but mostly harmless) had been causing a bit of noise and had some rough looking people round overnight.

It seems that one of my rough tenant's friends had determined that the best way to get through a door was to kick it to bits, and then spend the rest of last night sleeping on the concrete cellar floor while his 'girlfriend' knocked on my other tenant's door screaming that the Police should be called for whatever reason.

What fun!

So, responsive as ever, I visited the property 10 minutes after the call came through in the office. And yes we do respond THAT quickly - there's usually someone in the office from about 7am, and if you ring us then you probably WON'T get an answering machine.

What I found was an upset tenant (the one who made the call) telling me her side of things, and the drunk friend of my drunk and sleeping tenant staggering around outside by the kicked in door telling me "I no live here my friend".

Out on the street, two other inebriated people were chipping in to the situation with comments about "bloody landlords" and "we've got rights". All in all, quite a mess.

So what would you do with all this? Remember, there's a lot to take into account. Here are some of the angles to the situation:

The neighbouring tenant is upset, angry, and talking about moving out now
The drunk friend has a bunch of his stuff stored in the property which he has no right to have there
The door has been kicked to bits and is hanging off one hinge
My drunk tenant (the cause of all this) is still in bed, belligerent and lippy
There are two more drunks to contend with

I hope you never find yourself in this position. In fact, an easy way to ensure this never happens is to get a property manager who's experienced at handling sticky situations, and knows what to do next.

So what was the outcome of all this today?

The three extras drifted away once they realised I wasn't going to take any trouble from them. My troublesome tenant, who initially took exception to me being involved with this, got out of bed and demanded that if I had anything to say I should say it to his face. So I did. This caused him to rethink his strategy, and he backed down with an apologetic handshake and then gave me 21 days notice to quit the tenancy and bring the problem to an end.

My more reliable tenant next door who originally called in to the office saw that the situation was in good hands, and seemed more at ease with the prospect of staying on at the flat.

I'll be following all this over the next few days, with a visit to the property later today, and another visit tomorrow afternoon to make sure everything is under control. Would you be prepared to do all this at your property? Have you got the skills to confront four drunks and a smashed in door at 7.30am before you've even had a coffee?

And could you cope with the prospect of perhaps involving the Police, recording everything that happened, and still making sure your actions fall within the confines of the Residential Tenancies Act, let alone the countless other Government Acts that can affect the situation?

Hmmmm, you don't seem sure......

My advice? Get a Property Manager!

www.managemyproperty.co.nz

What's An Ideal Rental to Buy?

2009-12-20T11:37:00.000+13:00

Lots of prospective property investors ask this question, and I've put a lot of thought into an apropriate answer over the years. However, yesterday gave me the opportunity to actually visit an almost perfect rental purchase. Sadly, it's not on the market. And if it was, I wouldn't be telling you where it is; I'd be buying it myself.

So, what makes the (almost) perfect rental purchase?

Well, that can depend on your own personal investor risk profile, but here's a description of one that I'd buy in the blink of an eye. It's an ex-State house in a quiet street overlooking one of the best suburbs in Wellington. Set below the road, it has a two bedroom ground floor flat, and below that is a one bedroom flat at the back overlooking the garden.

It's tired and scruffy, the garden is overgrown, it needs a paint, new carpet, new curtains, and a few other cosmetic things done to it to bring it up to date. With an eye on the long term, the hot water cylinder is an antique destined for display in Te Papa, so replacing that is a good idea.

There are a few broken windows (both flats are vacant right now) and some old furniture from the previous tenants in the lower flat that needs to go to the Sallies. Other than that, it's solid, serviceable, and in a good area.

All these issues are easily resolved with some expenditure, but they are also 'reasons to discount' when it comes to making an offer. Remember, you don't make your money when you sell a property, you make it at the beginning when you buy it.

But wait - there's more! Two tenancies in one property spreads your risk - if one flat is empty you're still getting income from the other one. It gets great sun, has a sea view, there's some outside living space in the garden for both flats, AND it has off street parking.

As I've said before, always do the numbers on your target property and if they stack up, why wouldn't you buy it? This one pops up a rather healthy 7.65% return so with bank rates below 7% it makes a deal of sense.

Good luck and happy investing!

Oh, and Happy Christmas!

"You Don't Need To Do Inspections"

2009-12-08T17:11:00.000+13:00

Now tell me, honestly, in all the articles, books and seminars on property investment, where did it EVER say that inspections were not necessary? Go on, tell me.

