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How do you look after a property in another city?

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  • How do you look after a property in another city?

    Newbie City--How do you look after a property in another city?What do the tenants do when they want something and how do you know your property is OK without spending a lot of money having someone else look after it?

  • #2
    I live in Wanganui...

    I have properties in Papamoa (five hours away) I have properties in Hamilton (about four hours away).

    I use property managers.....

    Well that was easy...
    Counter cyclic means always swimming against the tide

    Manawatu Property Investors' Association

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    • #3
      Hi GW

      I use property managers in Napier, Manuwera and in Tokoroa.

      How much the PM can spend on repairs is usually written into their contract with you.

      Regards
      "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

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      • #4
        How much do PMs cost? How are they paid?

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        • #5
          Hi GE

          Where are you based?

          Many PMs are based with Real Estate Agencies.

          Cost is usually 8-10% +GST of the weekly rent.

          Regards
          "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

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          • #6
            I'm in Auckland but looks like I might have to buy a 1 bedroom investment property in some other city.
            Wow they charge a lot.!

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            • #7
              We have an IP in Manurewa earning $270pw and our PM charges just over $80 per mth (7%), plus GST, and inspection charge of $35 every 6mths which we are very happy to part with as we are NZers based in Melbourne and we don't want to be getting on a plane to sort out any problems. We have been with the same PM for 6 yrs, absolutely no vacancy (the same tenant the whole time) and the only occasional hiccups are maintenance issues. Not bad eh? Although I must admit the rent would definitely be considered reasonable and has just been increased in the last month.

              Sapphire

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              • #8
                Hi
                Buy a better quality IP - ie. Brick or simialr low maintenance on an easy care section, Have it completely serviced when you take possession - that is have an electrician, plumber and builder go through and take care of anything that could be a problem in the near future - taps, lightswitches, cupboard doors, latches etc. It costs very little to have all these things done in one swoop. For example it is fairly easy to tell when some light switches aren't going to last a year. Have all trees etc cut right back ( or down) if they are potential gutter cloggers, drains checked and cleaned out.

                Ask these tradespeople to be your emergency contact. Sole operators are usually better as they get to know you and the house. My experience of major trade companies is their workers are slow, not really interested and even go away to see a mate in your time.

                Supply their numbers to your tenants for emergencies only when they are unable to contact you. Hunt round and find a good PM who will do casual letting for you - usually the company you bought the property through - They should be keen because if they do a good job and put good tenants in, some time in the future when your property returns are much higher, you may just consider them managing it for you.

                We have 3 out of town properties we do this way and so far it has worked well and when there is a vacancy, we allow a few days between tenants to once again do a thorough check.

                Also contact a reputable gardener who will mow the lawns etc should you be empty for more than a week or so. Saves on time and petrol and possibly accomodation.

                It's really all about being organised.

                Cheers

                Phil

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                • #9
                  Originally posted by gingerwoman
                  Wow they charge a lot.!
                  It may appear that way. However I have found that a good PM who considers that you are the client and not the tenant will tend to look after your interests more than that of the tenants. Quoting my Wanganui guy" Tenants come and go we can always replace them but when a Property owner goes it's not so easy... " A good attitude I suggest...

                  In some cases you are right. I'm about to sack one of my PM's now. He thought I was an idiot and was treating me as if I was a cash cow. He may be right about the idiot part .

                  If you elect to go the PM route get a copy of the contract and look at all of the charges that they will be foisting onto you. For example, I object to paying for mileage when they are showing prospective tenants through. Isn't this one of the things that letting fees cover. Paying for disbursements can be a bone of contention as well. Especially if he decides to pass the cost of the cheque onto you. I prefer to pay my own invoices.

                  Another thing is to interview them as if they are applying for a position within your company. After all they are aren't they.
                  What can they bring to your comnpany that their competitors can not? Do you like this person? If you don't like them when they make a decision that you don't like you could be far harder on them than perhaps is really necessary.

                  The range of charges seems to be between 7 - 9% plus GST. This of course is tax deductible. So in the end it isn't that expensive and you can use your valuable time more productively. Who wants the hassles of leaky taps, broken down pipes, tenancy tribunal hearings or other whinges from people who think the world owes them a living??? (Sorry Glenn no offence mate).

                  Finally quoting (or is it misquoting) the great Orion "People tend to under value their time. They would rather drive for several hours and arrive tired than catch a plane and arrive fresh and ready to go. Use your time more wisely on things that matter more"
                  Counter cyclic means always swimming against the tide

                  Manawatu Property Investors' Association

                  Comment


                  • #10
                    People tend to under value their time. They would rather drive for several hours and arrive tired ... Use your time more wisely on things that matter more
                    I agree entirely. This is one of the reasons we decided to use a PM. Because we currently live in Melbourne, it just doesn't make sense to try and manage it ourselves. We don't have to get on a plane when something major needs sorting out. The total cost for the PM is around $1500 (including GST) per year, which is barely enough to cover two trips from Melb to Auck, staying somewhere, hiring a car, etc.

                    I guess we have been very lucky that we haven't had any vacancies in 6 years, but it also gives us peace of mind that there is someone local whose job it is to make sure everthing is sorted out, maintenance issues attended to, regular inspections, rent not missed, etc. Also, I'm a bit of a softie and I find it easier to keep things in perspective by dealing through a PM. I prefer not to have personal contact with tenants. We've had 3 PMs over the 6 yrs, all with the same agency, and we have had absolutely no problems at all. We get regular monthly statements and occasional emails whenever a maintenance issue needs urgent attention or is likely to cost more than the agent's limit.

                    We're in the process of looking at buying a 2nd IP and will do the same again, although if it is in another area we will obviously have a different agency/PM.

                    Buy a better quality IP - ie. Brick or similar low maintenance on an easy care section, Have it completely serviced when you take possession
                    I also agree with the brick or low maintenance idea. They can cost a bit more to buy initially, but ongoing maintenance is less, ie. no exterior painting, etc. If you buy near where you live, look for one that only needs minor improvement such as internal paint, gardens tidied, etc.

                    Start off small, at the cheaper end of the market, or with a 2brm unit maybe.

                    Sapphire

                    Comment


                    • #11
                      Quote:
                      Buy a better quality IP - ie. Brick or similar low maintenance on an easy care section, Have it completely serviced when you take possession


                      I also agree with the brick or low maintenance idea. They can cost a bit more to buy initially, but ongoing maintenance is less, ie. no exterior painting, etc. If you buy near where you live, look for one that only needs minor improvement such as internal paint, gardens tidied, etc.

                      Start off small, at the cheaper end of the market, or with a 2brm unit maybe.

                      Totally agree with the above! The above phillosophy has far reaching (positive!) implications for your tenant management (tenant quality & management time) and medium/long term maintenance costs.

                      Comes down to which sector of the market you choose to operate in, the balance between higher yielding & lower yielding areas??

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                      • #12
                        If you are thinking about buying something that needs cosmetic improvement do it as quickly as possible (say, no longer than a month to complete) because you will have mortgage payments to meet, with no rent coming in while you are working on it. You can then do some sums and decide whether it's better to keep it and rent it out or whether it's more advantageous to sell it and use the proft to give you a better chance with the next one. If you do decide to sell it, don't forget to calculate all the costs involved, ie. agent's fees, legal costs, etc.

                        If we were currently living in NZ, this is what I would be doing for my day job (ie. part time, school hours) while hubby stayed earning a salary until we got properly established. I think there are legal limits to how many properties you can buy and sell in 12 months before you are considered a 'trader', but it would certainly maximise the starting capital.

                        Sapphire

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