I would like to confess I bought a lemon...

[emmajane6]

I bought a 1 bed flat in Chch at the peak of the market. At time of purchase I was able to rent it out for $200 a week making it cash flow positive, but only just.
However the dodgy property manager ran off with 4 weeks rent and then the new tenant did a runner owing approx the same amount and leaving a lovely stash of drugs and prostitute-esque clothing in the flat and of course I could do nothing about this as I was/am overseas.
After writing off that loss (still searching for the dodgy property manager) I gave it to a reputable PM company who advised the rent needed to be dropped to meet the market by $40 a week - ouch.
After 6 weeks vacant (Winter 08, the winter of the Chch rental market's discontent) a new tenant was finally sourced. They lasted 9 months and paid rent on time however left the place in an absolute state, requiring the bond plus some to cover clean up/damages. My new PM had sourced someone to move in so it was only vacant for 2 days and this guy was great up until 2 weeks ago when they realised he had left the property (very cleanly i might add) and broken his lease and the property is now vacant for the 4th time in 18 months. I expect it will be vacant for a while as the rental market is still awful in Chch and it is the middle of winter. This flat is very nice, with new carpets, paint and curtains and is in a great location very close to town (Richmond).

I wish I could sell this lemon but it wouldnt move in this market and its on a high fixed rate that would be expensive to break.

If anyone has any suggestions for how to rent my lemon (I am considering heat pump) I would appreciate the help.

I will consider offering it furnished but my PM is against it so would need some guidance as to what is needed and may need to switch management if that is the road I am going down.

Emma - wishing she could make lemonade

[AMR]

Just a theoretical suggestion (as I have not managed a rental before) but have you considered a Housing New Zealand lease? Guaranteed rent 52 weeks of the year but it will tie down the property for 5 years and harder to resell as the lease follows the property around. The property will be "returned to you in the same state less wear and tear". From a brief search here it seems their definition of fair wear and tear is probably a bit stretched.

http://www.hnzc.co.nz/hnzc/web/rent-buy-or-own/guaranteed-rent-through-home-leasing/guaranteed-rent-through-home-leasing_home.htm

[HeatherB]

Is it really a lemon? Could be that you've had a tough lesson about the value of screening your property managers thoroughly and their ability in turn to properly screen tenants. Persevere, don't let this thing get on top of you, challenges are all part of the process. I am an overseas owner of a few places and I use skype with the video link wherever possible to talk to people I deal with back home. Most people have it these days so it's useful with agents and PM's. Are you really sure that the PM you have now is the best of the best in Chch? If you are then hang in there. If you're not then you could find out who is the best and ask them to manage your place to give you the best possible chance of turning it around.

[SuperDad]

I would definitely invest in a good form of heating. A heatpump for $3000 is a good investment, in my opinion.

I would not consider offering it furnished at this stage. If a flat is furnished, it is easier for the tenant to up sticks and move on. There is also more potential for loss if a PM puts a rogue tenant in.

Contact the user "keys" on here. He is a PM in Chch, and may well be able to give a valuable second opinion on the Chch market.

Good luck.

Paul.

[Xav]

I second everything Paul said.

If the property is insulated then you should be able to get the new government subsidy for the heatpump, as long as you get a new tenant to move in first.

[Lynda]

Hi EmmaJane,

You've had a bit of a crap time - I hope it hasn't put you off investing in property.

Sounds to me as though you're not getting good advice from your manager. What you need to know is how to increase the rent-ability of your flat in the current renters' market. It has new paint and carpet, so it must look ok. You don't mention owning any others, and 1 beds are usually not stand-alone, so I'm thinking it's 1960's or newer and probably in a block of four.

The issues you probably have there are:
Insulation
Heating
Condensation
Outdoor living
The state of the adjoining flats

I have a block of four one bedders in Linwood, close to town, 1970's concrete block, two up two down. They are slightly larger than normal (55 sqm), but otherwise fairly standard. Three of them have heatpumps. One is renovated, the others are original but very tidy. The rents I'm getting are:
$190 (without heatpump)
$200
$205
$205
One of those was re-rented only a month ago (the renovated one).

The tenants are out there, but they are choosy. You have to provide them with what they want, and in Christchurch in winter that's insulation, heating and condensation control, and preferably somewhere under cover for their car to stop the ice on the windscreen every morning. If they are moving, it's probably because their current flat doesn't provide those things.

