Our next meeting is being held at the Ocean Lodge Muritai St Thursday 17th November. The meeting starts at 7.30pm with the usual optional meal at 6pm. Jonathan John will be presenting a brief overview of
Jonathon is a highly skilled mining engineer who has recently taught the Strategic and Operations Management courses in the BCom degree course at Nelson Polytechnic. He had been a business consultant for the past 15 years focusing on business performance solutions through mentoring business owners on their business and personal development and providing specific advice in the areas of strategic and business planning, operations management, marketing, project management and franchising. We are facing massive changes in our industry and what better time to get your act together to meet those challenges that lay ahead. This meeting could be the key your success as a property investor. Do not miss Jonathon, this is a once only opportunity.
RSVP to Glenn for the meal please (Ph 03 547771
THE MARKET
As usual the market is a bit hard to define. Most certainly the onset of summer and the emptying out of holiday homes turned into rentals over the winter, is having a positive impact. I recently had a brand new four-bedroom home in Nayland to let. With some trepidation I advertised at $400 and was amazed to instantly get solid enquiries resulting in more than one application and it was let within three days at full asking price, to top rate people. In another case I had to re-let a $300pw property where the tenants had given notice after only four weeks of tenancy. The first time round was hard going yet this time after only a few days got response and good quality applicants were received. The mysterious thing is the other end of the 3 bedroom market has been a little hard going with less enquiries for a $240 than for the $300+ This surely brings into question the validity of media comments about a lack of affordable housing in Nelson. Tenants seem to be keener to have desirable properties than they are to save a few dollars.
NELSON STATISTICS TO CONFUSE AND ALARM YOU
The various newspapers around the country have recently reported on the latest Statistics Department release of population estimates for various areas of New Zealand. Some papers reported that Christchurch had the largest numerical increase; some reported that all of the growth was occurring in Auckland and main metropolitan centres. What Stats actually said was. The fastest growing regions were Tasman (up 1.7 percent), Auckland (up 1.5 percent) and Canterbury (up 1.1 percent), in the June 2005 year What was not reported was Tasman over the four year period 2001-2005 grew at an average rate of 2.4% per year and Nelson (despite the best efforts of the city council) at 1.6% per year. Stats NZ now think there are 59600 people in the Nelson Urban area (this being Nelson and Richmond). Similar sized cities like Rotorua, Invercargill, and Whangarei, which we overtook about 5 years ago, are being left in our wake as the people pour in over the boarders. Over earlier inter census periods the growth in dwellings was confined totally to rentals with almost nil growth of owner occupied dwellings. There is every reason to believe that this trend has continued since the last census in 2001, perhaps at an even increased rate of change from owner occupied to rentals. This trend is fuelled by declining home ownership affordability and the significant disparity between the costs of renting versus the cost of paying a mortgage.
Taking these trends into account, and assuming the growth continues at the same rate, I predict that by the year 2016 rentals will comprise 50% of all dwellings in our city.
Over the last four years rentals have increased at a whopping compounding rate of 4.9% per year.
Clearly more rentals will be required so there appears to be no good reason to be reducing your portfolio and every reason why you should be increasing it.
Increasing demand for rentals should keep pressure on the rental price levels.
As tenants become a significant proportion of the population they are likely to take a more active roll in the politics of controlling our industry. This political trend is well in evidence in the USA.
As the percentage of rentals reaches saturation point (100%) in some areas of the city significant social changes are going to take place. These might not all be nice and conducive to maintaining an attractive city.
This newsletter has been sponsored by SBS. Proud to be a Building Society not a Registered Bank
When I presented some of these details to the Nelson City Council Urban Growth study some of the councillors indicated that they doubted my figures. The results of the next census in 2006 might come as a surprise to many people. One of the big risks we face is some of the elected officials appear to want to make Nelson so backward boring and unattractive they might succeed in killing the growth we have become accustomed to. We need growth to keep our industry alive.
GLENN’S FUNNY STORIES
By an unsuccessful applicant. “I would not want you to judge us only on our credit rating. We admittedly were 13 months in arrears at one time in our present house but we have almost caught up and have only been three or four weeks in arrears this year. We can most certainly afford more because we have been paying $350 for ages to catch up with our rent.”
By an old lag I took in at the request of the Probation Service. “ I had better pay my rent to you Glenn. I am on parole and if I loose this flat I will be recalled back to jail.” I worked through with the poor old fellow and some of you might be pleased to hear together with a bit of help from WINZ we sorted the rent problem and he had stayed on the outside and in my flat.
By tenants giving notice after only 4 weeks. This place is very damp. Our children have all caught influenza since living here. Funny I think, previous tenants have not had that problem. Then all is revealed when showing new prospects through. The silly tenants had large open aquariums throughout the house bubbling and hissing water vapour everywhere.