I've lost count of the number of times I've heard rental owners say such mindless things as:
- "Oh, my tenants are sooooo nice"
- "I pop round every few weeks to trim the hedge and have a chat with them"
- "There's never any problems....."

Ok. So your tenants are real nice people who cut the grass and weed the drive. When did you last drop by for a formal inspection? You know, the inspection that the RTA actually makes provision for? The inspection where you write to the tenant to arrange a time to formally visit the property and check everything out?

What could you possibly find? What could go wrong during the (and I speak from direct experience here....) EIGHT YEARS since the tenancy started?

Try this:

This unholy mess is the bedroom of a four year old child belonging to one owners' tenant. Is the child still in there? We may never know. This was representative of the whole house, which hadn't been visited in five years.

How about this one:

To quote this tenant - "Oh, the dog did it". Brushing aside the fact that their tenancy agreement clearly said NO PETS, perhaps this tenant thought the dog was going to pay for it.

So as I continually state and restate the very, very obvious, it seems that there is a whole phalanx of rental owners who still think it's good practice to not do inspections. They feel uncomfortable visiting the property, or they don't want to bother the tenant, or "everything will be fine...."

An inspection serves many purposes:

1. It shows you care.
2. It tells the tenant that you have standards that you expect to be met.
3. It gives you a better understanding of the investment you have put several thousand dollars of your bank's money into for you benefit.
4. A formal regular inspection process also tells your tenants that you mean business. That you are professional about running this rental.
5. It allows you to check that your tenant is not doing anything dodgy.
6. It shows you care. Doubly important.

Examples of dodgy tenant practices from my first-hand experience include (and in no particular order):

- storing uncooked packs of sausages in a bag by the front door until the whole deck was squirming with maggots
- growing cannabis plants in the back bedroom under lights, but telling the owner every time they visited that one of the kids was asleep in that bedroom (they had kids!!!)
- changing the engine of their Harley in the middle of the livingroom floor
- filling the holes in the walls around the inside of house with cement and painting over it with a (very) different colour
- sending the owner a bill from a contractor for a new oven which the tenant had ordered without consulting the owner first

It is for the above reasons that you really must do regular, formal, properly notified and recorded property inspections. If you don't like the prospect of doing this, then you should either get out of the rental property business, or GET A PROPERTY MANAGER.

Why Have A Property Manager?

2009-12-03T08:04:00.000+13:00

That's a fair question. Why pay someone else to do something that, really, you can easily do yourself, and save the 8% fees a property manager would charge. Makes sense, right?
No, not really. If you intend to be a 'property investor', rather than a 'second property owner', you need to get serious about your chosen investment strategy. Thinking that you save money by doing it yourself is a classic mistake and can end up costing you money.
Let me give you an example.
We currently have a couple of client properties which are unoccupied right now. One house in particular is a three bedroom place with a laundry at the rear of the building. Over the past few days, one of the washing machine taps has been quietly dripping away onto the lino floor. Not a big drama really, but the puddle that formed started to grow some slimy green mould, and this could have turned into a much more expensive issue if the property manager didn't regularly visit the house to make sure everything was ok, or to show someone through.
Many rental owners don't even do inspections on their houses, and a problem like this can go unchecked for some time. If this little drip had carried on for much longer, the water damage could have ended up costing the owner far more than their property manager would charge to avoid the issue.
Makes you think, eh?

A little humour - Go on, have a laugh!!!

2009-11-26T16:27:00.000+13:00

Your House, as viewed by....

You:

Someone buying it:

Your banker:

Your Bank's Valuer:

and finally your local Council Rates Assessor
(or possibly Quoteable Value):

Now, this seems like a good time to get that rental appraisal done.......
.

FREE Rental Appraisals!!!

2009-11-26T15:42:00.000+13:00

Heaps of property management companies offer free rental appraisals. A lot of real estate agents also do the same. Why?
Well, the idea is that once you've contacted them, and they've done their appraisal, you'll use them to manage your property, or even sell it. Makes sense really.
However, I frequently get asked to do a rental appraisal for someone who is raising finance with their bank. That puts a very different complexion on the process, because that means my rental appraisal (if it's addressed to the bank) can be viewed by that bank as being like a registered valuation.
Now there are not too many property managers OR real estate agents who are actually registered valuers, and I'd be putting my neck on the block by addressing a rental appraisal specifically to any bank. That would imply that my appraisal is a sound basis for lending money, and it's not.
The important thing to remember here is that a rental appraisal (as opposed to a registered valuation) is a best guess, an estimation, a wet finger in the wind, just an opinion. And covering that appraisal with disclaimers and caveats and any number of other get-out clauses still doesn't protect me if a bank decides to take issue with the numbers I've offered in that appraisal.
If you want an appraisal, I'll happily do one for you. I'll give you my professional opinion based on what I know about that type of property, or that location. It can help you to measure whether you are getting a fair return on your investment.
But if you need an appraisal to raise finance to fund the project through a bank, broker or lending company, GET IT DONE BY A REGISTERED VALUER!
I can even put you on to a good property valuer if you need one......

