Life as a Landlord

[north shore]

Well written flyernzl, another one for landlords in auckland to ask, if when they bring in the wheelie bins for household refuse in I think 2014-2015 instead of buying prepaid rubbish bags who are they going to charge - householder or ratepayer?

[motivated]

Get someone to test watercare in court. A landlord (with plenty of cash at their fingertips and the drive to do so) could take them to court concerning their liability for an account the have no control over--especially as it is not a fixed cost but consumption related.
A tenant and landlord working together could take them to court to get the tenant signed up as the consumer??
Dont know what the court would say but there must be some case law about not being liable for liabilities caused by other parties.
Who said the rules made up by watercare have any weight in law???
Needs some one to do some research

[Perry]

Who said the rules made up by watercare have any weight in law???

Unless unconscionable, terms of service can have most anything in them,
AFAIK. I think the attitude by the dipsticks at DBH takes some beating.

What about telephone and electricity fixed charges, asked flyernzl?

Watercare are aided and abetted in their avoidance by the tenancy services
section of the Department of Building and Housing. As the RTA is silent on
water supply charging, the bureaucrats have unilaterally adopted the stance
that any daily charge for connection to a water supply is a fixed charge and
is therefore the responsibility of the Landlord and cannot be passed on to
the tenant. Any questions on how this squares with the long-held ruling
that fixed daily charges for electric power and fixed-line telephone services
is met only with a stunned silence.

[flyernzl]

There is a common assumption that the ownership of property bestows wealth on the owner. Unfortunately, this is not always the case. Given the money involved, when it all goes wrong it can go horribly wrong.

A few days ago we had a visit from an acquaintance seeking advice on resolving his situation. Some years ago he emigrated to New Zealand and set up an importing business. This business did reasonably well and he bought himself a suburban house. Having got a house, he then wanted to complete the happy picture with a wife and a family. Specifically, given the society from which he came, he badly wanted a son to carry on the family name.

Fortune smiled on him and he met and married a woman of his own ethnicity. In due time his wife bore him the son he so desired. Of course, a suburban house was not then a suitable place to bring up this treasure of a child, so he sold the house and, with some financial assistance from dear old mum back home, bought a country estate in the Auckland hinterland. As mother-in-law came as part of the matrimonial package he also bought the house next door and installed m-i-l in there.

So life was good and they all played happy families in paradise. Wifey was meant to go back to work when the son reached five, but somehow she was always far too busy shopping, lunching and having a great old time so that never actually happened.

Then the recession rolled around and the business took a bit of a hit. He was still making some money, but the profits came down and the bills stacked up. A conversation with family member back in the homeland resulted in another injection of funds which were meant to be a capital investment in the property but somehow ended up being used just to keep the wolves from the door.

So now he is over a barrel. He has investigated selling the property, but any offers have been well below what he says the place is worth. Any discussions with the wife about trimming expenditure, returning to the workforce and the possibility of moving to a smaller house invariably end with tantrums tears and sulks. She is playing Lady of the Manor, and it is his role to pay the bills. End of argument.

So here we have a guy in a property that costs 100k a year to maintain and who has 50k a year to do it. He is scratching, and by his own admission given current trends will be broke by the end of the year. You can guess the inevitable outcome. Whatever option he selects, Wifey will depart taking the son with her. Divorce and matrimonial settlement will quickly follow. If he lets it all run out he will end up destitute in the street. If he acts now and sells up he will still lose the family but may come out with a few dollars in his pocket and some socks on his feet. The value of the estate is what the market will pay for it today rather than his ego-driven estimation, and both of his overseas family members will lose face when they find out that their investments are history. It is all so very sad.

The whole thing is a classic Greek tragedy of nemesis following hubris. As we are so tiresomely told, cash is king and cash flow is vital.

The lesson to be learnt? Make sure your property empire is generating cash rather than consuming it. Other people, not you, should be paying the overheads. I have never understood those who run their property ‘investments’ on a cash loss basis. The lucky ones may get out with a profit and a whole skin at the end of the day but far too many end up, like the Chase Corporation, just as an irrelevant footnote in the history books.

