Life as a Landlord

[Perry]

A PM problem is summed - in many cases - as having no skin in the game.

[Davo36]

A PM problem is summed - in many cases - as having no skin in the game.

But they do. They get paid for it, if they do a good job. And lose that money if they get fired.

And they get a bad rep also if they do a bad job.

That's as much skin in the game as any business isn't it?

[Nick G]

Most problems in any service come down to being able to find, hire and keep great people over time. It's not easy to do consistently.

[Perry]

There's been talk on these forums of the lowly-paid-rate for property management. Such that a large 'book' is necessary to make it viable. If that's so, then the loss of a few would be of no great consequence, perhaps?

Perhaps that's why we get grumbles like the recent one of a PM charging a PI for the time involved in phoning the PI and tradies. (Or the like)

[Davo36]

Yes maybe true Perry. But of course you don't get a big loan book by losing a bunch of clients, even a few.

I guess you look after your clients, people recommend you, you get more etc. But what a shit job aye?

[Davo36]

Most problems in any service come down to being able to find, hire and keep great people over time. It's not easy to do consistently.

Yeah anyone who is really good would go out on their own.

So you need someone who is really competent but not ambitious

[Don't believe the Hype]

Yeah anyone who is really good would go out on their own.

So you need someone who is really competent but not ambitious

Broadly you're right but what might look like lack of ambition could actually be any of a number of things. I.e. Home situation, risk tolerance, understanding of running a business vs. being good at a job and time of life.

I'm considering finding someone who is looking to start their slow down into retirement (maybe 10 years out). Projecting my PM and maintenance costs over the next 10 years and they're heading towards $200k/yr combined.

I'm sure I could find a PM who is also handy or a builder/maintenance guy who can be taught the PM business. While I may still need to call in sparky/plumber for certain jobs I'd want to find a manager that could handle the majority of the maintenance issues as as well as lawns/gardens

[Kaye]

Don't Believe the Hype where are you located? I do everything your looking for.

[Don't believe the Hype]

Don't Believe the Hype where are you located? I do everything your looking for.

Hi Kaye - Porirua

[Kaye]

OK wee way to travel sorry. I'm sure there's PM's that do what I and don't gouge the owner for doing it.

[flyernzl]

Words are the most amazing things. We have just 26 letters in the English language, and yet with skill and talent these few letters can be combined into words and speeches that can uplift, enthuse and emotionally move individuals to great accomplishments and unify whole nations. In the hands of a Winston Churchill or a Barack Obama words can resonate around the world and have global impact.
Words can also exhibit subtle emotions, indicating expressions of approval or disapproval. We have many time-worn expressions that are used to influence our feelings and encourage us to regard certain people or certain groups in either a positive or negative light. Thus, in our media, all mums are ‘young’, all female teenagers are ‘bubbly’ and all landlords are ‘greedy’. Like the canned laughter in trashy television shows, these words function to clue us in as to when and how we should react to those people. Sympathy or pity, envy or dislike. Strangely, when school teachers or nursing staff go on strike and agitate for more money, somehow they are never labelled in quite the same negative way as landlords.
One of the most common uses of words is to limit a particular choice, option or decision. A well-trained shop assistant will say “do you want this in blue or green?” thus skillfully and hopefully avoiding the real question of “do you actually want to buy this?” They are implying that the first discussion and the associated yes decision has already taken place. This is a standard and fairly handy ploy to get the outcome that they - and possibly only they - want. In the political sphere this subterfuge implies that if you are unaware of the existance of the initial ‘yes’ decision you are uniformed, ignorant, and out of the loop.

Right now we are being asked to join in the consultation on what is being called ‘The Residential Tenancies Reform Act’. Now hang on a minute mate, who has decided that this Act is in need of reform, where and when did that particular discussion take place, who was involved, and when were the conclusions announced? The answer, of course is quite clear - no discussion took place, no evidence for and against was presented or heard, there was no open discussion, and the decision that the Act needed reform was obviously a totally political one held in some quiet bureaucratic back-room at some unknown time. Yet we are being told to proceed solely on the basis of this dogma.