The Rule of 72

2009-11-16T09:14:00.000+13:00

So what is The Rule of 72?

It's an interesting 'rule-of-thumb' calculation which comes in handy in all sorts of situations, but I find it really useful when working out one of the many numbers measures on a potential investment property.

This rule applies if the value of something – let’s say a house – doubles.

If it has doubled in ten years, divide 72 by 10 to get 7.2. Your house price has grown about 7.2 per cent a year. If the house doubles in six years, divide 72 by 6 to get 12. Your house price has grown about 12 per cent a year.

You can also use the Rule of 72 if you know the return on something – let’s say a fixed interest investment. If it earns 8 per cent a year, divide 72 by 8 to get 9. That’s the number of years it will take for your money to double.

Simple.

The Top Place to Buy An Investment Property Is...

2009-11-13T09:08:00.000+13:00

I get asked this all the time – which is the best part of town to buy an investment property?

Hey, if I knew that, I'm not too sure I’d be telling everyone! The thing that many people have trouble with when it comes to buying an investment property is the way they look at a property deal, because it’s the deal that matters.

You might be able to buy a property in the best part of town, with a great return, and a capital benefit on purchase, but it's priced way more than your self-imposed budget.

You might buy a property for a fantastically low price – way below GV – and find that the reason it sold is because there’s no return on it. The rental income is so low that the property doesn’t pay for itself, and also any potential capital growth is likely to lag behind the median for a long time to come. But it was a bargain price!!!

What to do?

Do the numbers. Analyze every property. The story goes that you should view 100 properties, make offers on 10 of them, and you might just buy one of them. That’s probably true if you take your time about it, so here’s my spin.

Each property you look at will give you the numbers you need to analyze it and work out if it’s a good deal or not. The more properties you analyze, the better you get at working the numbers out. Soon you’ll be doing it in your head, and the real estate agents will be amazed! I’ve heard one agent say “I don’t know how you investor guys work things out so fast!” That’s clearly an agent who hasn’t done his homework.

So, what numbers do you need? All of them. Try this short list for starters:

- Number of bedrooms
- Asking price
- Government Valuation
- Land/Improvements values
- Land area
- Property floor area or footprint
- Rates/local taxes
- Market rent rate for similar property in the area

You’ll find a few good questions will get you all the answers. Then you should analyze those numbers. If they don’t stack up, it doesn’t matter if you’re buying the place for 50% of GV - you’re going to lose money. If the numbers DO stack up, then it won’t matter if the property costs you five times the amount you originally thought you’d be spending on a property.

Remember, if your analysis shows that, after all outgoings, the rent income gives you a profit of just $1 per week, or per month, then it’s a winner. If analysis shows that it’ll cost you $1 a week or a month or whatever to own the place, why would you buy it?

The question to ask yourself at the end of all this is – “Does it feed me, or eat me?”

Happy hunting!

Property Manager = Financial Adviser?

2009-10-24T11:55:00.000+13:00

From the Landlords.co.nz website comes this story posted on Tuesday 13 October 2009:

"Property managers who receive rent or payments from tenants on behalf of landlords will need to become authorised financial advisers, according to new legislation.

Under the Financial Advisers Act (FAA), expected to come into force next year, property managers who handle rent payments on behalf of landlords and those who make a recommendation or give opinion or guidance in relation to buying, letting or selling of land, may need to become authorised financial advisers, or registered financial service providers.

Under the FAA, property managers will need to apply to the Securities Commission to become an authorised financial adviser. Authorised financial advisers will also need to become registered and comply with ongoing disclosure and conduct requirements, according to a release by the Property Institute of New Zealand (PINZ).

The report says once registered, advisers will "be subject to general conduct and training requirements" that will be set out in the code of professional conduct being developed by the Securities Commission.