NZPIF CONFERENCE
Conference this year was smaller than some years but Nelson PIA still had a good representation. Steve McKnight a master investor from Australia was the key note speaker. Steve has bought up big in Tokoroa and Wanganui. His view was to not follow the herd and look for problems to be solved that you can do something with.
Generally his advice was sound. This is what one attendee thought and wrote. Steve McKnight's talks I enjoyed from the mental, personal and organisational aspects but I thought his advice on actual property acquisition was over-complicating very simple ideas. He tried to suggest working out purchase prices on residential property in the same way we do commercial property (with yields) but this is absurd as home buyers don't care about yield and will generally pay more than an investor anyway.
Effectively, all he was saying was "buy low, sell high".
He also suggested selling IP's that were not returning well, based on market value. Sure, this is great but only worth doing if the investment can be replaced somehow.
Kieran Trass (who spoke at NPIA a few years ago) presentation in the workshops was very good. Like lots of other prophets out there Keiran has predictably figured prices are about to head down.
Our President Darcy was re-elected to the executive of the Federation. Special mention was made concerning the valuable work he had been doing establishing new associations in towns that previously had no PIA’s.
The conference was held at the Napier war memorial conference centre. This is located across the road from the large hotel were we stayed. I could not help thinking what a shame Nelson does not have a good facility like this. It sure is about time we started acting in a manner befitting a city of our size. We all hate paying more local taxes to subsidise these types of facilities but without them we will pay more travelling out of town to attend conferences that could have been held locally.
Next years conference will be held in Wellington.
FREEWEBADVERTSING
A new free service is available to all landlords. This is http://www.findA.co.nz I mentioned this service in my last newsletter. The facility is getting better and better. For a small fee you can have your own virtual web site within the big site. (I think they call it something like that) The number of enquiries as a direct result of the site is growing all the time for me. Come on everyone. It costs nothing and is worth heaps. So members, how come so few Nelson landlords are using it? The more people use facilities like this the easier it will get for us all.
BIG CHANGES AT TENANCY SERVICES
At the conference Nigel Bickle the General Manager announced that they are “improving” the service. His handout indicated that telephone mediations would be held for straightforward disputes. Presumably this means all those applications that involve rent arrears only. Faster and more reliable services will be achieved by centralising in main centres. Probing of what all this means for us indicates that the plan is to close the Marlborough office and in Nelson the public office will close. Mediations for “more complex” cases will still be held locally. Call centres located in Auckland will provide advice and deal with queries about Nelson cases.
Earn yourself $40 by referring your tenants to Mr Rentals for their appliances and gym equipment.
How to create a future for your business.
RSVP to Glenn for the meal please (Ph 03 547771
THE MARKET
As usual the market is a bit hard to define. Most certainly the onset of summer and the emptying out of holiday homes turned into rentals over the winter, is having a positive impact. I recently had a brand new four-bedroom home in Nayland to let. With some trepidation I advertised at $400 and was amazed to instantly get solid enquiries resulting in more than one application and it was let within three days at full asking price, to top rate people. In another case I had to re-let a $300pw property where the tenants had given notice after only four weeks of tenancy. The first time round was hard going yet this time after only a few days got response and good quality applicants were received. The mysterious thing is the other end of the 3 bedroom market has been a little hard going with less enquiries for a $240 than for the $300+ This surely brings into question the validity of media comments about a lack of affordable housing in Nelson. Tenants seem to be keener to have desirable properties than they are to save a few dollars.
NELSON STATISTICS TO CONFUSE AND ALARM YOU
The various newspapers around the country have recently reported on the latest Statistics Department release of population estimates for various areas of New Zealand. Some papers reported that Christchurch had the largest numerical increase; some reported that all of the growth was occurring in Auckland and main metropolitan centres. What Stats actually said was. The fastest growing regions were Tasman (up 1.7 percent), Auckland (up 1.5 percent) and Canterbury (up 1.1 percent), in the June 2005 year What was not reported was Tasman over the four year period 2001-2005 grew at an average rate of 2.4% per year and Nelson (despite the best efforts of the city council) at 1.6% per year. Stats NZ now think there are 59600 people in the Nelson Urban area (this being Nelson and Richmond). Similar sized cities like Rotorua, Invercargill, and Whangarei, which we overtook about 5 years ago, are being left in our wake as the people pour in over the boarders. Over earlier inter census periods the growth in dwellings was confined totally to rentals with almost nil growth of owner occupied dwellings. There is every reason to believe that this trend has continued since the last census in 2001, perhaps at an even increased rate of change from owner occupied to rentals. This trend is fuelled by declining home ownership affordability and the significant disparity between the costs of renting versus the cost of paying a mortgage.
