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NELSON PROPERTY INVESTORS ASSOCIATION
JULY 2004 NEWSLETTER
PO Box 198 Nelson [email protected]
Our next meeting is being held at the Ocean Lodge Muritai St Thursday 22July. The meeting starts at 7.30pm with the usual optional meal at 6pm. Mayor Paul Matheson and Councilor Mike Cotton will be talking on Nelson's growth, where we are going to fit all the new houses and industries in and what the council would like property investors to do re providing these houses for new people. If your business plans are in synchronisation with the Nelson City Council then you are half way there to succeeding. Come and ask your own property related questions from these experienced competent hard working representatives.
RSVP to Glenn for the meal please (Ph 03 547771
THE MARKET
The downs of the winter that some of us remember from another age last century (the mid 90’s) have returned with a vengeance. Some properties are proving a challenge to let at the moment. Prices have retreated for some 3-bedroom properties. The 4 bedroom properties especially those available for groups are still holding up. Two bedroom flats are still in good demand and seem for the most part to be holding up in price. The overpriced exceptions that most of shook our heads at and wondered why someone would pay above market rates are really coming unstuck. With plenty of supply, tenants (even the urgent cases) are now afforded the luxury of choice and are doing just that. If your property is correctly priced, reasonably clean, and its facilities work then there is still sufficient demand and you should be able to replace that departing tenant. If it is still sitting empty after a few weeks then the most likely cause is price.
POWER WOES.
My power does not work wails Mrs ingoing tenant. Have you paid the power company, I say? Well no, but I have rung Tenancy Services and they say it is your responsibility to get the power on. Well I say it was working yesterday when your tenancy started. Today I noticed that the power company has pulled the fuses and put their maker tag on the board. So as far as I am concerned there is power to the site. Services such as power are the responsibility of the tenant. Now Contact Energy has confirmed that they have recently commenced disconnecting the power two to three weeks after a final reading has been done. They do this as precaution against fire. They also advise that when a reconnection is scheduled a person over 18 years old must be present in order to ensure no appliances are turned on.
The cost is normally $50 for the reconnection and if on Saturday it is $90.
So I am not too sure how this story is going to end. She says she can not afford to move in until WINZ gives her a food grant in four days time, so I guess neither will she be able to afford the $50 reconnection cost plus any other charges such as a bond that they may require.
REDIRECTION OF RENTS BY WINZ
My March newsletter on this subject resulted in a letter from WINZ defending their position. Issues related to the processes associated with achieving direct payment of rents by WINZ to landlords have been the subject of a meeting with the Regional Operations Manager of WINZ. Our position and problems that some of our members have experienced were put and sympathetically received.
A number of issues were identified and an undertaking given that they would be addressed. Members are reminded the following should happen.
When an application to the tribunal is made that is likely to place the tenancy at risk the tenant should seek and be given an emergency appointment within 24 hours by WINZ. At this meeting they need to be given a written undertaking as to the extra assistance that can be given. This may include a redirection of benefits to pay the rent if the landlord and tenant agree. This written information must be brought to the tribunal mediation meeting along with the WINZ form V19 to be signed by the landlord at the mediation meeting.
After the mediation meeting the tenant has to return the completed V19 form to WINZ and WINZ undertakes to write to the landlord advising when that payment will start up. Note these payments normally take two to three weeks to start up so whilst waiting for them to start the tenant needs to keep paying the landlord directly. This detail can be included in the mediators order.
When for any reasons at all, the beneficiaries / tenants payments are to stop WINZ will write to the landlord advising them of this.
This newsletter has been sponsored by SBS. Proud to be a Building Society not a Registered Bank
Landlords need to understand benefits can stop for a range of reasons such as wage abatements or failure to supply required documentation. When this occurs the landlord should arrange for the tenant to request the payments to be increased until the arrears have been caught up.
