First Investment Property

[wildwest]

Hi

My first Investment property is 8 weeks away form finishing, and I'd like advice on whether I should manage the tenant, or choose a property management company?

I am in the process of organising rent insurance, and am leaning towards looking after the property myself rather than expending up to 8% for property management.

I'd appreciate advice in this regard. Thanks

[RentMaster]

Hi Wildwest.

I suggest that if you live close to the property, and it is not a property in an undesirable area, then managing the property yourself is pretty easy.

Just make sure you get a good tenant.

But it does depend on whether you feel up to it. If it is going to cause you a lot of concern and make it hard to sleep at night, then let someone else do it for you. Maybe give it a go for a few months, and if you dont want to continue doing it, then hand it over to someone else.

My experience is that it takes next to no time at all (once the tenant is in place) and is very easy.

[toby]

Look after it yourself.
I personally think rent insurance is dead money. I'm going to make a sweeping generalisation here which may offend some - but here goes.
Rent insurance is for those people who do not have the ability to effectively choose good tenants and do not have the skills to manage the people and property.
I have no idea what it costs but I do know that in most circumstances you are better off paying a Tenant to leave a property than trying to claim losses.
As for things happening to your property and you having to put youir Tenants up. Tower does a Lanlords package which covers that as part of normal house insurance.
My two cents worth.

[wildwest]

Thanks for your advice. I agree with you.
Our investment property is only 10 mins from home in a good area, and I'm happy to manage the process.

I did sign up for rent insurance, as an annual premium of less than one weeks rent, seemed to be a good idea to minimise any potential risk.

The tricky part will be choosing the right tenant, and I tend to be a bit of a soft touch and believe people when sometimes they are dishonest.

Any suggestions for the right magazine or website to place advertisements for tenants ?

I plan on asking for 2 references.

[drelly]

Two things...

Get contact details for the landlord before his current one. Sometimes landlords are so keen to see the back of them that they will say they're wonderful when they're not.

Do a credit check with Baycorp. It only costs a few dollars and will show you if anyone has registered the tenant for any debts. You can join Baycorp for free and avoid the usual $195(?) fee if you're a member of an NZPIF affiliated investor's association.

[Propoholic]

Hi everyone, fantastic website and forum. Looking forward to the Propertytalk meeting on Saturday night!

Wildwest
I am a great believer in managing your own properties - I have been managing my own for twenty years without any major problems. Even if you feel management might not be one of your strong points I would be confident that you can be a better property manager than the average real estate agents letting office. It is a business and you will need to be 'firm and fair' as against being a soft touch(your description!). You will also gain a lot of personal development by perservering with your own management.

For letting I have always found that running open homes is the most successful, say 12.00 - 1.00pm on Saturday and Sunday. It creates more urgency amongst prospective tenants when they can see and hear the other applicants.

Advertise in 'Flats/Houses to Let' column in local newspapers and put a 'To Let' sign on street. I have been finding the sign advertising to be as effective as newspapers, it is also very targetted advertising drawing in prospective tenants looking in that direct vicinity. The NZ Property Investors Federation sells their own For Let signs @ $30.00 each (inc postage), for ordering contact Waikato Property Investors Assn, Brian Hancock, ph 07 858 0799.

[fudosan]

Hi Propoholic, welcome to the forum. I find perseverance also important in property investing in general, as we make mistake while learning.

put a 'To Let' sign on street.

I've heard that putting a sign up invites burglary. Have you had such problem?

[Propoholic]

Hi Fudosan

I havent ever had any burglary problems during an advertising period. Most friends /colleagues are also using signs - no problems to date!

I do tend to start advertising & running open homes as soon as tenant issues 21 days notice. Properties are usually let during this period.

[Julian]

As for vetting tenants, when you have whittled down the wheat from the chaff and are say left with about three prospects a good tactic is to ask them where they are currently living and ask if you both can go round to their place right now. If they refuse - you refuse. If you go round and it is obvious they are pigs again you refuse. If you go round and it appears they are pretty reasonable tenants in their current abode chances are they will be for you as well.
Sadly, this is not my idea, but was a tactic used by a very successful residential PI that I met.
Julian

[wildwest]

Thanks so much for all your help. I feel so much more confident about my decision to manage the property myself, and I will follow all your advice.

Thanks again. I'm looking forward to meeting eveyone on Saturday night.

[muppet]

Hi Wildwest

There are two books available in NZ that deal with landlording. They can be bought second hand off the Trademe auction site.

The books are:
Landlording in NZ by Frank Saxton
The NZ Landlord's Handbook by Frank Newman and Suzi Biloshi

And there is also
Working Landlord, Happy Tenants by Roger Clist

Regards