Ray White Warkworth
Investor Gate Property Management Newsletter - November / December Issue
Market Report
It has been a fairly busy time over the last month across our market area, and we are short of properties to rent.
In the Orewa / Red Beach area supply and demand are so out of balance that when anything becomes available there, we are having to hold Open Homes due to the huge interest. Recently, we had 17 groups to one home in Stanmore Bay and 20+ groups to a rental in Orewa.
Up at Mangawhai we have only had two available properties, with one being snapped up and the other only becoming available in the near future.
Keith, from Maungaturoto, reports that he could do with more properties “right now” to satisfy his demand.
We have no vacancies in Wellsford and the Warkworth area has had pressure put on its supply with even properties located in reasonably remote locations being well sought-after.
This is a good sign for our investors because empty homes, for any length of period, can seriously affect the return on their investment.
We are often bemused by investment owners that want to hold out for the top value in rents and are willing to leave their properties empty for an extended period of time. Our advice is usually to stay a little below the market and maintain continuity of income, rather than have a vacant property. It does not take many weeks of zero rent income to have a 0.5 percent difference on your annual return. If in doubt, do the maths.
This period, prior to Christmas, is an important one in the management of properties. It is a time to complete any necessary repairs or items that could cause a problem in the near future. It can be frustrating trying to contact your preferred tradespeople during the summer break. It is a time to remind tenants about the dates when their rent is due. With statutory days and interrupted routines, obligations to pay rent in a timely fashion may be overlooked, particularly during this season when budgets may be stretched.
For any owner that is managing their own properties—if your tenant is in arrears, do not wait until after Christmas hoping matters will improve. They rarely do!! Start the process now. Typically, after Christmas there is an overload of applications to the Tenancy Tribunal and the waiting period is greatly extended. Also, be mindful of your obligations as an investor. As the owner of an investment property you must arrange someone to act as your agent if you are out of the country for more than 21 days. ‘An agent’ being a person who represents you in your absence.
Here, at Ray White Bogue, we are continually looking to grow our business. If you know of anyone with an investment property / properties, and you would be happy to recommend our service, then we would love to hear from you.
With the festive season fast approaching, our team here would like to wish you all a Very Merry and Safe Christmas and a New Year that is prosperous and fulfilling.
TIPS from the Department of Building and Housing
Tenants should keep the property reasonably clean and tidy. This includes weeding and mowing lawns where the landlord has not accepted responsibility for this under the tenancy agreement. Tenants should also leave the property reasonably clean and tidy at the end of the tenancy.
Responsibility for the pruning and maintenance of trees, shrubs and hedges and the removal of any debris created in doing this is usually interpreted as the landlord’s responsibility. This is because the tenant is responsible for any damage they intentionally or carelessly cause to the landlord’s property, including facilities. Where a tenant does cause damage to or kills a tree, shrub or hedge, they may be liable for its replacement, or to compensate the landlord for the damage or loss.
Some trees and shrubs may require special care, skill or knowledge to be able to properly maintain them, which a tenant may not have. Other trees or shrubs may be protected species, or specimens of local or historical interest that cannot be removed.
If a tenant does wish to remove or prune a tree, shrub or hedge on the property, they should first get the landlord’s written consent. The tenant would then usually be responsible for clearing away any debris created in the removal or pruning of the tree, shrub or hedge.
A Lifesaver From Bad Tenants
A tenant’s credit history can reveal how they’ll act in the future, says Diana Clement from Herald Homes
Landlords want to avoid letting to bad tenants at all costs. One of the checks they should do is a credit check. The results indicate how much risk a prospective tenant poses for non-payment.
- Who has made credit inquiries about them.
- Applications for credit cards, hire purchases and loans.
- How often they move house.
- Defaults on bills.
- Insolvency information.
The idea is based on the premise that a tenant’s past behaviour with credit will predict their behaviour in the future. Auckland landlord and vice president of the New Zealand Property Investors Federation, Andrew King, was saved from a bad tenant by a credit check. A well-dressed middle-aged woman visited a property he was going to rent. It turned out she’d been evicted by Housing New Zealand and the credit check revealed a string of unpaid debts.