Without having seen your flat I'm just guessing, but with good heating and insulation you should be able to get at least $180 for your flat. More if it's in a good block with good parking, and gets a bit of sun.

PM me if you'd like me to drive past and perhaps come up with some more concrete suggestions.

Don't give up! One bedders close to town are brilliant, in my experience.

BTW - the PM, when they're advertising, have to make sure they highlight the fact that your flat is totally self-contained. There are pages and pages of those rent-by-the-rooms on Trade Me and they all come up in response to a 'one bed' search. I put 'self-contained' in the 'available from' field and also put that and other attributes in text on the main photo. That way they show up in the search results.

Best of luck!

Lynda.

[donna]

Wow Lynda, what a information packed post! Thanks a lot. Geez I love this site...I'm biased I know but it's discussions like this one that really show how willing we are to help our fellow investors.

Back to the thread....I'd be surprised if we don't all consider at least one of our PIs to be a lemon at some stage during our investing. Marc still thinks we have one - I'm not inclined to think it is now - after hanging onto it for 7 years.

cheers,

Donna

[mortgage broker]

Having a warm home changes a lot of things for the tenant and also means you can charge more rent. I offerred one to my tenant with a rent increase of $15 per week.

Its win win situation she saves on the power bill and I start to make a profit after 4 years (they come with a 5 year guarantee).

[k1w1]

leaving a lovely stash of drugs and prostitute-esque clothing in the flat and of course I could do nothing about this as I was/am overseas

I bet you wanted to rush back quick and get your hands on them goodies!

What options are out there for decent condensation control, btw? Apart from the HSV-style systems.

[Tan]

What options are out there for decent condensation control, btw? Apart from the HSV-style systems.

Try here http://www.propertytalk.com/forum/sh...570#post126570

[Lynda]

I find security stays on the windows work really well. That means that tenants are generally happy to leave the windows ajar while they're out at work. If that's not sufficient, I recommend HRV. I've tried HRV in one flat and it works brilliantly. I installed a Moisture Master in a house in two flats, but it hardly makes a difference at all. HRV is much better IMHO.

If you don't want to shell out for something like HRV, then just supplying a dehumidifier can be helpful. They are more expensive to run, though, so the tenant may be less inclined to use them.

[Tony FJ]

Definitely go for making the place better than the competition. We insulated two places recently and tenant agreed to rent increase and houses are easily let in winter. Are there issues outside you flat like neighbours and noise that are causing the problems?

[freezinhot]

Im sure most of us at times have difficulty managing problem properties (or lemons as you say) but I find if you do not have solid systems in place to deal with issues when they arise you become disheartened very quickly. I manage all my own and thankfully only had one instance to date which did effect my ability to think straight.

If the unit is paying for itself or better find a GOOD PM, don't give up, look to minimise the problems, having a PM that works in your best interests is a great start.

FH

[ChundaMars]

It's always very interesting reading a thread where you know the properties in question, or at least, have access to more information than most. It actually makes you realise how, despite the best of intentions from all involved, sometimes advice from strangers who can only imagine what you are talking about is a little lacking.

Lynda, I'd consider your units to be far from the average 1 bedroom flat in that area in Christchurch, and I mean that in the good way - and that's before renovations are taken into account too. Also, you're in the position where you own the whole block (plus the property in front) so you have control over the overall presentation - a luxury the owner of one unit in a block doesn't have.

Emma - hang in there! You've had a string of bad luck with this particular property, and your PM was as surprised as you when the guy disappeared - as you say, he was ticking along nicely paying his rent with no problems for several months before just up and disappearing. Also (and not sure if you've been told this, so slap on the wrist to your PM if you haven't), it sounds as though the other units in the block are causing a bit of trouble for your tenants - specifically, there have been a few incidences of fights happening just outside this unit involving bottles being thrown etc.

[ChundaMars]

PS I should clarify my first paragraph above - by no means am I saying the posters are on this site give poor advice. Quite the contrary! I mean only to say that, in most cases, with limited information available to us, it is difficult to really offer anything more than limited advice.

It's also interesting to see how different people reading the same post can pick out different things and run with them - we each bring our own experiences to the table and apply them, so while some run with the question at hand ("What can I do to improve the rentability of my unit?") others have chosen to question the PMs work, and whether they really have your best interests at heart. Nothing wrong with that of course, just interesting to see.

I get the feeling I should shut up now before I dig a bigger hole :-) Night everyone