How to make a profit selling water

[AMR]

Hi all,

For Auckland Council properties, has anyone worked out how much rent per person would cover the annual water charges?

Also, is it legal to charge a profit margin on water charges if it is outside the tenancy agreement?

I need to raise funds to buy a new Lamborgini as the old one got mud on it. I figure if Watercare presents us a lemon we will turn it into lemonade.

(This post is slightly sarcastic of course)

[Maccachic]

Call it "mineral water" and bottle it then you can charge a premium.

[NovInvestor]

I always charge the full bill to the tenant inside legacy Auckland City Council area.

[NovInvestor]

However, lately I have increased the rent to include water in the tenancy, so that this 'increased rent' increases my serviceability to the bank.

I don't think the bank looks at if water is included in the tenancy.

[flyernzl]

I always charge the full bill to the tenant inside legacy Auckland City Council area.

Under the current RTA, if the Auckland Council does implement their proposed city-wide flat $190.00 (+GST?) water service charge, you will no longer be legally able to do that.

This is why you must respond to their invitation to comment on the plan and lobby against the implementation of this charge.

[NovInvestor]

Under the current RTA, if the Auckland Council does implement their proposed city-wide flat $190.00 (+GST?) water service charge, you will no longer be legally able to do that.

This is why you must respond to their invitation to comment on the plan and lobby against the implementation of this charge.

Ok I will thanks! More cost to the rate payers!!!

[mortgage broker]

The councils are doing a great job of making sure that people in Auckland continue to pay for a housing shortage. I have clients which take 6 months to a year to subdivide a property and get consent to build. The costs involved mean that you have to be able to throw $30k - $60k cash into it to make it happen.

[Davo36]

That actually sounds cheap and quick mate. I would have thought $100k and 12 months would be more the norm.

That's if they let you...

I read a newsletter from my lawyers yesterday. It contained a warning about the ''Infrastructure Growth Charge" charged by WaterCare Services. It's normally $12,000. The developer sometimes pays, but can defer it, and so the warning was to be sure whether this fee had been paid or not before buying a section and building.

So that's $12k on every section in Auckland just for a water connection...

I have just looked this up online, here are the charges, which are here: http://www.watercare.co.nz/SiteColle...s/AllPDFs/PDFs v2 111010/2011-2012 Water and wastewater charges booklet.pdf.pdf


So it actually seems it might be more like $7k but a lot more in some places. No idea where my lawyers got the figure of $12k from.

The cost of the installation of a water meter is on top of that. It starts at $130 application fee plus $550 for a small meter and goes up from there for bigger connections.

So it's a very expensive business nowadays.


Oh by the way, while Googling, I cam across this: http://www.aucklandcity.govt.nz/coun...licyreport.pdf. It's the first development contributions policy put in by Auckland City Council in 2005. Prior to that, there weren't any! Imagine that!

For a laugh look at this:

People were surveyed by phone as to who should pay for growth. And whaddya know? They chose for someone other than themselves to pay.

Back in 2005, the development contribution for a residential development was around $2000. It's now around $20,000 (http://www.aucklandcity.govt.nz/coun...sp#residential) a ten fold increase in 7 years.

[JABlog]

Thanks Davo,
I know someone who had to pay 8K - an unbudgeted cost when he purchased a section to build.
And the rort continues , I am flabbergasted when I hear of such monopolies and how they can fit a 40 yr plan into" oh lets do this now and see what happens" attitude.

[Wayne]

You would think if the developer incured the charge it should stay with them not pass with the section - a big 'gotcha'.

[Davo36]

Well the thing is the other development contributions (like the council ones) are normally paid when you build the house i.e. when you apply for building consent. So in some ways it makes sense.

But your average person wouldn't know about this.

[MarkButThis]

I paid my development contributions when I did the subdivision. $25K + $10K street drainage work. My subdivision took 1.5 years and cost over $100K.

NovInvestor - when you start to do things like put in the water cost into your rent to increase the serviceability to the banks, then you are usually stretching things a bit...

...just keep in mind that before Ron had 30 houses in a portfolio, he also had 8 houses in a portfolio which he lost the lot (and blames it on "bad advice"). I like Ron, but he is a classic high-gearing investor and seems to be overly comfortable with the risks (in my opinion).

Being a fellow engineer, you're a smart guy, so you don't need lectures, but do keep your eyes open - interest rate rises are coming next year - again an opinion.

[Stickman]

The councils are doing a great job of making sure that people in Auckland continue to pay for a housing shortage. I have clients which take 6 months to a year to subdivide a property and get consent to build. The costs involved mean that you have to be able to throw $30k - $60k cash into it to make it happen.

Agreed, in this respect, councils are absolutely shocking. It is a farce...