"This change in law will prompt both owners and occupiers to review the person currently managing their property," says PINZ president Ian Campbell. "Property owners need to ensure their property manager is an authorised financial adviser."

Those exempt from the FAA include real estate agents and registered valuers.

PINZ is helping to educate property managers about the new standards soon to be implemented, saying it will benefit the market as a whole.

"The institute's commitment to providing professional development benefits an individual's performance, rewards the employer, owners, occupants, the public and the property industry in general," Campbell says."

COMMENT - Hmmmm. Interesting that the Real Estate Agents are exempt. Does that mean they don't have to be registered as financial advisers? That is surely a weakness in the REINZ closed shop policy of not allowing independent property managers to become members of their organisation.

What do YOU think?

RTA Changes Reach Next Phase

2009-09-29T14:00:00.001+13:00

The Residential Tenancies Act, which as an investor and landlord you should know inside out and upside down, is undergoing some changes. The latest word on these proposed changes can be reviewed in this article from an article on the NZ website Landlords.co.nz : RTA changes reach next phase - Landlords.co.nz

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CLASSIC PROPERTY INVESTOR MISTAKE

2009-09-24T19:00:00.000+12:00

Okay, so you've got your finance sorted, spent countless weekends doing the open home circuit, made a few offers, analyzed heaps of likely properties, and you've finally purchased your first investment rental property.
It's a bit of a dog, granted, but with a lick of paint, some new carpeting, and a good hard chop back on the undergrowth blocking the light out of the windows, this will soon be a honey of a property.
The classic mistake is to do the place up to a standard that will make the place good enough for YOU to live in. Please don't fall into that trap, because you'll end up spending far too much money and stamping too much personality on your rental.
Keep it simple, keep it clean, and keep it neutral.
Paint the whole interior in pleasant neutral colours like Pearl Lusta or Thorndon Cream, and choose a plain (not patterned) carpet in a grey or blue colour that's not too dark. Avoid beige carpet if you can, and don't under any circumstance do what one idiot investor did and fit the white carpet from your own house because you are refitting your place and this carpet will do fine. White is heading for disaster!
Also fit plain thermal curtains in easy colours like navy blue or dark green or red, and fit a simple lino to the floors in the bathroom, laundry and kitchen.
I'll repeat - keep it simple.
If you would like some tips and tricks to make your rental look fabulous to potential tenants, email me - richard@managemyproperty.co.nz - or make contact through the website at www.managemyproperty.co.nz and I'll help you as much as I can.
Alternatively, appoint us as your property manager and we'll give you more professional expertise than you'll ever get from anyone else!

Greenhouse Gasses - A Solution

2009-09-14T18:40:00.000+12:00

Greenhouse gasses are everywhere, and they can even affect your investment property!!!

As you are no doubt already aware, the most widespread greenhouse gas is not actually CO2 as the media would have us believe, but is in fact water vapour, and it can do a huge amount of damage to your property. But there are a few things you can do to combat this issue:

1 - Fit extractor fans in your kitchen, bathroom and laundry
2 - Make sure the underfloor space in your property has plenty of ventilation
3 - Teach your tenants to leave windows open as often as possible
4 - Give your tenants a dehumidifier as part of their tenancy agreement, and insist that they use it properly
5 - Fit an extractor hood and filter above the stove and hob in the kitchen
6 - If there is a clothes drier in the property, ensure that it is vented to the outside (NOT into the underfloor space!!)
7 - Don't allow tenants to heat the property with an LPG or CNG gas bottle heater

By following these few tips you can keep the humidity in your property to a minimum and maintain it in better condition for longer. You will also be cutting down on those pesky greenhouse gases in a far more effective way.

PS - Maybe you could try buying some Steam Credits? Nah - bit of dumb idea that.....

Visit the website at www.managemyproperty.co.nz

managemyproperty

2009-09-11T08:16:00.001+12:00

managemyproperty

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Location, Location, Location

2009-09-09T21:41:00.000+12:00

We’ve all heard that saying before, and it gets quoted all the time by real estate agents, property pundits and investment soothsayers often. You probably know what it means, but I’d like to add my own twist to this well worn and slightly off-the-mark quotation.

Yes, location of your property, be it commercial, retail or residential, is very important. You want to get the best property offering the best return. So, popular thinking in the residential rental market would posit that a property with fantastic sea views, great sun, on a wonderfully landscaped and fenced section with all mod cons would be highly desirable and therefore easy to rent at a top rate.

