Housing NZ Pros and Cons

[gdj]

Hi All

We are looking closely at a property that meets our criteria, location and numbers wise. It is however leased to housing NZ and that has another 5 years to go. I was hoping to find out peoples experience and thoughts, positive and negative with HNZ leases.

Thanks in advance.

GDJ

[AMR]

Read the lease very very carefully as HNZ may have a right of renewal. Is this the Onehunga one?

[gdj]

Read the lease very very carefully as HNZ may have a right of renewal. Is this the Onehunga one?

Yes it is. What are your thoughts on it?

[AMR]

Ok that came off a bit more negative than intended. Ask your soliticitor to inspect the lease documents.

If you do a HNZ search on these forums you should find a bit more. The general feedback is that HNZ try to paw off damage as fair wear and tear.

[speights boy]

http://www.facebook.com/pages/Housing-NZ-Owners-Landlords/178273642191204

[NovInvestor]

Leasing to HNZ:
Positive:
1) rent received 52 weeks of the year
2) no need to manage the property yourself

Negative:
...oh gush where to start...
1) you dont pick the tenant
2) you have 0 control over the property
3) if the tenant is one of them from hell, tough luck
4) there is management fee paid to HNZ
5) rents are often not at market rate
6) tenant damage is often classified as 'reasonable wear and tear'
7) repair and maintenance is done by HNZ and charge to house owner, often at inflated prices
can't break the lease
9) if you want to sell the house, no home buyer will want it because they can't move in, hence investors will pay pennies for it

[Glenn]

I took over 6 or so properties that a client had previously had leased to HNZ.
I think the local HNZ did a good job in restoring the houses. Like new carpet and paint work. However at the very best of the bunch the neighbours were just about out of their mind due to the P useage going on next door. I think if the lease had gone on much longer the whole street would have turned into the P central of the town. Just go figure what that would have done to the "value" of the house and the neighbourhood.
Now one would hope that the police and the rest of society would lock up all the P manufactures. Well yes they did multiple raids on that house but could not find any sign of manfacture. I have just got rid of a tenant where the CIB whispered in my ear. They could not find any evidence of manufacture just possession. The story was the tenant had previous prosecutions for making the stuff. The police are powerless to get rid of tenant but I can do it!
HNZ have nothing to lose. They do not own the properties so if you have a major there all HNZ has to do is hand you back a stuffed property.

As for the other houses. Yes they cleaned up but they could not get rid of strange odours that lingered for ages. My client is a picky ex builder and demanded all sorts of things be fixed at the houses. However he could not figure out everything. The taps were at the end of their life. The stoves had been given a hard time, and there bathrooms had more wear and tear than what I think would be normal for the age of the properties.

Go find another property. HNZ are bad news (in my personal experience)

[Tan]

If you get one, do it somewhere you never visit so you don't see it's condition until it is reinstated at the end of the lease.

[Keithw]

As already noted, read the lease very carefully, particularly around the reinstatement clauses.
A nasty trick I have discovered here in Aus with one of the "managed property" type schemes, (not sure if it's defence housing or council managed housing) is the practice of a 9 year lease with reinstatement at year 10.
So the lease simply doesn't get renewed at year 9, leaving the owner with a delapidated property and no lease, when they expected to get a reinstated property back at year 10.

As already noted by others, the quality of tenant tends to be low, with very high wear & tear, and no respect for what was once a nice new property.

[Rocksteady]

As already noted, read the lease very carefully, particularly around the reinstatement clauses.
A nasty trick I have discovered here in Aus with one of the "managed property" type schemes, (not sure if it's defence housing or council managed housing) is the practice of a 9 year lease with reinstatement at year 10.
So the lease simply doesn't get renewed at year 9, leaving the owner with a delapidated property and no lease, when they expected to get a reinstated property back at year 10.

As already noted by others, the quality of tenant tends to be low, with very high wear & tear, and no respect for what was once a nice new property.

Interesting thread. I'm looking at a 2 beddy attached house/duplex in Auckland currently. 11 years to run on the HNZ lease. All of the (freehold) attached houses are leased specifically to the elderly. Would this still be a bad investment?The place is 10 years old and the tenants have been there the whole time and it looks to be in great condition. The vendor wants out and with the long lease , first home buyers won't be at the auction. All thoughts and criticism welcome

[grip]

What's the yield?

[Rocksteady]

What's the yield?

If I get the price I'm after 6% on no money down -auckland market

[grip]

If I get the price I'm after 6% on no money down -auckland market

Is this net or gross?
HNZC charges you an 8% management fee.
And you still have to budget for maintenance costs, rates, water above the $500.
I was evaluating another deal, and the problem was that the lease has over 10 years to run and in the past 5 years the rent increased by $20! I can understand why HNZC is hesitant to review the rent upwards.

At the end of the day if the yield is reasonable then it's a good deal.

[Glenn]

Well I have been a property investor for 25 years now. (not counting the years before that when I was just a property owner and share market investor) Up until 1993 some of my duties was to do economic studies. I certainly have not invested in the full range of properties but have done a reasonable range such as residential houses, flats, caravans, blocks, industrial, retail, warehouses, syndicates, partnerships and leasehold. I can assure you looking back that some of the deals that looked best at the beginning have been very disappointing. Some of the stupid insignificant deals have been consistent performers. On reflection the best ones were those that I had full control of. By best I mean consistent rent, good capital growth, ability to sell (not that I have done much selling) and good ability to borrow against without expensive disappointing valuations. Two big problems have been the Government via political swings and tax. The other has been the economy being expressed through interest, and market flavour. Dare I suggest this months darling investment which seems to have the best promises is tomorrows dog. For goodness sake just do your own barking and find your own power pole.

[sidinz]

I have been through hundreds of state houses recently. I've seen more properties than I care to count, where there have been thousands and thousands of dollars of damage done. Ask yourself if you want that done to your property.

There are some very good state tenants out there who keep their homes beautiful and even some who upgrade them themselves. But there are also some who live like animals. How lucky do you feel?