There is no requirement for supporting social agencies such as Family Start, Neighbourhood Connections, or Mental Heath social workers to give approval for this facility. However they have the respect of WINZ and can smooth the process significantly helping and advocating for the tenant.
COURT COLLECTIONS START RAKING IT IN
I recently attended a consultation meeting in Christchurch where the Ministry of Justice presented various alternatives re raising the fees they charge. Full frank discussions in a friendly atmosphere were undertaken. How’s this for some suggestions on fee increases that were put to us.
Distress Warrants for evictions by court bailiffs Current $55 Proposed new fee $327
Order for examination to seek payment of court awarded debts. Current $90 Proposed new fee $255.
URGENT MESSAGE FROM D.
Glenn I want you to manage my investment property in Greymouth. I have these terrible tenants down there and they keep missing their rent. I think I will give them notice and say my son is going to live there D says. Or perhaps I should just sell it. But surely D there must be plenty of property managers in Greymouth I say. Have you thought of looking in the yellow pages? Oh no they are all terrible D says, they do not check if people have paid, she says. Well D even the worst property manager in Greymouth is going to be better than you in Nelson. We know from first hand failures of our own. I used to own a property in Christchurch and we found that it was really impossible to manage from here. You must get yourself a local property manager. If for your own reasons you do not want to use local property mangers then for goodness sake do not buy a property outside your own town.
Now this story sort of confirms my suspicions that a number of investors are buying what they perceive to be high return cash positive properties in places like Hell and then are wondering why the tenants they get all seem to be from Hell. If you think that Hell is such a good place to buy in why not live there yourself.
FIXED TERM TENANCIES
With the market moving back into the tenant’s court a few people are starting to ask me if I think having a fixed term tenancy is a good idea. Now it does not matter if you are socialist or a right wing capitalist the playing field we work on is never level. I am sure you would all agree that the goal posts are a little higher at present than they were this time 12 months ago. Some landlords believe that having a fixed term tenancy for say 12 months will be to their advantage in that it will save them money by holding the tenant in place. They over look the issue that fixed term tenancies are a two edged sword. During periods when properties are selling well and rents heading up they can be attractive to tenants in that the tenant has assurance that their tenancy will not be terminated or increased in rent. However if a property with a fixed term tenancy is sold the tenant in place is restricted from getting out early as soon as a replacement property comes available. Never the less in times like at present when things are heading down the smart tenants can see that a fixed term tenancy is definitely not in their favour because they will not be able to take advantage of any market opportunities that might present themselves.
In my experience the best tenancy deals are where both landlord and tenant win.
If you have a low quality tenancy having a fixed term security blanket will not save you from the tenant moving out. Going to the tribunal is always an option but then you have to collect. The net effect of sticking to a fixed term tenancy in today’s market will generally reduce the number of applicants; a reduction in customers always translates into reduced returns. I have always found that top quality tenants with fixed terms, who want to break, will stick it out as a matter of honour. For those that must break the RTA has a few clauses that can be used.
Section 49 Mitigation of damage or loss. Where any party to a tenancy agreement breaches any of the provisions of the agreement or the Act, the other party shall take all reasonable steps to limit the damage or loss arising from that breach, in accordance with the rules of law relating to mitigation of loss or damage upon breach of contract.
Section 66 provides for either party to apply to the tribunal to break a fixed term tenancy and award reasonable compensation to the other party any loss or damage to the other party which would result from the reduction in the term of the tenancy.
Section 44 (5) On giving consent to any assignment, subletting, or parting with possession of the premises by the tenant, the landlord shall be entitled to recover from the tenant any expenses reasonably incurred by the landlord in respect to the proposed transaction.
Generally I do a “deal” with the tenant when they want to break asking for say the cost of letting the property again. Interestingly enough this clause / action is prohibited by Section 17 of the act that refers to charging of a fee to vary / assign / sublet the agreement. But then to just confuse you section 17 (4) (b) states that the prohibition does not apply to any sum that the landlord is authorised by any other provision of the Act to require or receive.