Maybe not, if that property is in a small town on the west coast of New Zealand. If the local population is dropping and employers are moving away from the town, then the location might be great but it’s not the location alone that will make the property work. So how do I describe the most important feature to look for in an investment property?

CONTEXT, CONTEXT, CONTEXT.

You need to look at where the property is in relation to many other things – proximity to main transport routes, is it close to schools and colleges, is it in a growing or receding part of the country, are there new building consents being applied for nearby, when was the last new subdivision developed in the area, what is the demographic of the people who live there (your modern large property may not appeal if the residents are mainly in their later retired years with no children and no desire to weed the garden).

So think context because that term includes location as a consideration, but location does not include context as a consideration.

Tenancies – Fixed Term or Periodic/Rolling?

2009-08-31T07:40:00.000+12:00

You’ll often hear property pundits suggesting that the ‘wise’ investor or property owner should aim to secure a tenant with a fixed term tenancy rather than a periodic or rolling tenancy. Why would that be? Well, if you think about it you’ll see it’s pretty obvious.

A fixed term tenancy offers the tenant security of tenure and means that their rent won’t change during the tenancy. More importantly, for you as the property owner it means that you know exactly how long the tenancy is going to run for, and so you’re more in control, right?

Maybe.

I view the fixed term tenancy option as LAZY LANDLORDING. It’s the easy way out. Why? For several reasons, all of which come from my years of experience as a property manager and landlord.

First, a fixed term tenancy means you can’t give notice to your tenant if you want them to move out. This can arise when the property owner (as often happens) returns from overseas and wants to move back into their home. However, you have them locked into a two year fixed contract….

Secondly, tenant’s circumstances change. They may be a couple heading for divorce, or they might get a new job in a different city and have to leave. In any case, they want out of the tenancy, and most tenants don’t really understand that they can’t actually give notice in a fixed term tenancy. This means that you have to find another tenant even though you have the fixed agreement in place. It also means you have a fair bit of work on your hands, none of which you should really get paid for.

Alternatively, you could ask that the outgoing tenant finds you someone to replace them by taking over the lease. That might also seem like a good idea, until you realise that the tenant will take the first likely looking Johnny that comes along rather than taking some care in choosing a great tenant as I’m sure you (or your property manager) aims to do. You can end up with some pretty second rate tenants from such an arrangement.

Thirdly, you can’t change the rent rate with a fixed tenancy in place. Currently, rents are finally on the move in the upward direction, and if you fix a tenancy for, say, two years, you won’t be able to put the rent up while all around you are raising their rents every 6 months.

Be prepared to do a little work to optimize your investment in property. Or might I suggest you get a property manager who knows what they are doing, and spend your new-found free time searching out more investment properties?

A Funny Thing Happened Today.....

2009-08-26T06:33:00.000+12:00

My phone rang this morning and a pleasant guy greeted me by name and told me that he needed our bank account details as he was in the bank and about to pay his bond and two weeks rent in advance to our trust account. Now this happens every week so it didn’t seem unusual, so I dug the information he needed from my portfolio (I was in the car at the time) and read him the details over the phone.

When I asked him which property this bond and rent was for so that I could give him a reference to attach to his payment, he gave me an address I didn’t recognise. I asked him if he was sure the address was correct, and he said yes. He even told me that he had my card and that I was the property manager for that address.

Well that was a surprise as I’m not the manager of that property, and I told him he must be mistaken. He apologised, said that he had a couple of other property manager cards with him and that he would try them instead…..!!

Gasp! What a way to operate. That little encounter tells me yet again that there are property managers and/or owners out there signing up tenants but failing to communicate with them, thus leaving the tenant having to guess as to what to do next. More importantly, some poor owner has entrusted their freshly signed up tenant to hand a substantial sum of money across without giving them enough information to pay it to the right person! Definitely a strong case for have someone looking after your property who knows what the hell they’re doing!!

What Do You Do When Your Tenant Dies?

2009-08-20T19:48:00.001+12:00

I've had this happen twice over the past year. Unusual, but it does happen. When your tenant dies, does that mean the end of the tenancy?
Well, yes it does, but the harsh reality of the Residential Tenancies Act tells you that the tenancy will end after 14 days, so the rent will still have to be paid up to the end of that period.
Last week, one of my longest tenancies came to an end when my 69 year old, and very frail, tenant was found by the Police in the living room of the flat. He had been dead for about three days. The family were really nice to deal with, and they have cleaned up the flat beautifully and left it in good condition.
So the flat gets rented out again, and life goes on. But this is not something you would want to deal with as a property owner, so my advise is to get yourself a good Property Manager and let them take care of the details for you.
Go to the beach, or golfing, or go fly a kite.

