Life as a Landlord

[muppet]

Good story flyernzl...keep up the good work.

I've had a tenant move out on Monday.(this week)
Talked to the Property Manager on Tuesday.

List to do.
1.Fix fence on driveway.
2. Get the rollers on the ranchslider seen too.
3. Get another key for the front door.
4. Fix the ceiling in the lounge. Has water stains from
a leaking roof.
5. Paint ceiling in the bathroom.
6. Trees out the front need trimming(executing).
7. Move a trailer load of builders mix from behind the garage.
8. Put another water outlet on the spouting at the back of the house.
9. Get plumber to fix a leaking pipe in the bathroom.
10. Sort out the smoke alarms.
11. Put in an outlet for a washing machine.
12. Paint outside of the house.
13. Get rid of other stuff from around the place.

Wednesday went to Auckland.

Thursday morning went to Rotorua for some repairs to the car.
Thursday afternoon started cleaning up the outside of the house
before painting.

Friday will be in the classroom.

Weekend have some lawns that need cutting.

Ah well the jobs will have to wait till next week.

[flyernzl]

Well the big news in the local property world this month has been the uproar about the usurious level of Auckland rents. All the print and television reporters have been wading in with tear-jerking stories about poor ripped-off tenants being taken to the cleaners by rack-renting landlords.

Of course anyone employing a modest amount of research and a cheap calculator would have soon found out that this is a load of hokum.

Starting from 1992, the price of an average three bedroom solidly-built group house on the good old kiwi quarter-acre section in a lower/middle class suburb in Auckland has increased in price from around $120,000 back then to $480,000 in 2012. That means that it has doubled and then doubled again. Fair enough, somehow people still seem to be able to afford a house priced like that.

Now consider the rent. Market rent back in 1992 for that house was about $200 a week. So you would now expect that, to retain the same cap rate, we would get $800 a week for that house. Dream on. According to the latest Crockers rental price table, in Sandringham, Mt Roskill, or Panmure you’d be scratching around $400 a week. So that cap rate has halved over the last 20 years. What was that about rip-off landlords again?

So, what is the problem? Two-fold, in my view.

Firstly, for sure property prices have quadrupled over that twenty years but incomes have not risen to the same extent. So rents may well have maintained their relativity in relation to average wages over that time, but property prices have not. Is the nation’s economic stagnation and lack of individual incomes a crime that is to be blamed on Landlords? We get blamed for most of the problems of the world, so why leave that one out.

Secondly, many people have been willing to buy a residential property and then rent it out at lower and lower rates of return. Instead of a 10% return on their investment, they have entered into deals that will return them 4% or even less. By the time they then pay such often-overlooked incidentals as rates and insurance on top of their mortgage commitments they may even be in negative return territory. Why would a seemingly rational investor do this? Sometimes, through ignorance or falling for hot-gospel sales people and fast-talking property ‘mentors’ who can spot an open wallet from miles away. Others knowingly sign up for these deals on the expectation of a gold-plated capital gain or the promise of a ‘tax efficient investment’ which is sales-speak for something that is guaranteed to lose you money.

Unfortunately for these purchasers, the recent financial turmoil has meant that for many a capital gain is but a distant mirage and that once so-attractive tax efficient investment is now a money-losing drag on an already reduced income that is causing grey hairs and sleepless nights.

To those caught in this bind there are but two answers – either sell that dog of a property or jack the rent up to the point where the whole thing is eventually going to make some sort of financial sense. Either way this means a reduced number of rental properties at a higher price is available to the growing pool of tenants.

Like most who are on to a good thing, tenants do not realize that they have had a very good deal for many years and are now screaming at the prospect of facing rational economic rents for the highly priced asset that they occupy. Scream on, the process will and must continue.

Back at the trenches, my new tenant is settled in and WINZ is making nice regular contributions to my bank account on her behalf. There seems to be some minor problem with the ceilings in this house. They are those 1970s acoustic tiles, and some sagging has taken place over the years. We fastening them back up as well as we could during the renovation work, but she reports that the ones in the laundry have descended again, so that’s on the list to check out. Meanwhile Hills are meant to be repairing the two doorstops that they ripped off the walls during the floor preparation work.

Shock of the month was over at my four-unit block. The main house has a decramastic tile roof, which is L-shaped with a gully on the roof between the two legs of the ‘L’. There have been a few minor leaks over the years. We have managed to patch those from time to time but it is getting a bit worn. Unfortunately, with the liquid sunshine over the recent summer, quite a serious leak has now developed in this gully. My normal roof man has been pessimistic about it, so I got someone from a serious roofing company to look it over.

