Life as a Landlord

[Perry]

Water hammer. I remember when plumbers
used to install a blind vertical pipe to act
as a capacitor against such things. Once,
long ago, when tradesmen were tradesmen.

[mrsaneperson]

The conenctor has been in there before we purchased the property so over 10 years back.It still has a white sales sticker on it though , it is connected just before the pressure limit device for the rest of the house ,which still should be fine as the specs say they are rated for direct water mains pressure.

[flyernzl]

Always, after returning from an overseas trip, I find that I can observe the local scene with renewed objectivity and clarity. Folks, we may mutter and moan about our daily lot, but in comparison with many other countries we are fortunate to have an ordered and structured society. Some of the rules may be irksome, but at least we have the rules and they are largely obeyed.

The electrician seems to have had a lively time during our absence. One hot-water cylinder expiring, an oven that decided to go on strike and a house with a succession of blown fuses kept the guy busy. Isn’t it funny how the gremlins always seem to know when the cat’s away and it’s time to play. At least, apart from the HWC, the plumber finally seems to have had a quiet time of it.

Talking of water, the insurance companies have been a mixed bag. The flooded laundry damage was duly inspected and accepted, but the water damage in the adjacent hallway was deemed to be pre-existing so would involve an additional claim. As the excess would be almost as much as the repair cost for that part of the work, and as I had no idea when that particular flood took place, I told them to proceed with both parts of the work and just bill me for the cost of the hallway. Of course, when I went out there on the duly appointed day, the chippie had no knowledge of the hallway work and had to complete the laundry floor in that one day as he was booked solid with other work for at least the next two weeks. The insurance assessor was very wisely on leave that week and her deputy knew nothing and could do nothing. So we have the laundry done, but the hallway will be some other day.

Responding to threatened Campbell Live publicity, EQC finally inspected the earthquake damage at the North Shore house a considerable time ago and said they would report. The weeks have since ticked by while they pondered. Now I have received their written response. Claim declined. Not earthquake, they say. ‘The damage is likely to be caused by soil shrinkage as a result of the recent dry season’. So apparently it is just a fluke that it happened during the weekend of the earthquake shock. Yeah, right. I note that word ‘likely’ as well. Smells of fudging to me. In the meantime I have had to spend around four thousand on that particular property to restore the waterproofing and décor to keep the remaining tenants happy.

The head tenant in that place is happy to stay on, as is his one remaining flatmate. The other fellow departed, muttering, and some weeks of TradeMe advertising have so far failed to attract a replacement. Flatmates are a bit hard to find in the middle of winter, apparently. Meanwhile I have come to the party with a bit of a rent reduction until a full muster is again in occupation, so the dip in cashflow has combined with the maintenance bills to create a bit of a sour mood.

I see from the news that the argy-bargy over Auckland property prices has continued to rage. The only good news on this front is that the media-lead blame has now apparently shifted from property investors to overseas buyers, and those of Chinese nationality in particular. Labour and the Greens are still stirring up the biased and the ill-informed with talk of extra taxes, more regulations, and restrictions on who can buy what. Given that a ban on non-residents buying residential property will actually mean that every property purchaser will have to prove that he/she is a resident, with the additional cost the paperwork and extra staff will add into the transaction, I suspect that this is yet another politicians’ placebo.

We recently held a meeting with Auckland City staff to discuss their wish to allow residential tenants greater security of tenure. Apparently, as part of their Auckland plan, they expect many of those currently renting to remain renters for the rest of their lives. Thus they feel that there should be scope for such long-term tenants to be granted lifetime tenure rather than being at the mercy of some Landlord brandishing a 90-day notice. Quite how this could work out I do not know. Presumably lifetime tenure would also mean that the tenant would be unable to leave the property prior to the funeral director’s visit. I cannot imagine many prospective tenants willingly signing up for that offer. Even the fixed-term tenancy options currently available in the RTA are limited to a maximum five year term.