Plumbers - A Necessary Evil?

2009-08-19T21:45:00.000+12:00

In Wellington, plumbers and drainage guys are NEVER out of work. The whole city seems to be sliding gently down the hillside, so the drains and pipework gets damaged and broken. If you ask any property manager or investor worth their salt, they will tell you that they spend more on plumbers than any other trade in this city.
Can YOU get a hold of a plumber quickly?
managemyproperty has a team of trade professionals that we have built up over the years. This trades team responds quickly to emergencies and handles regular jobs usually on the same day. An example from yesterday was when I had a call from a tenant that the toilet cistern in an apartment was flowing constantly and might overflow - HELP!
One call to our main city plumber and I met him at the property within 10 minutes. He repaired the cistern float immediately AND spotted a sink waste that was leaking ever so slightly, so he repaired that too.
That is one of the many advantages of having a professional property manager look after your investment property.
.
Visit www.managemyproperty.co.nz

to find out more

The Naked Property Manager

2009-08-19T20:06:00.000+12:00

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TAX DRAGON REARS ITS UGLY HEAD!

2009-05-11T11:53:00.000+12:00

The tax dragon is on the loose again! The NZ Government, in its infinite attempts to squeeze even more funds out of the populace, is again targeting the hapless property investors. Read on with the following article from today's Stuff.co.nz news website:

The $200 billion rental property sector not only pays no tax, but is actually getting refunds when it might fairly be contributing tax of $500 million to $900 million a year, says a report from the last meeting of the influential Tax Working Group.

The TWG calls widespread and growing tax minimization using rental property investments, especially by top bracket taxpayers on the 39 percent tax rate, "the glaring hole in the current tax system".

Led by Victoria University, with input from the Treasury and Inland Revenue Departments, the TWG's latest report all but rejects a capital gains tax on property as an option for New Zealand.

Instead, it turns its guns on the rental property sector with proposals to apply the so-called Risk Free Rate of Return method to assumed income from rental property, which the TWG estimates could be worth $500 million to $900 million in additional tax revenue every year.

"Recent data show that revenue from the approximately $200 billion rental property sector is negative and has trended downward since the introduction of the 39 percent tax rate in 2000," the working paper says. "The glaring hole in the current tax system is the rental property sector.

"There are efficiency and equity problems with the different treatment of savings in the form of bank accounts, and savings in the form of rental property."

Under an RFRM tax, "rents from land would not be taxed, and other expenses relating to the investment would not be deductible, but a risk-free rate of return would be applied to the net equity in the property and included in taxable income".

This approach would not work if a capital gains tax were introduced, but if a CGT was rejected, then "the TWG considers that the RFRM for rental properties is an option worth considering".

The downsides would be the potential for rents to rise and hurt low income renters to meet new tax obligations; lower property values; the potential to make debt-funded rental property investment more attractive than equity-funded; and tax being payable on loss-making properties.

Applying such a tax only to rental properties might also encourage further personal home ownership as a preferred investment by New Zealanders.

The working group paper on the RFRM proposed, prepared jointly by the IRD and Treasury, also suggests $1.3 billion a year in tax is not being collected because of the questionable practice of allowing depreciation deductions for buildings.

While buildings were a normal business expenses and should perhaps be depreciable for consistency's sake, the group noted that only industrial buildings are allowed to depreciate under United Kingdom tax rules.

The group identified an alternative option as ring-fencing losses on rental property and making them non-deductible against other income, although previous ring-fencing attempts had proven "reasonably easy to circumvent".
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Along with a land tax, such a tax on rental property could go a long way to creating the substantial new sources of income the Government requires to help fix looming Budget deficits, without seriously distorting economic activity .

A rental properties tax might also potentially discourage speculation in residential property, which is commonly blamed for imbalances in New Zealanders' savings and investment habits that lead to high foreign indebtedness.

The TWG's land tax paper suggests between $160 million and $460 million could be collected in land tax applied at a rate as low as 0.1 percent of capital value.

The group has a day-long conference scheduled in December, and its final report is expected to have influence on government deliberations on tax reform, which Prime Minister John Key has signalled is one of his Government's top six economic policy priorities.

NOTE: This news story is from Stuff.co.nz