How’s that for a closed circle of confusing permissions and prohibitions. No wonder the issue of broken fixed term tenancies can so often be the subject of bitter disputes in tribunal. Mr. Bumble said, 'the law is an ass... more like a dog I would say.
The following three paragraphs have been borrowed with thanks from The Greater Bristol Property Owners Association USA. I will leave it to you to do your own translation into Kiwi culture and language.
MR LANDLORD TIPS ON MANAGEMENT
KNOCK AND TALK
After the prospective resident has seen our rental home, submitted their application (which includes a signed authorization), the first thing we do is verify employment by sending a Fax to their current employer. If the employer doesn't have a fax in today's environment does that raise any questions for you? It should. If the employment checks out, it is time for the landlord version of the "Knock and Talk". I need to see both outside and inside their current residence. Bums are bums and pigs are pigs. They won't change their ways just by moving into your clean new unit with fresh paint and carpets. When you go to see the prospect's current residence, don't demand entrance and don't give too much notice. Be polite and professional. If at all possible take a witness with you. Explain that you have a couple of questions about their application and ask if you can you come inside and review them together?
Top Ten Things to look for when checking out the current residence:
1. Will applicant not hesitate to open the door, or only opens it safety chain wide blocking your view?
2. Are there more residents in current dwelling than listed on the application?
3. Are the walls moving? Until you have seen a cockroach farm you won't know what I am saying.
4. Are there any unlicensed vehicles, vehicles up on blocks or other obvious problems?
5. Is there trash or garbage in yard or any evidence of current trash service?
6. Are the utilities on?
7. What do you smell: lemon fresh pine, garbage or a meth lab?
8. Is there evidence of housekeeping?
9. Is the problem housekeeping (residence), or maintenance (landlord)?
10. Has the house been hit by a cyclone or Mr Clean?
Now do you still want to rent to them? If so, continue with your normal screening process. If not, do you have written screening criteria on file at
your office. Do not simply send applicants some vague letter about another more qualified applicant. Write up your screening qualifications before taking
any other action so that if desired, you can give a clear and objective reason for non-acceptance.
HAVE ALL APPLICANTS PREVIEW THE RENTAL
If there are going to be two or more people (married, room mates, etc.) sharing a house, DO NOT let just one of them preview and pick the house. We have let this happen approximately half a dozen times now, and it has never worked out. The second person who did not preview the house, always dislikes something and spends all their time complaining. We now insist that both parties previewing the property together and then there are no complaints. All of the above tips are shared by mrlandlord.com rental owners and reprinted with permission from MR. LANDLORD
newsletter. Visit their informative web site at www.mrlandlord.com to register.
COMMENT ON REPLACEMENT WINDOWS
Last year I replaced all the windows in my house with those expensive double-pane energy efficient kind. But this week I got a call from the contractor complaining that his work had been completed a whole year ago and I had yet to pay for them. Boy oh boy, did we go around! Just because I'm blonde doesn't mean that I am automatically stupid. So, I proceeded to tell him just what his fast talking sales guy had told me last year... That in one year the windows would pay for themselves. There was silence on the other end of the line so I just hung up and I haven't heard back.
Guess I must have won that silly argument.
ANNUAL SUBSCRIPTIONS
Ahoy there last warning for payment of subs. Anyone that has not paid by the end of July will have their KPI and Capital Property Investor magazine stopped. Please hurry along there now. I am waiting on your cheques.
For those of you who have difficulty remembering if you have paid or not, anyone who gets another invoice included in your snail mail newsletter mail out still needs to pay.
The email version will have the invoice included for everyone paid or not. My computer skills do not extend to sorting for the email version. Everyone who has paid will get a snail mail version with the Capital Property investor magazine included. Anyone who does not understand this is elligable for a house lot of new windows and a bottle of hair dye.
Disclaimer. Anyone stupid enough to act on advice or comments in this newsletter without thinking for themselves deserves to suffer the consequences.