Another language trick is to extend the particular to the general. This is very common in the mass media, where we are frequently told that “Everyone is watching this” or “Everyone is following that”. Completely untrue, of course. What it really means is the person writing the article, and possibly a few of their friends or associaties are, and then they extend that to the ridiculous extreme. The actual sweeping statement its both untrue and impossible, there are always a few natives in the highlands of New Guinea who have no interest at all in whatever it is and probably have never heard of it.

So, in similar fashion, we have the Healthy Homes Guarantee Act. A reading of the brief and a few minutes of logical thought shows that this title is false under at least two reasons. Firstly, it will only apply to rental homes. At my last reading, I found that two-thirds of homes in the country are owner-occupied. This Act will not apply to them. So 66% of NZ’s housing will see no improvement to their environment. If I said that I will give out a pill that would improve the health of our population, applied that nostrum to just one third of the population, then claimed the job was done, would you call me a liar?

The second part of the misleading title is the word ‘Guarantee’. You may ask “Exactly what does this legislation guarantee?” Well, very little in the way of improving the lives of those involved. It does guarantee that most landlords will need to spend money. It does guarantee that the Government will receive a nice little bonus of the GST on that expenditure. It does guarantee that vendors of insulation and heating will experience a very welcome short-term surge in business. It does guarantee that there will be some Tenancy Tribunal cases that will give us news headlines and possibly a few fines notices. What it does not guarantee in any shape or form that tenants will want to, or be able to afford to, run those expensive new heating appliances. It does not guarantee that their houses will be any warmer, as a cold uninsulated house then becomes a cold insulated house if no heating is applied. It most certainly does not guarantee that there will be any increase in the number of rental houses available on the market.

This Government has already stated that one of its aims is to be business friendly. Yet over the last year we have seen and experienced sustained and extensive attacks on the residential landlording business and the demonisation of those who provide housing for those who cannot or do not wish to buy their own property. Admittedly, part of the problem lies with us landlords - most who do not regard themselves as being in business, the accomodation business. I have spoken with many such people who regard it more as a hobby or a bit on the side. If we do not behave and act as business people ourselves we can hardly blame others if they also take a similar view. So we are held to be bumbling amateurs, incapable of making rational decisions, poor at providing for our tenants expectations, unreactive to their wants and needs, and ripe for regulation and exploitation.

So logically we cannot be amazed when there is a strong movement to reduce or eliminate the private sector landlord and place the whole residential rental industry into the hands of competent professionals. These professionals, with their academic credentials, social work training, and their MBAs, will do a much better job of catering for the wants and needs of our societies underclass. Of course that underclass of socially-deprived people will need to be properly educated into exactly what their wants and needs are, but no doubt large new government departments can be set up to establish that. The proletariat always needs leadership, and who is better than the university-educated middle class, solidly estabished on secure taxpayer-funded salaries and crammed full of socially-acceptable academic book learning, to provide that?

[Perry]

Some further insights into this sort of semantical chicanery is here.

[artemis]

Mr Twyford will decline to move on some of the more extreme measures, say he has consulted widely, and hope that the other changes will slide under the radar. Especially if they are a couple of years off so plenty of time to massage the message to voters and (he hopes) delay the impact on renter pockets while smacking landlord pockets hard.

Will it work? Probably yes to Mr Twyford's constituency.

Except that rental shortages and rent rises are getting quite a bit of airtime already, and that will increase as peak letting season nears.

[eri]

If you steal from a shop it is a crime but if you steal from a landlord it is not a crime just a civil matter that has no additional cost to bear on the perpetrator! How is this fair? There is an element out there who know this and create mayhem for landlords."

https://www.stuff.co.nz/business/107530274/if-you-steal-from-a-shop-it-is-a-crime-but-if-you-steal-from-a-landlord-its-not

[flyernzl]

Is Residential Landlording a Business?

The genesis of the New Zealand Labour Party lies in the gritty, grimy and muscular blue-collar labourers who worked long gruelling hours in the mines, the factories and on the wharves. Armed with quite genuine grievances and fired with visions of a just and fair society they achieved political power by the 1930s and then propelled a number of their own colleagues into Parliament.

