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  1. #1
    Join Date
    Jun 2005
    Location
    Nelson NZ
    Posts
    3,863

    Default Nelson PIA April meeting and newsletter

    NELSON PROPERTY INVESTORS ASSOCIATION
    FEBRUARY 2007 NEWSLETTER
    PO Box 198 Nelson [email protected]
    Our second meeting of the year is being held at the Ocean Lodge Muritai St on THURSDAY 12 April. FOUR STEPPING STONES INTO INVESTMENT. A panel of local expert speakers will speak on LOANS, ADDING VALUE, FINDING A TENANT, and MANAGING THE TENANCY. This is an interactive night with plenty of opportunity for questions, and learning from others point of view. As well as our normal meeting we will squeeze in the AGM. Normally our AGM’s take about 10 minutes. The meeting proper commences at 7.30 pm with the ever popular meal at 6pm when you will have the opportunity to chat to other investors. RSVP to Glenn for the meal please (Ph 03 547771 or better still email me.







    THE MARKET
    It does not seem very long since I was hammering away on the keyboard about this subject. All is well with good demand for a range of properties. I have found that some applicant’s expectations appear to be higher. It is a while since the Accommodation Supplement (AS) was increased. A recent case of mine might give you some idea of how the AS is impacting on the market. A couple with a baby is currently renting a small flat off me for $190 per week. They wanted to move to a bigger property with plenty of garden space. One came in at $230. By the time the AS was increased it cost them an extra $12 in rent. They are convinced they will save this much in heating and vegetables. However other tenants who are working do not get the same AS. I think the rents for traditionally cheaper properties that house those tenants on AS are starting to creep up and impacting on the rent levels for the better properties. At the same time the really good properties that are suitable for British new arrivals are not sitting empty for long and so there is downward market pressure from this end of the spectrum.
    Meanwhile the wanna bees are buzzing again. I recently attended the first open home for a modest 2-bedroom home in Atawhai. There were 19 couples registered on the open home book that day. The property sold within a few days at about 5% gross rate of return. Achievable rent $260 sale price $265000. With the interest rates up another 0.25% this week it is clear the buyers will take years to achieve the break-even point. Yet the buyers keep coming. Some of them can see what is happening in other countries like Australia. Old age pensions in Australia are income and asset tested. One would have to presume that these new NZ investors are making provision for their future retirement income believing that by the time they get to age 65 the Government will rat on them. After a lifetime of promises by successive Governments taxpayers have paid dearly through their taxes and may get precious little back.

    ROBYN GRINTER
    We were lucky and privileged to have Robyn address our last meeting. Our good (and expensive) advertising combined with Robyn’s reputation filled the meeting venue to more than over flowing. Here is what some of the attendees said about the meeting. With everyone straining to catch Robyn's every word
    it helped for concentration.
    So what did she do? What should we do to be the same? Listen to your inner voice. Answer back to yourself. Look for the good in the problems that come your way. See yourself doing the deals and go out there and do it. Learn not to take no for an answer.
    Never ask your land agent or property manager to lower their fees. Never cheat or lie with you tax returns.
    Be generous with your time and money. Help others when you can. Do not phone Robyn she hates her mobile phone. Be yourself. Super woman does not come dressed in a flowing cape zooming down to rescue people in distress. Ordinary people doing ordinary things like Robyn can do it. And when her husband said NO! she followed her gut feeling and

    her instinct and did it anyway.....

    What I got from her talk was that she knew inside that property was for her and she didn't let anyone discourage her by saying No. She was certainly inspirational. She placed a strong emphasis on being ethical and fair, there is plenty to go around and everyone can get what they want.

    Great talk last night Robyn, full of motivation & passion. I particularly enjoyed and heard the need to clear one's own negative inner talk, expressed so freely and totally from the heart. The message was loud and clear, "You are the stories you tell yourself" "Look for the good in all things & think that way" "Choose whatever you want to be" "if the numbers work I'll buy it" Thanks Robyn for your passion, heart and motivation. Thanks also to the Nelson Property investors Association, I'll be at the next one.
    Hey guys thanks for listening, I had a great time, loved Nelson too and you turned on the heat for me (I love hot weather) I can see I may need to come back some time and buy a couple of rentals there, still a few other goals to achieve first.
    __________________
    Robyn Grinter

    We at NPIA are over the moon about the meeting. I will attempt to organise a sound system for the next meeting.