JULY 2004 NEWSLETTER
PO Box 198 Nelson [email protected]
Our next meeting is being held at the Ocean Lodge Muritai St Thursday 22July. The meeting starts at 7.30pm with the usual optional meal at 6pm. Mayor Paul Matheson and Councilor Mike Cotton will be talking on Nelson's growth, where we are going to fit all the new houses and industries in and what the council would like property investors to do re providing these houses for new people. If your business plans are in synchronisation with the Nelson City Council then you are half way there to succeeding. Come and ask your own property related questions from these experienced competent hard working representatives.
RSVP to Glenn for the meal please (Ph 03 547771
THE MARKET
The downs of the winter that some of us remember from another age last century (the mid 90’s) have returned with a vengeance. Some properties are proving a challenge to let at the moment. Prices have retreated for some 3-bedroom properties. The 4 bedroom properties especially those available for groups are still holding up. Two bedroom flats are still in good demand and seem for the most part to be holding up in price. The overpriced exceptions that most of shook our heads at and wondered why someone would pay above market rates are really coming unstuck. With plenty of supply, tenants (even the urgent cases) are now afforded the luxury of choice and are doing just that. If your property is correctly priced, reasonably clean, and its facilities work then there is still sufficient demand and you should be able to replace that departing tenant. If it is still sitting empty after a few weeks then the most likely cause is price.
POWER WOES.
My power does not work wails Mrs ingoing tenant. Have you paid the power company, I say? Well no, but I have rung Tenancy Services and they say it is your responsibility to get the power on. Well I say it was working yesterday when your tenancy started. Today I noticed that the power company has pulled the fuses and put their maker tag on the board. So as far as I am concerned there is power to the site. Services such as power are the responsibility of the tenant. Now Contact Energy has confirmed that they have recently commenced disconnecting the power two to three weeks after a final reading has been done. They do this as precaution against fire. They also advise that when a reconnection is scheduled a person over 18 years old must be present in order to ensure no appliances are turned on.
The cost is normally $50 for the reconnection and if on Saturday it is $90.
So I am not too sure how this story is going to end. She says she can not afford to move in until WINZ gives her a food grant in four days time, so I guess neither will she be able to afford the $50 reconnection cost plus any other charges such as a bond that they may require.
REDIRECTION OF RENTS BY WINZ
My March newsletter on this subject resulted in a letter from WINZ defending their position. Issues related to the processes associated with achieving direct payment of rents by WINZ to landlords have been the subject of a meeting with the Regional Operations Manager of WINZ. Our position and problems that some of our members have experienced were put and sympathetically received.
A number of issues were identified and an undertaking given that they would be addressed. Members are reminded the following should happen.
When an application to the tribunal is made that is likely to place the tenancy at risk the tenant should seek and be given an emergency appointment within 24 hours by WINZ. At this meeting they need to be given a written undertaking as to the extra assistance that can be given. This may include a redirection of benefits to pay the rent if the landlord and tenant agree. This written information must be brought to the tribunal mediation meeting along with the WINZ form V19 to be signed by the landlord at the mediation meeting.
After the mediation meeting the tenant has to return the completed V19 form to WINZ and WINZ undertakes to write to the landlord advising when that payment will start up. Note these payments normally take two to three weeks to start up so whilst waiting for them to start the tenant needs to keep paying the landlord directly. This detail can be included in the mediators order.
When for any reasons at all, the beneficiaries / tenants payments are to stop WINZ will write to the landlord advising them of this.
This newsletter has been sponsored by SBS. Proud to be a Building Society not a Registered Bank
Landlords need to understand benefits can stop for a range of reasons such as wage abatements or failure to supply required documentation. When this occurs the landlord should arrange for the tenant to request the payments to be increased until the arrears have been caught up.
There is no requirement for supporting social agencies such as Family Start, Neighbourhood Connections, or Mental Heath social workers to give approval for this facility. However they have the respect of WINZ and can smooth the process significantly helping and advocating for the tenant.