They did quote some overseas jurisdictions where lifetime tenure is common, but apparently fail to appreciate that the ownership of such property is usually vested in organizations such as churches, charities and quazi-Government entities rather than in individual Landlords. The reasoning for their interest became a little more obvious later, when one of the Mayoral candidates announced that increasing Auckland Council funding for subsidized council-owned housing would be part of his policy. My gut feeling is that this is, once again, local councils meddling in social engineering - something which should be outside their permitted field.

One of the drawbacks of being a Landlord is that we get lumped in with Property Developers and Speculators to occupy a lowly position on the popularity ladder. Why we should be ranked down among Politicians, Lawyers and Used Car Salesmen in public esteem when all we are trying to do is eke out a living by providing a service to those who wish to keep the rain off their heads without actually going through the trauma of buying a house themselves is a little strange. I’m suspect that this disapproval is a factor in the Council hierarchy’s desire to show that they can do a much better job than us in housing the city’s poor and needy – with the help of our money, of course.

[eri]

german tenants normally sign unlimited tenancies

which they can get out of with 90 days notice

but it's much harder for the LL to get them out....

http://www.globalpropertyguide.com/E...ord-and-Tenant

the German housing system, which is regarded as amongst the most affordable and liberal in Europe.

The German rental system is another key factor contributing to the stability and affordability of the housing market. While the majority of rental dwellings in Germany are private, rents are regulated and prices are prevented from increasing sharply. Tenants also have security of tenure as long as they pay the rent and behave well, except on the rare occassion when a member of the landlord’s family needs the accomodation or when the building is going to be replaced.
Further, because renting is the dominant housing choice in Germany, the political system is highly sensitive to tenants’ rights and perecived threats to the status quo typically receives prominant media attention and political responses.
Since home prices are relatively stable (owing to liberal supply) and renters enjoy secure tenure, Germans have little incentive to rush into owner occupation. As such, Germany doesn’t suffer from the ‘panic buying’ and speculation often present in bubble housing markets.
In comparison, the UK rental system could not be more different.

http://www.macrobusiness.com.au/2011...dable-housing/

[Bob Kane]

Since home prices are relatively stable (owing to liberal supply) and renters enjoy secure tenure, Germans have little incentive to rush into owner occupation.

How does Germany create a liberal supply of houses?
What do they do differently to NZ?

[PC]

3 months bond sounds good.
Tenancy law enforced via a real court probably helps.
Oh and lots of tax subsidies.

[Davo36]

How does Germany create a liberal supply of houses?
What do they do differently to NZ?

It's in their constitution that you have the right to build on your land. And no one can stop you, that's the difference.

So you still have to build to a code and everything, but it's the planning part of it that is radically different.

In places like the UK, NZ etc. you have to go to the local council, cap in hand with your plans to build or subdivide and beg them to grant you resource consent. In Germany, you already have that right, you just need to build a house of good quality.

The other thing, is that they have economies of scale on their side, so your house gets built inside a factory and assembled onsite.

One more thing is that they have properly trained builders and other tradesmen. It's a proper vocation over there where you get trained really well to do 1 or 2 jobs really well e.g. make the floors and only that, or be a carpenter and only that etc.

[Wayne]

One more thing is that they have properly trained builders and other tradesmen. It's a proper vocation over there where you get trained really well to do 1 or 2 jobs really well e.g. make the floors and only that, or be a carpenter and only that etc.

I was reading an article on building a house in the US - they had a team come out to dig, a team to box up, a team to pour and a team to take the forms down - all specialists in their role!

[Maccachic]

The odd think about Germany is generally tenants bring their own kitchens and take them with them when they leave.

[Bob Kane]

It's in their constitution that you have the right to build on your land. And no one can stop you, that's the difference.

Thanks Davo36.
That's a huge difference when I think about it.
If we adopted that in NZ then house prices could really fall.
Food for thought, aye?

