Life as a Landlord

[Davo36]

Hmmm, this doesn't sound like you FlyerNZL.

You're normally pretty unflappable with all the ups and downs of property investment and do lots of repairs all the time it seems.

But it might not be a bad time (perhaps after the Unitary plan is in?) to sell a couple of your worst ones. You might do well out of them in the current climate - especially if they have some land with them.

I've had stink times in property (see my thread here DavoTriesAgain) and nearly jacked it in. But not sure what I could do to make money that would be any easier to be honest. I don't have many maintenance issues nowadays.

I certainly would not try and develop. But you could maybe get some indicative plans in place and sell to someone silly enough to actually build.

Oh well, all the best. Keep fighting the good fight, things will turn around.

[Viking]

Know the feeling but, having struggled through the last 6 years with empty houses and low quality tenants we are seeing the payoff. Since October 2014 rents up considerably and more to come. Back maintenance to do but we can work our way through that.
The real gem though is the value increase. Four properties in Tauranga looking like average 100K per year total. Can't make that working while sleeping.
Just a matter of time in the market. More to come of course.
Rotorua is on it's way with stories of some great prices. The good thing there is that there are no subdivisions of note so not a lot of new houses can be built. Now Rotorua has always been about half the price to buy so with Tga prices heading to the 600k average Rotorua should have quite a bit of upside.
That will be fine with me.

A couple of refinances and some new toys will be a nice bonus. Might even sell one or two in the next while.

[Perry]

As someone who has been in this business since 1991 I can tell you from the coal-face that it is becoming harder and harder to make a living as a residential landlord in the Auckland area. Sure, rents are increasing, but these increases are severely limited by the lack of growth in tenants incomes, while the rents now achievable have fallen well behind the quite startling growth in the value of the assets employed. In the meantime, of course, the unavoidable costs involved in property ownership have soared.

What of outside Auckland? Do you think the same criteria fit?

Soaring asset values are just so much flim flam. And RoI is more important than the abstract figures attributed to the V in RoV.

Chatting with my mum and her adviser, t'other day and the value of the ancestral home was broached. Circa half a million was suggested. The section cost ten quid in 1906. (That's $20 for you non-imperialists)

Value / cost / inflation / purchasing power all need to be weighed to get a realistic picture of the actual status of the business. (Along with the costs of private medical care for the business operator's ulcers )

[mrsaneperson]

It is actually really difficult to get anything published that reflects the Landlords point of view.
Frustrating!

Brilliant posts Flyer ,the difficulty in publishing lies in the fact that NZ is run by a bunch of socialists:

[Bob Kane]

Brilliant posts Flyer ,the difficulty in publishing lies in the fact that NZ is run by a bunch of socialists:

The media is run by socialists (as are the councils).
When Mike Hosking challenges the socialist viewpoint, that nutter (Dan Wayman) tries to get Mike removed from tv with the lame

He is a harmful role model to younger New Zealanders and he lacks the ability to put himself in anyone's else's shoes.

[Lovethiscountry]

Fliernz

You do great work for APIA and thanks for the work you put into separating the Watercare billing charges.

Look things this way. We have, in recent years, had better than 10% CG on our Auck Properties. Hopefully you were leveraged say 50% or more at purchase. If so you have been getting CG of at least 20%pa onfunds invested.

Interest rates are now mid to low 4%pa. The best we have ever had. Use a RC to meet any unexpected maintance costs etc. Delay paying off principle for a while and treat yourself to the good things in life.
My advice is to only sell if you want to weed out undesirable properties. Increase a loan if need be. live well and do the things you enjoy. We can't take it with us when we die.
PM me if you want to chat and keep looking at the glass as half full. Thanks again for the good work you have done over the years.

[flyernzl]

Interesting to note that here in Perth some poor sod has had a mansion on the market for two years, price tag AUD25mil.
He's just had to accept an offer of 17.5mil, the market has dropped.

[eri]

"The clever operators who have been through cycles know that this is where you sell off your high maintenance low yield stock to these panicked buyers.


"And so that to me is the first of the factors which will eventually cause the market to plateau. We have entered the last ranks of new buyers."


Tony Alexander's housing market predictions:


- An end to falling interest rate expectations. Adjustment to a new low interest rate environment over the six to nine months.


- Migration will ease, "nothing precipitous". In two to three years the net gain will reduce to between 25,000 and 30,000 from 68,000 now.


- Housing supply will rise slowly. National building consents will rise to 30,000 in a few months .


- The Reserve Bank to introduce a debt-to-income ratio, probably by the middle of next year.

http://www.stuff.co.nz/business/8186...alexander-says

[flyernzl]

When the world turns nasty it seems like a good idea to run away. As far as possible. Perth, in Western Australia, is seven and a half hours away by direct non-stop flight in one of Air New Zealand’s new Dreamliners. That might be far enough. Toss all the rental keys to Jan and leave the damp dreary and depressing Auckland winter behind.