Getting a credit check and interpreting the results are two different things. Just because someone has applied for a number of loans doesn’t mean they’re a bad tenancy risk.
The VedaScore system gives people a credit score from –330 to +1000, according to how they compare with other “credit-active” adults in NZ. A score of 600 indicates an average credit risk. A score of 700 or over at the other end of the scale is pretty good.
Landlords can, under the Credit Reporting Privacy Code 2004, subscribe to Veda’s services. But they need written permission from prospective tenants before running a credit check. This can usually be included as standard in a tenancy application. According to Veda, VedaScores can identify high-risk applicants who may look good on paper ie, they have no defaults, but who may exhibit high-risk behaviours such as “shopping” for credit.
As well as subscribing to Veda’s services direct, There are other ways to pay for access to credit records. Most local property investor associations, like the Auckland Property Investor Association, offer discounted membership to either Veda, or Tenancy Information New Zealand (T.I.N.Z.), which offers the Veda check as well as others. Each individual credit check is paid for over and above the annual fee.
Top Investment Property Traps
- Losing site of the fact that you are making an investment rather than choosing where you want to live.
- Paying too much because you haven’t done your research.
- Over-estimating gross rental income—if you wouldn’t pay it, why would tenants?
- Forgetting to factor in all the costs: letting-fees, insurance, maintenance, furnishings, etc.
- Failing to make contingency for interest rate and rental market fluctuations.
- Not checking tenant’s references.
- Keeping all your mortgages with one lender—especially the lender that has the mortgage over your own home.
- Taking estate agents, developers or investment advisers’ unrealistic growth assumptions or rental estimation at face value.
- Buying negatively geared property.
- Having too short a time horizon. The property cycle takes on average seven years.
- Trading property without setting up appropriate trusts.
Tips for Landlords (from the Department of Building and Housing—Tenancy A-Z file)
The Landlord must provide and maintain the property in a reasonable state of repair, having regard to the age and character of the property and the period during which the property is likely to remain habitable and available for residential purposes.
The landlord must also comply with all requirements in respect of building, health and safety under any enactment, so far as they apply to the property.
The landlord must compensate the tenant for any reasonable expense incurred by the tenant in repairing the property where the need for repair did not result from a breach by the tenant and is likely to cause injury to people or property, or is otherwise serious and urgent. The tenant must have made a reasonable attempt to contact the landlord about the need for the repairs before carrying them out.
Where the repairs required are not serious and urgent, the tenant should notify the landlord and may issue the landlord with a notice to remedy the breach.
Where the tenant intentionally or carelessly causes damage to the property or allows others that they have invited onto the property to damage it, the tenant would be liable to repair the damage or to compensate the landlord for it. The tenant is not responsible for repairs or damage arising from burglaries, accident, acts of God, or fair wear and tear. However, tenant may be liable for repairs if they know about the need for them, they failed to advise the landlord, and the damage to the property became worse as a result.
For Your Information
Monthly Statements
Provided you supply us with an email address, we have the ability to forward a 2nd copy of your monthly statement direct to your accountant or Tax professional. Some are already taking advantage of this service which does solve some issues (particularly lost statements) when gathering information at the end of your tax year.
Drybuild - Infrared Solutions
This is a company which uses infrared cameras which can see right through the walls of a house to quickly and accurately locate moisture issues. We have used their services on a number of occasions now and saved property owners thousands of dollars in repair costs. As you can appreciate, water leaks and their source are sometimes the hardest things to detect. Often the search for the source of a water problem involves hours of labour and dismantling of structures which often turn out to have been unnecessary. We have found that Drybuild saves you time and money. For further information visit www.drybuild.co.nz
Good Landlord—Good Business
As property managers, we are dedicated to providing quality service to both owners and tenants. Occasionally—often through unawareness—issues arise that may have been avoided with a little thought and care on the part of the owner. Where problems do occur, it may at the least bring stress to the tenant, owner and us, and in the most extreme cases there may be the possibility of litigation.