[VCTLDH]

If i had a PM , they would still be dancing around having to call me in the end to fix up something as i doubt if many have practical skills at all & will be hopeless at ascertaining the situation correctly in order to keep the costs down. To illustrate:
Last Sunday i got a call from my tenant at 11.30pm, i was just about to hit the sack,then the phone rang "Hey we have almost no water pressure from any taps in our house". Thinking this very strange I went to check it out gathering all my tools . Fortunately i know the layout of the house well & know where the watermains come into the house & to the basement. I could also hear gushiing water. I turned off the mains then went into the basement storage area where the water mains comes into the house. There is a good light source & i was able to see quickly that a pipe connected to a garden hose from the mains water feed had come away from the mains water feed. On closer inspection an RXP Junction connector [15mm] aka RX fitting, had cracked & the pipe leading to the garden hose had freed itself from the junction resulting in full mains pressure water gushing into the basement.I temporarily rectified the situation by disconnecting the T connection & eliminating the cracked connecter . If the tenant hadnt called me & unwittingly slept through the night this would have been catastrophic as the whole basement would have flooded when they awoke the next morning.
This is actually the 2nd RXP connector [RX fitting] that has failed on me recenly .The first failing a few years back was not really an issue as it was in an outside area.Again the connector had cracked. These connectors are extremely common & sold right throughout NZ from Bunnings etc .They may be ticking time bombs waiting to fail anytime , disastrous if they are located inside a basement & not located quickly .

We've had exactly the same thing happen. We purchased a property six months ago and already had to replace a split RX fitting where the mains pressure pipe comes into the basement. I thought I had it all sorted.....went down to our local bunnings and bought a replacement...job done....but maybe not by the sound of it....bugger! They look like a real solid type of plastic, I thought it was just incredibly random bad luck for it to split, especially since it's not exposed to any sunlight that would perish the plastic.

[mrsaneperson]

We've had exactly the same thing happen. We purchased a property six months ago and already had to replace a split RX fitting where the mains pressure pipe comes into the basement. I thought I had it all sorted.....went down to our local bunnings and bought a replacement...job done....but maybe not by the sound of it....bugger! They look like a real solid type of plastic, I thought it was just incredibly random bad luck for it to split, especially since it's not exposed to any sunlight that would perish the plastic.

OMG sorry to hear of your dilemma same as mine these connectors must be failing big time!
I'm very disappointed with RXP Plastics response when i've alerted them to the situation a few weeks back now. Not even a reply!

[flyernzl]

The first Sunday of August started with a bang. Literally. Every Landlord dreads the 8.15am text from a tenant “Hey, my kitchen tap has exploded”. Just what you want as a Sunday wakeup call. Even worse, we were scheduled to take Miss Eight up north for her first pony ride lesson. The tears and tantrums if we missed that birthday present would certainly ruin the day. Fortunately, the tenant concerned has a reasonably handy son, so I texted back “Turn the water off at the main, and I’ll be out this afternoon”.

Sure enough, the kitchen mixer faucet was leaking like a sieve. These mixers are beyond my plumbing skills, and as I was unwilling to incur plumber’s Sunday overtime rates, I simply disconnected the water pipes to the unit and capped them off. That gave the family water to the rest of the house and the plumber could do his thing at non-overtime rates. How do these fixtures know the day of the week and exactly when statutory holidays occur?

The project of the month was to be the renovation of the middle unit of my Manurewa block. This unit has had very little maintenance since I bought it and was, quite frankly, a mess. Some years ago the back door, which faces to the west, developed a bad leak and over time the rainwater had regularly flooded the kitchen floor. We eventually gave up on trying to fix the leak and built a covered rear deck to protect the door from the elements. Although this was successful, the previous floods had rotted the particleboard to the extent that there was a hole right through the particleboard overlay. The kitchen units themselves were 1960s built-in fixtures and, although I had toyed with the idea of just new handles, hinges and bench tops I finally reluctantly decided that full replacement was the only way to go.

The existing tenant had been there for some time and did not seem to be too unhappy with the place. I bumped his rent up by fifty dollars a week to try and get him to move out but, after some initial grumbling, he even stayed on at the new rate for another 18 months. Eventually, having acquired a girlfriend and a new addition to their family, he moved out at the end of July.