While my tenants rents have now finally finished paying off the bills from last year’s do-ups, Murphy has struck again. We renovated the bathroom at my most run-down flat a few months ago, with the intention of upgrading the kitchen this year. Now the plumbing has burst, and the whole bathroom has had to be gutted, the flooring replaced yet again, and new cabinets installed. It is only a minor solace that the insurance company has accepted the claim. I am still up for the excess plus the tenant has the disruption of the work which we were told could be completed one day (yeah, right!) but seems to have run on for far too long. Sometimes I wonder why I bother, at two in the morning my thoughts are that it’s easier just to let the place fall apart.

Those of you who live in Auckland may have experienced the jolt from the recent but quite unexpected earthquake. No damage at home, but my Takapuna tenants called to say that the fibrolite cladding on the rear extension of the house has developed a large fracture between the doorway and the adjacent window. On inspection, yes it is there and yes it is very recent.

As I am trying to minimize any work on this house, which is eventually destined to be bulldozer material, I formulated the idea that we could simply patch the fracture and get on with life. However, I now find that there is additional damage in the bathroom, where the scotia around the top of the walls is broken in several places. The house was built in 1947 by an English immigrant builder and features brick walls both exterior and interior. Even to hang a picture, you need to drill and plug the wall, so no doubt this type of construction is particularly susceptible to earthquake damage.

Given the recent horror stories about EQC and their ilk, I am not looking forward to sorting that one out. So what to do next? A holiday seems to be needed while the insurance companies fiddle, so this month’s update comes to you from the Omaka airfield, Blenheim, as we head south.

[Keys]

Get the drains videoed. Have a record of their condition now. Odds are, they are cracked as a result of the quake but still working. Several years down the track they will fill up with tree roots and you'll be up for an expensive repair.

[mrsaneperson]

Always a good read from flyernzl . I can relate very well to his posts, especially concerning the continuing assault on maintenance issues. I have around 10 rentals & find it a full time occupation ;not just ensuring the rent is paid & selecting/deselecting tenants but maintaining everything in a reasonable condition. 50% of the tradesmen out there are close to diabolical in my experience. I have some handyman skills more than most i suspect but often don't have the time factor to do the big jobs.Most of my properties are around the 1980's vintage which doesn't seem that long ago but my receding hair tells me otherwise as does the merry go round to the next property calling for work, shouts out. So i've come to the conclusion looking after 10 properties myself is a full time occupation; then how can some PM's be able to look after 120 with the same degree of good intent?Well they can't! Even with the greatest delegation skills it is easy to fall over quickly.

"I'll buy a house sit back & let the PM take care of everything" is the new syndrome.And PMs are the big new growth industry out there .Just watch TV Renters programme for validation ; it puts me off for life using a PM. How do those ratbag tenants get in there in the first place? Someone didn't do their homework thats for sure!

I'm sure there's a silver lining somewhere in every cloud though.

[Grundy]

FlyerNZL - love your commentary !

"Given the recent horror stories about EQC and their ilk"

Never a truer word, its no wonder the EQC offices in Christchurch have to defend themselves by unusual means from victims pushed over the line of sanity.