COURT COLLECTIONS START RAKING IT IN
I recently attended a consultation meeting in Christchurch where the Ministry of Justice presented various alternatives re raising the fees they charge. Full frank discussions in a friendly atmosphere were undertaken. How’s this for some suggestions on fee increases that were put to us.
Distress Warrants for evictions by court bailiffs Current $55 Proposed new fee $327
Order for examination to seek payment of court awarded debts. Current $90 Proposed new fee $255.
URGENT MESSAGE FROM D.
Glenn I want you to manage my investment property in Greymouth. I have these terrible tenants down there and they keep missing their rent. I think I will give them notice and say my son is going to live there D says. Or perhaps I should just sell it. But surely D there must be plenty of property managers in Greymouth I say. Have you thought of looking in the yellow pages? Oh no they are all terrible D says, they do not check if people have paid, she says. Well D even the worst property manager in Greymouth is going to be better than you in Nelson. We know from first hand failures of our own. I used to own a property in Christchurch and we found that it was really impossible to manage from here. You must get yourself a local property manager. If for your own reasons you do not want to use local property mangers then for goodness sake do not buy a property outside your own town.
Now this story sort of confirms my suspicions that a number of investors are buying what they perceive to be high return cash positive properties in places like Hell and then are wondering why the tenants they get all seem to be from Hell. If you think that Hell is such a good place to buy in why not live there yourself.
FIXED TERM TENANCIES
With the market moving back into the tenant’s court a few people are starting to ask me if I think having a fixed term tenancy is a good idea. Now it does not matter if you are socialist or a right wing capitalist the playing field we work on is never level. I am sure you would all agree that the goal posts are a little higher at present than they were this time 12 months ago. Some landlords believe that having a fixed term tenancy for say 12 months will be to their advantage in that it will save them money by holding the tenant in place. They over look the issue that fixed term tenancies are a two edged sword. During periods when properties are selling well and rents heading up they can be attractive to tenants in that the tenant has assurance that their tenancy will not be terminated or increased in rent. However if a property with a fixed term tenancy is sold the tenant in place is restricted from getting out early as soon as a replacement property comes available. Never the less in times like at present when things are heading down the smart tenants can see that a fixed term tenancy is definitely not in their favour because they will not be able to take advantage of any market opportunities that might present themselves.
In my experience the best tenancy deals are where both landlord and tenant win.
If you have a low quality tenancy having a fixed term security blanket will not save you from the tenant moving out. Going to the tribunal is always an option but then you have to collect. The net effect of sticking to a fixed term tenancy in today’s market will generally reduce the number of applicants; a reduction in customers always translates into reduced returns. I have always found that top quality tenants with fixed terms, who want to break, will stick it out as a matter of honour. For those that must break the RTA has a few clauses that can be used.
Section 49 Mitigation of damage or loss. Where any party to a tenancy agreement breaches any of the provisions of the agreement or the Act, the other party shall take all reasonable steps to limit the damage or loss arising from that breach, in accordance with the rules of law relating to mitigation of loss or damage upon breach of contract.
Section 66 provides for either party to apply to the tribunal to break a fixed term tenancy and award reasonable compensation to the other party any loss or damage to the other party which would result from the reduction in the term of the tenancy.
Section 44 (5) On giving consent to any assignment, subletting, or parting with possession of the premises by the tenant, the landlord shall be entitled to recover from the tenant any expenses reasonably incurred by the landlord in respect to the proposed transaction.
Generally I do a “deal” with the tenant when they want to break asking for say the cost of letting the property again. Interestingly enough this clause / action is prohibited by Section 17 of the act that refers to charging of a fee to vary / assign / sublet the agreement. But then to just confuse you section 17 (4) (b) states that the prohibition does not apply to any sum that the landlord is authorised by any other provision of the Act to require or receive.