Talk about terminal shock. Sixteen and a half thousand dollars was his quote. A quiet sitdown and a few pegs of brandy were required after that one, I can tell you.

Further thought came up with the idea that maybe I should conduct a personal investigation, so I have spent several afternoons up scaffolding cleaning out the gutters and sweeping accumulated debris off the tiles. Quite a bit of junk up there, to be sure. Perhaps the cleaning it is working. The tenant tells me that there were no leaks from that area in the last downpour, so the water may now be able to drain away rather than through. However, he also says there is now a new leak on the over side of the house. Sometimes you can’t win. Back to the Selleys.

[muppet]

Another good report flyer.
In this mornings Granny

Tenants squeezed by double-digit rental increases are turning to buying their own home as the cost of owning and renting narrows - even though New Zealand houses are rated some of the most unaffordable in the world.

Industry commentators have noted a fresh flurry of interest among first-time buyers, which they put down to rising rents, an improving job market and appealing interest rates.
According to the latest Roost Rent or Buy report, it took the typical Kiwi first-buyer household just slightly more money to service a mortgage on a bottom-range house than it costs to pay a median rent.
The figures, which assumed a 20 per cent deposit had been raised, showed the 24.3 per cent proportion for owner costs was 1.3 per cent more than rent for a median three-bedroom house.

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10796087

As regards to maintenance and repairs
we have had a problem with one of our rentals in Manuwera.
The ceiling fell down in the laundry last Monday
due to a leaking water cylinder rusting the roof.
$500 to fix the immediate leak and water cylinder.
On Thursday we got a quote to fix the
rest of the water damage - $6600 - ouch.
Oh well the damage has to be fixed.

[One]

Checked your insurance? I'm pretty sure ours would cover that.

[Maccachic]

Heres one for the otherside: http://www.bayofplentytimes.co.nz/ne...h-bay/1326745/

However, the wait was too long for some landlords who were contemplating selling. Mount Maunganui-based landlord Eldred Irving told Bay of Plenty Times Weekend finding good tenants was slow and the return slim. Rates and insurance were "going through the roof"', he said.

Residential landlords wanted to raise rents in Tauranga but the reality was, many tenants couldn't afford it.

Wellington-based landlord Steve Naismith plans to sell his five Western Bay housing rentals because he deems Wellington a more lucrative market.

Nationally, 46 per cent of First National property management offices say rents have increased from a year ago, while 43 per cent say they are the same and 3 per cent report rent decreases.

Rents in Auckland have increased because of a lack of new construction.

"At the same time, the returns landlords can achieve with development don't justify their investment," Wayne Boberg, from First National Bobergs in Epsom, said.

When gross yields of 4.5 per cent or 5 per cent were the norm (3.6 per cent or 4 per cent net), it was more attractive for many landlords to leave their money in the bank.

[mattinvestor]

for you landlords out there, just curious, what is your strategy for raising rents per year?

Do you have a specific amount you aim to raise it, a percentage to raise it at, or just raise it based on the market?

[essence]

I keep an eye on the DBH rental website. I look at what other rentals in my area are being rented out at.

If my rents are below the low end of the range, I put my rents up (only as allowed by the RTA!) so that they are between the low and middle range.

I don't allow my rents to get too far behind otherwise I'm always playing rental catch-up. It's also unfair on the tenants, otherwise it's too much of a shock to the tenants, when I try to get market rate.

Either that or I wait for the tenants to move, which they won't when they know they're paying below market rates!!

[Perry]

Consumer Price Index (although
dodgy) is written into my TAs.
Or at tenant changes, which-
ever comes first.

[Keys]

Consumer Price Index (although
dodgy) is written into my TAs.

Interesting concept Perry. Why do you think it is dodgy?

[Perry]

Long story, Keys. Essentially, it's fudged. Been covered in other PT threads, too.
Things like hedonic* measurements and the government's interest in keeping the
official BS, sorry, figure low, as many benefits and other government costs are
pegged to the CPI.

Take a car. Because a 'new' car has power steering, aircon, power ash trays,
tinted windows, etc., the dubious rationale is that comparing the new car with
the old one that was missing some of those features is not quite right. Hypo-
thesising: if the cost of cars has gone up by 10%, but the new models have
two more 'features' as standard, some dodgy calculations say that the cost
of cars has really only gone up by 7.5%, because of the new facilities built
in to the new ones.

While that may be of some relevance, for the person getting to and from work,
it makes no difference to that act of commuting. To him/her, the real cost of
getting a set of wheels to get to and from work is 10% more.

The automagicentromatograhicaldigitrometer thingamewhatsit is irrelevant.

S/he just wants to get to work and back! And as inexpensively as possible.