The distances across the far side of Oz are amazing. If you hop on the Greyhound bus in Perth and don’t get off, it will take you 62 hours to get to Darwin. Only a masochist would actually do that, but you get my point that it’s one hell of a long way. We covered 3000km on the road just between Broome and Darwin, and a fair chunk of that will leave you out of internet and cell phone contact. Plenty of room for all of the Syrian refugees out there in the GABA.

Perth seems to be a pleasant place, but like most of Australia is suffering from a bit of an economic recession right now. The hot news on our arrival was that a riverside mansion that had been listed on the market at an asking price of 25 million for a couple of years had eventually been sold – for 17.5 million. At a much lower level, many of the smaller mining and service towns now have a surplus of housing and consequentially both rents and selling prices are dropping quite rapidly.

The mining sector is suffering a double whammy. Just as the infrastructure construction phase has been completed and all those workers made redundant, the demand for the minerals themselves has dropped. Consequentially, many of the mines are either working restricted hours or have been reduced to a non-productive care and maintenance status. Of course this decline has now moved through to all of the other sectors of Australian business, and there seems to be significant numbers of empty shops and offices in every town.

West Australian tenancy laws seem similar to those we live under in New Zealand. The tenancy may be periodic or fixed term, and the fixed term may be of any length of time. A bond may be collected, and must then be lodged with a Government department. Interestingly, if the rent is more that $1200 per week then the bond may be more than four weeks rent. I wonder if this is inflation-proofed? An interesting variation is that if the tenant is permitted to keep pets capable of carrying parasites which can affect humans, a pet bond of no more that $260 may also be charged. This apparently is supposed to cover the cost of fumigation at the end of the tenancy. So presumably fleas count as eligible parasites. $260 still does not seem a lot of security for the damage that an active or incontinent pet may cause.

The tenant is responsible for all outside maintenance of lawns, gardens and any pools. No more than four property inspections by the landlord are allowed in any 12-month period. On the termination side, the tenant may give 21 days notice and the landlord 60 days, and the rules around the timing and amount of rent increases are pretty well the same as here. Interestingly, the water supply authority seems to find no problem in issuing separate water rate invoices (payable by the property owner) and water usage invoices (payable by the tenant).

All of the Australian states like to emphasise their independence by going out of their way to create differences between their own laws and those of the other states. However, in my quick flick through their residential tenancy laws while I sat beside the pool in Broome, I found only fairly minor differences between them.

Distance does give perspective. As I perused the New Zealand news as and when I could get internet access, I could see the postings from those at the wailing wall about how we are doomed by high property prices and forecasting the seemingly inevitable economic crises and property price crash. Oh dear, do I really need to go back?

Darwin has very stable weather during the dry season. This lets them operate the open-air Deckchair Cinema, which is well worth a visit. We went, and happened to see The Big Short. This is a dramatised story of the US residential property collapse, and it does make you think. The US banks and financial industry are portrayed as the villains and the greed of the market is the driver.

While our own mortgage market is very different, our powers-that-be have obviously taken this message on board and most of their recent moves are intended to restrict the bank’s ability to get in over their head. Any negative effect on property buyers, developers, investors and landlords is collateral damage. There are and will be more unintended consequences, but within the agenda that the mandarins of the Reserve Bank follow these are unimportant.

So who are the people who are buying in the property hot-spots right now? Overseas investors, no doubt who can either pretty much either pay cash or organize funding from sources that are outside the control of the Reserve Bank; Kiwis who have saved hard as a provision for their retirement years, and who are now finding that they cannot live on the 2% interest offered by the local banks. They can probably pay cash as well. Neither of those groups are going to be deterred by Mr Wheeler’s latest moves.

My first task on my return to my little property empire was to calculate my own LVR, and it came out at 45% excluding my own home. Enough, I am sure, to insulate me from the worst of the blast. However, I am seriously considering selling off at least one property to reduce that further and also to free up some cash that I can use as play money. If the end of the world is imminent I want to go out having fun.

[Perry]

If the end of the world is imminent I want to go out having fun.

Ahhh, but where? And doing what?

[Wayne]

Ahhh, but where? And doing what?

There is a lot of world out there - unfortunately a lot of troubled world also.

[Davo36]

There is a lot of world out there - unfortunately a lot of troubled world also.

Well, yes, but the world is mostly getting better (perhaps with the exception of the environment) I reckon. Less people starving, less violence, less crime etc.

Not that you would know this from reading the papers!

[Davo36]

FlyerNZL, why don't you consider getting your properties managed? Sounds to me like you're sick of the day to day s**t.

So maybe having a really good manager on board would take a lot of the day to day hassle away from you?

[sidinz]

But then we wouldn't get the benefit of his posts!

[Perry]

Why don't you consider getting your properties managed? Sounds to me like you're sick of the day to day s**t.

So maybe having a really good manager on board would take a lot of the day to day hassle away from you?

First, there is a paucity of 'good managers.' We all know that.

Second, I suspect that it's the management of the day-to-day stuff that makes the last few dollars which turn a marginal investment into a moderate one, or a modest one into a good one.

Was it you, Davo, who, many moons ago, made a post about refurbishing one of those mixer taps? Along with the costings and a comparison, so you could calculate the savings of DIY versus paying a plumber and PM margin?