The plan was to completely replace the kitchen and the kitchen floor, repair the laundry wall which was suffering from dampness originating from the adjacent bathroom, replace the over-bath shower unit and repaint the inside of the unit. As inevitably happens, we found other work that needed to be done throughout the project.

So what actually happened?

Firstly, we removed the overhead kitchen cabinets (we were not replacing these) and then the bench tops and finally the lower cabinets. Next to go was the exiting vinyl and the particleboard subfloor. Finally, the laundry tub came out along with the gib board off the laundry wall to expose the damp timber. We then cleaned all of that back, and after those two days of work we could leave everything to dry out over the weekend.

The first day of following week was spent tracking down any leaks in the bathroom, replacing a couple of pieces of timber around the bath that did not look so good, and removing the old and cracked Feltonmix shower unit. I then spent a lot of time going around the place getting all the jammed aluminium windows to open once again, replacing the catches on the kitchen and bathroom windows with venting catches, and arranging for new friction stays to go into these windows so they all operated correctly. No excuse for mould and fungus through lack of ventilation now.

Once the kitchen and laundry had dried out, we laid a new marine ply subfloor in the kitchen and regibbed the wall. Mr Vinyl-layer did his work and then the new already-assembled kitchen units had to be collected and installed. The kitchen is a U-shape, so we found a second-hand stainless-steel sink to fit across the midsection and were then able to measure-up and order bench tops for the two side areas. Of course, these were 30mm thick while the stainless-steel top is 40mm thick, so ply packers had to be made and installed to level things up.

The original laundry tub cabinet was chipboard and had succumbed, and as there is not enough depth in that area for a supertub I found another second-hand washtub with a solid timber cabinet at a dealers yard along with a recycled back door that would fit the existing doorway.
All this took time to put together, along with the new shower unit and new kitchen and laundry taps. Have you seen the price of laundry combination taps recently? Normal taps and mixer faucets are quite cheap, but laundry taps are gold. The plumber spent the afternoon on-site, had a few problems with it all, and gave me the opportunity to learn three new swear words. Well done that man.

I tidied up the front entry by repainting the front deck and getting a trailer-load of bark chip to cover up the weedy patches in the garden. Having cleaned back all the walls, doors and ceilings I was looking at a long weekend at the busy end of a paintbrush. Not to be. After a Saturday spent patch-undercoating all of the areas, I went home feeling decidedly unwell. Next morning my beloved took one look and said “Off to the emergency doctors with you, my lad”. And so it was. After a bit of humming and haring, the verdict – conjunctivitis. Believe me, it’s no joke. Four days as walking wounded, fumbling blind down the hallway to the bathroom, unable to even drive a car, living on eye drops and antibiotics. A sure way to lose weight.

So that has put the timeline back by about a week. We now have all the painting done, new light fittings from Lighting Direct’s sale installed, and the curtains are about to go in. We may get there yet.

Cost? Who knows, at this stage. Jan says she has clocked up 100 hours to this point, I have done rather less time than that. The kitchen units and benches ran out at around $2600, but there are a lot of other bits and pieces both expected and unexpected to add up yet. My gut feeling is around nine thousand, so I hope the eventual new tenants appreciate the effort.

[Perry]

Ouch. I hope it was fixed more quickly than
the job you were doing.

Now I understand why you weren't seeing
things clearly. All that eye-mucous did it.

[flyernzl]

Now that the flat-from-hell has been renovated and new tenants moved in at a good market rent, my thoughts turned to a bit of play time.

This year’s NZPIF conference was held in Wellington, so by taking a week away from the daily grind I could drive down via the scenic route, see a bit of the country as it moved into the spring weather, and arrive in Wellington rested and relaxed.

That was the intention, anyway. Let’s forget the weather bit, as a wild and windy westerly was more the flavor of the week. By taking the country route down through State Highway 4 we were able to inspect some of the smaller towns that so seldom hit the headlines. When did you last hear from Waitomo, Te Kuiti, National Park, Raetihi or Feilding?