Regards your earthquake damage in Auckland I regret to advise that you forget it. EQC will put you through every hoop and refusal excuse their tiny minds can create.
Pal had a 70 year old brick chimney in perfect nick in a part of Devonport that had a real thump (that wacked parts of Auckland) a couple of years ago. One day a perfect brick structure, morning after cracked straight down from the top plus a bit of cracked plaster corners inside rooms etc. Insurer referred to EQC and due to the overload of Christchurch the weeks became months and eventually an inspector arrived. All seemed OK during an initial looksee then a bit later boss man flys in and he was just Mr NO. We are told that this oaf was the biggest teller of porkies the insurance industry could create and had a grab bag of excuses all of which could be summed up by saying that my pal was a liar and it was all 'pre existing' and proof with cobwebs, soot and dirt that his amazing microscope camera could detect...yeah right. What they didn't know was my mate was pretty experienced in civil engineering with a few decades working on big stuff overseas and had even been involved in some civil repairs after the big Newcastle earthquake. Bottom line as I recall is it all went nowhere. The cost and value of the damage was not worth his time pursuing. As he related, a government dept hell bent on refusing a claim will counter the worlds best engineer you supply with a tame one of their own and you will have as much chance of winning as going to the casino and putting a grand on red.
Pretty disgusting actually. We all now reckon the EQC levy is just a JAFA tax on insurance and failing a real catastrophe the chance of getting any genuine claim treated ethically is zero.
On a final note he mentioned that he knew he was dealing with a moron when Mr NO proclaimed (in front of a registered builder) that the brick chimney crack had been caused by the wind load from the sky TV dish that had been attached to it.
I reckon they had hundreds of claims in Auckland and probably didn't settle a single one. Bet also Sky doesn't know they are being blamed for causing chimney failures around the place.
Keys advice is also very good, but again I doubt your chances. Had an old place that Fulton Hogan smashed hell out of the road grinding off asphalt that had concrete under and the machine was pounding away for 3x days. Discovered together with some neighbours that our old ceramic sewers were fractured all along the our front boundaries...we got nowhere with them or the council and had to fix at our own expense.

[Maccachic]

Make sure you read your insurance documents some provide for your own expert witness which may help in the likes of the example above. We have stepped in for a few owners in Christchurches in these type of cases.

[Wayne]

Pretty disgusting actually. We all now reckon the EQC levy is just a JAFA tax on insurance and failing a real catastrophe the chance of getting any genuine claim treated ethically is zero.

JAFA's aren't the only people in NZ who pay EQC charges!

[Perry]

More Emotive Language: "Trapped."

Scary Prospects For Lifelong Tenants
07/04/2013

More of today's young New Zealanders will be trapped in rental
accommodation all their lives, a government-funded retirement
researcher predicts in a draft policy report. And that fact has
to be reflected in pensions policy, the report recommends.

[speights boy]

A good start from the taxpayers POV.
Perhaps a few missed rent payments coming up next week however.

Govt cuts 525 wrongful benefits

More than $5 million in welfare has been immediately cut to 525 people who were discovered to be unfairly claiming a benefit, the Government said today.

The hundreds of cases were only discovered last month as a result of expanded information sharing between Inland Revenue and the Ministry of Social Development.
As a result, the 525 people wrongfully claiming benefits have had their payments stopped immediately.

www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10877460

[Perry]

$5M per what period? A year? (Av: $9523;
or just over $180/week). A good start, but
not quite a pot of gold for Blenglish & Co.

[speights boy]

Yes perry, as we have both said, a good start.
One aspect that cannot be measured is the deterrent factor.
IE: just how many in future will not attempt this fraud due to the now greater chance of being caught.

[Wayne]

$5M per what period? A year? (Av: $9523;
or just over $180/week). A good start, but
not quite a pot of gold for Blenglish & Co.

$5.6mil/year as the article says
He said the 525 claimants had been receiving benefits costing $5.6 million a year.

[flyernzl]

I have to admit it, I’m a harlot. Not in the physical sense of course, but with easy virtue I have changed my bank several times during my financial life.

I started out with the BNZ, for the simple reason that that’s where my parents banked. As one did, at the time. That sufficed for quite a few years, and I even had a house mortgage with the BNZ in the 1980s. However, as such organizations inevitably do, about then they decided to give their customers a hard time. Just for the fun of it. I had several meetings with various BNZ functionaries during which they asked lots of questions and never seemed to like any of the answers. As both my wife and I were earning and paying the mortgage I could not see a problem but they seemed to be hell-bent on creating one. As the BNZ themselves were, at that time, near to collapse I could not fathom why they thought that they could give me good financial advice. Those who can’t, teach. Or delude themselves they can.