    PROPERTY INSPECTIONS
    I think that most landlords are like me and do not like doing property inspections. It can be intrusive and annoying for both bad and good tenants. Come to think of it there are far worse things property managers have to do. So we just get on with the job and do it. Tenancy Services have an inspection schedule shown on the tenancy agreements they publish, and NPIA sells. Occasionally I inherit a problem tenancy where the initial landlord has used the TS form at the beginning of the tenancy. I would think that this form has worked against me in most if not all of the tribunal cases that have followed. Comments like “one window cracked” have been used to avoid paying for several smashed windows. “Carpet worn” has been the reason why a carpet shampoo has not been allowed. Ingoing inspection reports need to be far more detailed than the form provides for on the tenancy agreement. Our inspection reports are now documents covering as much as six pages. We use palm tops to upload and down load the reports from the computer. Most landlords can cope more than adequately with a paper based system. Just make sure the tenant gets a copy and your give them the opportunity to put their comments on it. All comments need to be backed up with lots of photos on your digital camera. It is unlikely that you will take a picture of the exact same spot on the carpet that a stain appears. Take wider views of the carpet showing some of the other room features so that it will make sense in court. Detail curtains in each room so that at the end of the tenancy you can easily determine that they have not been substituted for some rotten old ones from the recycle bin. Specify on the form that the carpets have been professionally cleaned before the start of the tenancy. Record the model of the dishwasher and other appliances that might be provided. In periodic inspections far too much emphasis is placed on checking to make sure the rotten tenant has not damaged the property. Landlords need also to check things like all taps can be turned on and off, all stove elements operate, all power points are operational, the header tank and toilet cisterns are not overflowing, no water or sewage flowing under the house and the washing machine is not leaking onto the floor. A quick check of the water meter to make sure it is not ticking over whilst all taps are off tells heaps. We record the water meter and power meter readings at the end of all tenancies. We have a simple electrical outlet-checking unit. This devise is simple and safe for use by people with out electrical knowledge and training. I am amazed how many old worn out hot points have bad earth connections and we have even found some where the phase and neutral have been incorrectly wired. Always check the garden shed to make sure it is not full of rotting rubbish. Check that the gutters are not full of leaves and that the lids or grates are still in place on the drain gullies. Follow up unsatisfactory inspections with either a 10-day notice to remedy or for more serious cases a 90-day notice to terminate. Whilst it may not be possible to turn a slob into a perfect house proud model tenant regular inspections will at least ensure rubbish and other issues do not get out of hand.

    GOOD NEWS FROM NZPIF

    Our national organisation is working away on our behalf. Here is information on a on a paint discount.
    http://www.capitalpia.org.nz/resources/reidpaint_offer.pdf and here is some information on Veda Advantage on their free training. http://www.capitalpia.org.nz/resources/veda_seminars.pdf
    You can now access the news feed of interest to property investors from the NZPIF home page by clicking on “News” or by going to
    http://www.nzpif.org.nz/afawcs0111517/tn-news.html

    2007- 8 SUBS NOW DUE
    Invoices are attached in the paper-based version for the new financial year. Those people that have paid so far this year do not need to pay again.
    Spot you at the next meeting or in the tribunal waiting room.



    Disclaimer. Anyone stupid enough to act on advice or comments in this newsletter without thinking for themselves deserves to suffer the consequences.



    Terry’s Opinion

    I thought I would continue on and talk some more about investment philosophy.
    This time I want to talk a little about permanent investment and inter generational wealth.
    What I mean by permanent investment is to select and purchase property that will have the following characteristics
    • Have a least 50 years earning life in the building.
    • Be in a good enough location so that you are able and willing to hold it long term.
    • A building that doesn’t have heavy on going maintenance e.g. old weatherboard houses on sinking piles. The cost of this on going maintenance will lower your return on investment dramatically.
    When we buy a house as an investment it has this wonderful earnings stream that on average is inflation adjusted every year. It’s called rent. As well as receiving the rent, part of the rent is tax free because of the depreciation on the building and chattels. This earning stream if managed properly will continue every year until the day you die if you don’t sell the house.
    So if you buy a house to rent and it produces say $13,000, it will produce that every year. But look what happens when you buy your next house that rents for $13,000. Now you have a combined earning stream of $26000 a year. Then on to $39,000 a year, then $52,000 a year until the day you die. What I say, is even while I sleep I’m making money because I have some tenants that work night shift to pay the rent. So you can see how when you build that earnings stream of rent it can become very useful to you.
    If you choose to sell a property and not replace it that earnings stream disappears for ever. An earnings stream is like a river of money flowing your way and the larger you can make it the more benefit there is in it for you and you family.
    Once you have these earnings streams in place why not pass in on to the next generation to grow and enlarge but also to enjoy the profit from it but not the capital.
    This is what I mean by inter generational wealth. The wealth is passed from generation to generation.
    So what happens is each generation become caretakers of the wealth. They understand that the income is able to be used by them but the assets are inter generational.
    In our western society we have a short term vision of the future. We think I’ll make money, save for my retirement, retire, spend all my wealth on myself and then die leaving the kids with nothing.
    Kiwi’s call this SKIING spending the kid’s inheritance. I believe this is a selfish shortsighted attitude.
    I’m not suggesting that we give our kids so much we ruin them and an ongoing legacy or trust needs to be handled with wisdom. I like what the Maori organizations do and that is if their children save for education they give them say $5 for every $1 they save. If they save for a house or retirement they give them say $2 for every $1 they save. That rewards initiative and causes people to rise up and achieve their goals in life.
    With inter generational wealth the next generation needs to be trained up by the previous generation to add value to the trust instead of destroying it. Inter generational wealth can be a strength to our descendants but living in poverty is a hard road to walk.
    Anyway that’s my thoughts for today I hope it’s given you something to think about.
    See you at the next meeting
    Terry


















 

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