Taking these trends into account, and assuming the growth continues at the same rate, I predict that by the year 2016 rentals will comprise 50% of all dwellings in our city.
Over the last four years rentals have increased at a whopping compounding rate of 4.9% per year.
Clearly more rentals will be required so there appears to be no good reason to be reducing your portfolio and every reason why you should be increasing it.
Increasing demand for rentals should keep pressure on the rental price levels.
As tenants become a significant proportion of the population they are likely to take a more active roll in the politics of controlling our industry. This political trend is well in evidence in the USA.
As the percentage of rentals reaches saturation point (100%) in some areas of the city significant social changes are going to take place. These might not all be nice and conducive to maintaining an attractive city.
This newsletter has been sponsored by SBS. Proud to be a Building Society not a Registered Bank
When I presented some of these details to the Nelson City Council Urban Growth study some of the councillors indicated that they doubted my figures. The results of the next census in 2006 might come as a surprise to many people. One of the big risks we face is some of the elected officials appear to want to make Nelson so backward boring and unattractive they might succeed in killing the growth we have become accustomed to. We need growth to keep our industry alive.
GLENN’S FUNNY STORIES
By an unsuccessful applicant. “I would not want you to judge us only on our credit rating. We admittedly were 13 months in arrears at one time in our present house but we have almost caught up and have only been three or four weeks in arrears this year. We can most certainly afford more because we have been paying $350 for ages to catch up with our rent.”
By an old lag I took in at the request of the Probation Service. “ I had better pay my rent to you Glenn. I am on parole and if I loose this flat I will be recalled back to jail.” I worked through with the poor old fellow and some of you might be pleased to hear together with a bit of help from WINZ we sorted the rent problem and he had stayed on the outside and in my flat.
By tenants giving notice after only 4 weeks. This place is very damp. Our children have all caught influenza since living here. Funny I think, previous tenants have not had that problem. Then all is revealed when showing new prospects through. The silly tenants had large open aquariums throughout the house bubbling and hissing water vapour everywhere.
NZPIF CONFERENCE
Conference this year was smaller than some years but Nelson PIA still had a good representation. Steve McKnight a master investor from Australia was the key note speaker. Steve has bought up big in Tokoroa and Wanganui. His view was to not follow the herd and look for problems to be solved that you can do something with.
Generally his advice was sound. This is what one attendee thought and wrote. Steve McKnight's talks I enjoyed from the mental, personal and organisational aspects but I thought his advice on actual property acquisition was over-complicating very simple ideas. He tried to suggest working out purchase prices on residential property in the same way we do commercial property (with yields) but this is absurd as home buyers don't care about yield and will generally pay more than an investor anyway.
Effectively, all he was saying was "buy low, sell high".
He also suggested selling IP's that were not returning well, based on market value. Sure, this is great but only worth doing if the investment can be replaced somehow.
Kieran Trass (who spoke at NPIA a few years ago) presentation in the workshops was very good. Like lots of other prophets out there Keiran has predictably figured prices are about to head down.
Our President Darcy was re-elected to the executive of the Federation. Special mention was made concerning the valuable work he had been doing establishing new associations in towns that previously had no PIA’s.
The conference was held at the Napier war memorial conference centre. This is located across the road from the large hotel were we stayed. I could not help thinking what a shame Nelson does not have a good facility like this. It sure is about time we started acting in a manner befitting a city of our size. We all hate paying more local taxes to subsidise these types of facilities but without them we will pay more travelling out of town to attend conferences that could have been held locally.
Next years conference will be held in Wellington.
FREEWEBADVERTSING
A new free service is available to all landlords. This is http://www.findA.co.nz I mentioned this service in my last newsletter. The facility is getting better and better. For a small fee you can have your own virtual web site within the big site. (I think they call it something like that) The number of enquiries as a direct result of the site is growing all the time for me. Come on everyone. It costs nothing and is worth heaps. So members, how come so few Nelson landlords are using it? The more people use facilities like this the easier it will get for us all.
BIG CHANGES AT TENANCY SERVICES
At the conference Nigel Bickle the General Manager announced that they are “improving” the service. His handout indicated that telephone mediations would be held for straightforward disputes. Presumably this means all those applications that involve rent arrears only. Faster and more reliable services will be achieved by centralising in main centres. Probing of what all this means for us indicates that the plan is to close the Marlborough office and in Nelson the public office will close. Mediations for “more complex” cases will still be held locally. Call centres located in Auckland will provide advice and deal with queries about Nelson cases.
Earn yourself $40 by referring your tenants to Mr Rentals for their appliances and gym equipment.
Disclaimer. Anyone stupid enough to act on advice or comments in this newsletter without thinking for themselves deserves to suffer the consequences.