As my frustration with this treatment grew, I pointed out that under this policy their good customers would depart to other banks. Only the risky, the insolvent and the highly leveraged would stay. Gresham’s Law, I said. I was rewarded with a blank stare that would make even a flatfish seem friendly. So I departed, as did many others. And we all know what happened to the BNZ.

There was a Trustbank branch just over the road, so I went there and was welcomed. The world was rosy once more. Then the Ockers came. National Australia Bank took over Trustbank. The BNZ fell, and NAB moved in. I was about to become a drafted BNZ customer once again.

Jim Anderton heard my plea, and Kiwibank started. At last I could escape the Australians. I signed up. A Foundation Customer, that was me. I set up my accounts so that I could track my tenant’s payments and all was sweet. So sweet, in fact, that when an AMP mortgage on one of my rentals came up for renewal I switched that to Kiwibank. The lady who arranged it could not have been more helpful. ‘Anything else we can do for you?’ she enquired. Innate caution held me back. ‘We’ll see how this one goes’ I replied. I still have her letters offering more help with finance on file.

So time jogged on, I was happy. I even recommended Kiwibank to other people. Then things started to sour. First sign was the removal of the Kiwibank ATM machine from Newmarket, the most upmarket high-spending retail area of Auckland. No word of why and silence about any replacement. Then, when I started to go to other Kiwibank ATMs, they were invariably either broken or under repair. Soft-soap answers were all I got.

Then the Kiwibank mortgage came due last month. A letter arrived, sternly offering a few alternatives. None of those suit me, I replied. As the property is rented out, a renewal on interest-only terms would be great.

A few days later, the phone rang. Swwwww wwwwww it said. Now I know my hearing is OK. I’ve just had it checked and have a CAA certificate to prove it. Speak up. I finally managed to work out that it was the woman from Kiwibank on the other end. She was not happy, and wanted a complete financial dossier on me. I provided it. Swwwww wwwwww again. What is the value of the house? It may have gone down. For heaven’s sake lady. The house is in Auckland. How many Auckland houses have gone down in value over the last five years? I paid for a valuation and emailed it through to her. She responded, calling me by an incorrect name. It was all very difficult and she’d have to consult.

By now, alarm bells were ringing. Time for plan B. Late last year, I bought my 9^th IP and financed it through a very helpful ANZ lady. I rang her. No problem, she assured me. Take a few days.

So when Kiwibank got back to me (right name this time) and made their offer – interest only for just one year and I’d need to pay a chunk off the principal to even get that, I was able to say ‘Your offer does not meet my requirements, and I have decided to accept a better offer from the ANZ’. No attempt was made by Kiwibank to find out more, just a blank silence. ‘We don’t care about you as a customer. Easy come easy go, there’s lots more fish in the sea’ is the implied message.

So now we have completed the refinancing. Inefficient to the end, Kiwibank took three days to produce the settlement statement and then had the gall to charge me, among other things, an ‘Urgent Discharge Fee’. By the time I paid for the valuation, Lawyers fees, mortgage registration charges and Kiwibank’s blood money I’m down about $500 even after the ANZ contribution. Bastards.

Back in the trenches, I has a tenant move out of a 2brm flat while I was away. Jan got in there and tidied the place up so that it was ready to show to prospective tenants as soon as I returned. On the way back, passing through Wellington, I picked up a newspaper and read an item about Auckland rent levels. Static, if not falling, it said.

The departed tenant had been paying $280 a week. In light of this news I advertised it on Trademe at the same rent. Well, was I sucked in. The queue stretched out down the driveway and around the corner. Oh dear, what to do.

I checked out the suitability of one applicant, and then asked him to come back to the property to see me. It’s all yours, I said, if you pay $300 a week. He left scorch marks on the paper in his eagerness to sign. Take it from me, if its in the media don't believe it.