How’s that for a closed circle of confusing permissions and prohibitions. No wonder the issue of broken fixed term tenancies can so often be the subject of bitter disputes in tribunal. Mr. Bumble said, 'the law is an ass... more like a dog I would say.
The following three paragraphs have been borrowed with thanks from The Greater Bristol Property Owners Association USA. I will leave it to you to do your own translation into Kiwi culture and language.
MR LANDLORD TIPS ON MANAGEMENT
KNOCK AND TALK
After the prospective resident has seen our rental home, submitted their application (which includes a signed authorization), the first thing we do is verify employment by sending a Fax to their current employer. If the employer doesn't have a fax in today's environment does that raise any questions for you? It should. If the employment checks out, it is time for the landlord version of the "Knock and Talk". I need to see both outside and inside their current residence. Bums are bums and pigs are pigs. They won't change their ways just by moving into your clean new unit with fresh paint and carpets. When you go to see the prospect's current residence, don't demand entrance and don't give too much notice. Be polite and professional. If at all possible take a witness with you. Explain that you have a couple of questions about their application and ask if you can you come inside and review them together?
Top Ten Things to look for when checking out the current residence:
1. Will applicant not hesitate to open the door, or only opens it safety chain wide blocking your view?
2. Are there more residents in current dwelling than listed on the application?
3. Are the walls moving? Until you have seen a cockroach farm you won't know what I am saying.
4. Are there any unlicensed vehicles, vehicles up on blocks or other obvious problems?
5. Is there trash or garbage in yard or any evidence of current trash service?
6. Are the utilities on?
7. What do you smell: lemon fresh pine, garbage or a meth lab?
8. Is there evidence of housekeeping?
9. Is the problem housekeeping (residence), or maintenance (landlord)?
10. Has the house been hit by a cyclone or Mr Clean?
Now do you still want to rent to them? If so, continue with your normal screening process. If not, do you have written screening criteria on file at
your office. Do not simply send applicants some vague letter about another more qualified applicant. Write up your screening qualifications before taking
any other action so that if desired, you can give a clear and objective reason for non-acceptance.
HAVE ALL APPLICANTS PREVIEW THE RENTAL
If there are going to be two or more people (married, room mates, etc.) sharing a house, DO NOT let just one of them preview and pick the house. We have let this happen approximately half a dozen times now, and it has never worked out. The second person who did not preview the house, always dislikes something and spends all their time complaining. We now insist that both parties previewing the property together and then there are no complaints. All of the above tips are shared by mrlandlord.com rental owners and reprinted with permission from MR. LANDLORD
newsletter. Visit their informative web site at www.mrlandlord.com to register.
COMMENT ON REPLACEMENT WINDOWS
Last year I replaced all the windows in my house with those expensive double-pane energy efficient kind. But this week I got a call from the contractor complaining that his work had been completed a whole year ago and I had yet to pay for them. Boy oh boy, did we go around! Just because I'm blonde doesn't mean that I am automatically stupid. So, I proceeded to tell him just what his fast talking sales guy had told me last year... That in one year the windows would pay for themselves. There was silence on the other end of the line so I just hung up and I haven't heard back.
Guess I must have won that silly argument.
ANNUAL SUBSCRIPTIONS
Ahoy there last warning for payment of subs. Anyone that has not paid by the end of July will have their KPI and Capital Property Investor magazine stopped. Please hurry along there now. I am waiting on your cheques.
For those of you who have difficulty remembering if you have paid or not, anyone who gets another invoice included in your snail mail newsletter mail out still needs to pay.
The email version will have the invoice included for everyone paid or not. My computer skills do not extend to sorting for the email version. Everyone who has paid will get a snail mail version with the Capital Property investor magazine included. Anyone who does not understand this is elligable for a house lot of new windows and a bottle of hair dye.
Disclaimer. Anyone stupid enough to act on advice or comments in this newsletter without thinking for themselves deserves to suffer the consequences.