Despite their name, the Labour Party activists today have become almost entirely white-collar. Academics, school teachers, sociologists, public servants, do-gooders and leftish lawyers. Their elected Members of Parliament have, almost without exception, never worked for a day outside politics. They have moved adroitly from a liberal tertiary education through to some tax-payer funded bureaucracy or NGO and then on to their current parliamentary role. Most would give themselves a hernia if they tried to pick up a spade. As such, they entirely misconstrue what makes the country run and simply cannot understand that business in this country is overwhelmingly a Ma-and-Pa enterprise.

Efforts by the current coalition Government to connect with and reassure the business sector of the economy strongly reflect this limited view. The recently appointed members of the Business Advisory Council all come from the big tower-block end of town. Professional politicians and bureaucrats share a similar background and view of the world with professional managers and directors. Where does this leave the plumber who employs two or three staff and does his bookwork at the kitchen table at night after himself working hands-on for nine or ten hours during the day, the shopkeeper who attends the counter six days a week 52 weeks of the year without six weeks of annual holidays and, yes, the Landlord with a full-time day job as well as a couple of residential rental properties and who spends his weekends repairing fences and mowing lawns?

On the political outer for a start. Jacinda Ardern has been reported as saying that she had spoken with New Zealand business and they are comfortable with her changes to the economy, but as far as I can tell she has not spoken to any residential landlords, individual Property Investor Associations, or the Property Federation. In her eyes, and by extension the other members of her coalition Government, it would seem that we are not ‘business’. We seem to exist in some twilight ‘other world’ where the normal rules of commerce do not apply.

But being a residential landlord is a business like any other trade, from a cat-house to a computer company. Over 80% of New Zealand landlords possess just one or two properties and unfortunately many such landlords do not even consider themselves as being in business. They have inherited or otherwise acquired an additional property or two without much forethought or planning, and see themselves just as someone who happens to be getting a bit of an extra income on the side from the rent and building up an asset for their retirement. Most of the landlording horror stories I hear involve people not treating their properties like a business. They accidentally or on a whim become a landlord. If landlords themselves do not think they are running a business, why should anyone else think differently?

Both the current Government and previous administrations have often proposed and frequently enacted ill-informed policies that denounce all landlords as oppressors of the poor. High-living rip-off merchants and public enemies who must be hit with additional taxes to satisfy the demands from and hence attract the support of the idle, the incompetent and the casually fecund.

So landlording is not even lumped into the ‘Small and Medium Enterprise’ basket. Instead it is at best regarded by as a hobby, at worst as a tax-evading rip-off, and by Governments from both sides of the house as a convenient target for abuse, censure, blame, and punishment.

What is a business? A business is a commercial activity. Assuming that you are not working at being a landlord for purely altruistic reasons, you are engaging in a commercial activity – exchanging shelter for financial reward. You have suppliers, you have customers, you have contractors, you have responsibilities and you must obey the law of the land. You have to be knowledgeable about the property, the people, the paperwork and the processes involved. And on top of that, succeeding in the business of rental properties requires a certain set of skills and desires. Making a living as a rental property owner isn’t always as easy as others would lead you to believe. However you look at it, a landlord is in business just as a motel operator is in business and a hotel owner is in business.

Many of the punitive proposals and taxation arguments around property are based on two fundamental misconceptions. Firstly, the ongoing and possibly deliberate confusion around the difference between property investors and speculators, and secondly the false but firmly held belief that somehow there are special and unique tax advantages for those who rent out property.

To claim that property has an unfair tax advantage over other investments is incorrect. No such tax advantage exists. Those who advocate for a capital gains tax on property - and only on property - are actually asking for a targeted penalty on property that does not exist anywhere else in the New Zealand tax system. Many long-term capital gains are currently and always have been tax-free. Stephen Tindall sold The Warehouse business without a tax bill, and when Sam Morgan sold Trade Me he could quite legally keep all the proceeds without any consequential tax liability.

So largely the onus is on us as Landlords to act in a business-like manner, promote being a landlord as an acceptable career choice, stand up against those who would vilify and abuse us, and portray ourselves and the businesses we run as fair, equal, and worthy participants in the ordinary commerce of the country.