Thursday morning is apparently set in stone as hair-do morning, so while my Dearly Beloved was pruned and polished I was able to walk around the main street of Te Kuiti. Not, I must confess, an uplifting exercise. Those shops that were open for trade frequently rub shoulders with the abandoned and the derelict. Alongside the usual mix of cholesterol-rich fast food joints and dingy two-dollar shops, legitimate traders in life’s staples were obviously struggling. My sure indicator of a depressed town is one where the church thrift shops make it out onto the main street. Not a good look.

A quick check at the local real estate agent’s window displays revealed local house prices in the 120K – 160K range. Compared to Auckland, bargain basement territory. But a bargain is never a bargain if there is a good solid reason for the low price.

Moving on to Raetihi, the situation appears to be even worse. Two out of three shops in the main street are closed up and residential property prices appear to languish down around similar levels. Arriving at a café there for lunch we were informed that we were the rush hour. Oh dear. Abandon hope and leave town seems to be the recommended solution.

In contrast, a morning walk around residential Feilding was a much more uplifting exercise. Houses there seem to be neatly kept and in good repair. There was even some new building work underway. No doubt, apart from its traditional role as a centre for trucking and distribution companies, Feilding’s proximity to Palmerston North and Massey University give it solid reasons to prosper.

We are told that one of the reasons for Auckland’s housing crisis is that everyone in New Zealand wants to move there, and that the resultant demand exceeds supply. It would certainly be nice to avoid the congestion and delays on the Auckland motorways by moving to a place where home and work are no more than ten minutes apart, but that move requires a lot more than a compact graffiti-free town with limitless parking and no traffic lights.

So what can be done to rescue and resuscitate small town New Zealand? When asked that question, Sir Robert Jones recently replied “Nothing. Let them die. That’s the way of the world”. A valid if Darwinian view, to be sure. A lot of these settlements were created to serve trade, shipping or railway routes that now either do not exist or have shrunk to economically insignificant levels. Some, like Matamata profiting from the Hobbiton mania, have successfully managed to recast themselves in a new role. Others are dead men walking, surviving only as concentration camps for the terminally life-incompetent who are given WINZ payments just to get them to stay out of the way of useful people.

Occasionally we hear calls for Government action to solve this problem. These proposals usually ask for various financial incentives intended to bribe employers into creating or moving jobs into these so-called disadvantaged areas. Presumably these folk are blessed with short memories, forgetting that such regional development schemes were a feature of the New Zealand economic landscape back in the 1970s. Looking back, these arrangements now appear to have been a total failure. The reality is that such schemes only exist by the grace of some political party, and no sensible businessman is going to invest substantial capital in a project whose profitability can be destroyed at any time just on a political whim.

A second option, sometimes suggested, is directing the pitter-patter of immigrant feet southwards. Forget moving from Shanghai to Howick, direct the incoming hordes to Taumarunui, Norsewood and Twizel. Again, this proposal has a long history of failure. How do you make them stay? Border controls and a new Berlin Wall at the foot of the Bombay Hills? My mother’s family, arriving in New Zealand from the UK as assisted immigrants back in the 1920s, was transported to Taihape for the duration. They hated it. The day their three year obligation ended they were at the Taihape railway station waiting to take the first train, any train anywhere, providing it was somewhere away from Taihape.

So where does this leave Landlords? Auckland based property investors have now become used to an active and largely rising market, and may be tempted by rose-coloured spectacles to reach out and grab some apparently incredible bargains in the provinces. The reality seems to be that, outside the Auckland and Christchurch markets, the New Zealand property market is flat if not declining. The current well-organized opposition to any proposals put up for creating or expanding large-scale tourism or mining projects means that there seems to be no chance of significantly increasing employment in these regional areas. Given that landlording requires people willing and able to pay rent, I cannot see myself expanding my property empire to the provinces. Other people presumably have the experience and skills to survive in such markets, I do not. Stay in the market you know.