There are a few warning signs of an owner who may be—even unwittingly—a cause of issues and problems:
Property in Poor Condition:
If an owner has owned a property for long enough to have fixed the problems but simply has not “got round to it”, the property may be in unnecessarily poor condition, and will attract poorer quality tenants. Even if there is a good tenant, it may lead to conflict. The potential for litigation is heightened with the risk of injury to the tenant, their visitors and the potential of damage to the tenant’s property. A property in poor condition will serve the landlord’s interests no more than those of the tenant.
The Law Suit:
Some property owners believe they should incur no loss or have no risk when it comes to property investment. They believe that the property manager should wear all responsibility for any loss—and they are quick to take out a law suit when a dispute occurs. When bad feelings arise, careful consideration of rights and responsibilities can often show that a law suit is not warranted.
Unreasonable Control:
Some owners require unreasonable conditions to be written into the management and tenancy agreement. In certain situations it is reasonable to add conditions to an agreement, but if an owner marks an agreement with a mass of alterations to terms and conditions, it can indicate a wish to retain unreasonable control over the rental property. It is important to remember that tenants have the right to enjoy the property as their home.
Unreasonable Expectations:
Sometimes problems may arise if an owner and family are vacating their own residence for use as a rental property. Even where a rental property is immaculately maintained at the time of renting, there must still be allowance for “reasonable wear and tear”. The owner must accept that the property (especially if they will be moving back in the future) will change in time with “wear and tear” and that this must be legally permitted. It is unrealistic, for example, to expect no marks on the walls, and the inside of the oven to have a mirror finish after 3 years.
If property investors are aware of the potential for problems, and bear in mind these few points, the three-way business arrangement between owner, tenant and property manager will have far less potential for stress, worry, and financial loss from unnecessary legal disputes and frivolous payouts.
In general, the bottom line is commonsense. Let us all work together so that we can enjoy our business relationship.
WARKWORTH $315,000 WAR21126
An affordable entry point to the Warkworth residential market. 3-Bedroom home on two levels. Two bedrooms upstairs with bathroom, downstairs kitchen, separate dining and separate lounge plus a second toilet and the third bedroom. Large sun-room/porch. Large freehold site, fenced at the back. Plenty of off street parking. All this and a flat walk to town. Obviously it could suit investment home buyers and at this price it represents great value, so call today for more info and a time to view, don't waste this opportunity.
Current rental return$340.00 p.w.. Possible rent $350 p.w.
MAUNGATUROTO $219,000 WAR20811
RESIDENTIAL WITH RURAL OUTLOOK. Priced to sell. 3 Bedroom home on 827m2 section. It has a little native bush so take a look and listen... there are bird songs to be heard and rural vista to be seen... Walkable distance to well appointed township, good schools, shopping and cafes and other necessary amenities.
Expected rental return$240.00 p.w.
Recent Rentals
| |
Mahurangi West |
Kaipara Coast |
Wellsford West |
Snells Beach |
Warkworth |
|---|---|---|---|---|---|
|
2 bedroom, 1 bathroom, no garage, nice view |
4 bedroom, fenced, quiet lifestyle |
3 bedroom flat, double garage, quiet rural setting |
1 bedroom, handy to beach, no garage or carport |
2 bedroom, lovely garden, internal garage |
|
| Our Figure (per week) | $320 | $230 | $275 | $200 | $350 |
| DBH Statistics Median Price | $330 | N/A | $300 | $200 | $330 |
| |
Orewa |
Silverdale |
Waiwera |
Red Beach |
Sandspit |
|
4 bedroom, 2 bathroom, double garage |
5 bedroom, 2 bathroom, double car garage |
3 bedroom, 2 bathroom, no garage |
2 bedroom, 1 bathroom, no garage |
1 bedroom, furnished, lovely sea view, no garage or carport |
|
| Our Figure (per week) | $450 | $750 | $420 | $400 | $250 |
| DBH Statistics Median Price | $442 | $700 | $400 | $360 | $232 |
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