PS

I only just learned that ex-MPs pensions are tax-free. Scumbags. (May be
just ex-MPs who were Ministers, but that stinks, either way) Wonder what
CPI that rort's pegged to?

[flyernzl]

Pets can be the bane of a Landlords life, turning otherwise Desirable Tenants into The Tenants from Hell.

Don’t get me wrong, I like cute puppies and fluffy kittens as well as the next person. I grew up in a small Northland town, and on our half acre we had a dog, a cat, hens, and various other rather less desirable creatures, often with far too many legs. My older sister even then was a gregarious person with a natural affinity for animals, so her friends and mine owned horses, donkeys, other dogs and a wide assortment of farmyard animals.

Since then I seem to have matured into a cat magnet. Sitting beside the pool at Aggie Grey’s in Apia, I watched the hotel cat weave its way right through all of the happy throng to settle contentedly on me as its chosen cushion for the afternoon nap. Rather more purposefully, my Beloved’s Birman moved to adopt me quite a while before she did.

Early in my Landlording days I rented a house to a group on the purely selfish basis that they were, collectively, able to afford to pay a higher rent than a family could. As such groups do, individuals within the group came and went. One of the later arrivals was a young woman who, after a while, inherited a cat. Could the cat stay? She assured me that it was well behaved, and she paid for a cat flap to be installed in the front door.

Certainly the animal appeared to be placid and problem-free during its stay, but on the final inspection I found that the hallway wallpaper had been scratched up to cat-reach height right down the full length of the hall. How many rolls of wallpaper are required to redo a hallway? More than that, much more than that. Maybe I should have provided them with a scratching post as a preferable option.

At this point I became a bit twitchy about tenants with pets. My tenancy agreements now all contain the clause “No pets shall reside on the premises”. However, this does not stop it happening.

One of my WINZ tenants appears to have acquired a dog soon after she moved in. I found it there when I was passing the property, and complained. Her reply? “If I’d known you were coming around, I would have sent my puppy (!) away”. I pointed out to her that the Tenancy Agreement clearly said “No pets” not “No pets just while the Landlord is around to see them”.

Similarly, one of the tenants in the flats has acquired what looks to be a cross between a boxer and a sheepdog, complete with an active approach to life and a loud angry bark. This animal quickly mastered the art of jumping over the fences between the flats and harassing other occupants and their visitors. Of course I again demanded its removal, and I have not seen it since.

However, my spies tell me that both dogs are still lurking, one in the garden shed and the other in a cage on the back deck. The lawnmowing guy has apparently been nipped by one of these beasts, but I’m told is too scared of me to complain, so it’s a problem that I’m going to have to solve. How do I catch them ‘in residence’ is the question, as I am sure a pre-arranged visit will coincide with dogs day out.

A secondary problem is, of course, uninvited and unwanted small wild-life. Tenants seem to attract these, and then complain about the outcome. Cockroaches and ants, wasps and rodents all appear to be able to differentiate between a tenanted property and an owner-occupied one.

The current infestation started at the flats when recently moved-in tenants complained of rats in the walls. Investigation confirmed the problem, so the Debug woman was called in. Traps were baited and battle commenced. After a short but torrid struggle, we came out ahead. Then the tenant called again – from his hospital bed. Apparently he had washed his bedclothes and hung them out to dry. On returning home, he’d decided on an early night so retrieved his sheets and blankets from the clothesline, made up the bed, and climbed in. Sometime later, he woke up in agony. Apparently there is a small unfriendly recent migrant from Australia called a white-tailed spider whose bite is close to but not quite fatal, and one of these had moved inside on the bedding and attacked the fellow while he slept. Result – four days in hospital. Oh dear.

Meanwhile the tenants in the adjoining flat had moved out, and we decided to renovate that before getting Ms Debug back to treat both flats at the same time. A wise move, as it turned out, as not only did Jan find the beginnings of a cockroach colony in the empty flat, but also a feral bee hive in the ground under the fence. Why do I feel that the insects are taking over the earth in some sort of retaliatory strike against us humans?

So tomorrow the chemical warfare is set to be unleashed. The battle will be vicious and no quarter will be given or taken. I may not return.

[Keys]

Are the dog infested flats easy to re rent? If so, a large rent increase and 90 day notice. Not only are they in breach of the TA. They are lying about it.

[frazzledfozzle]

bees dont live in the ground I'm sure it will be a wasp nest, half fill a 1 1/4 ltr fizz bottle with petrol ( petrol is better than Diesel because it has more potent fumes and it's the fumes that kill the nest) at night time just shove the neck of the bottle in the hole as far is it will go and leave it there.

[eri]

don't do it while smoking

seriously

people have...

[Glizzle]

bees dont live in the ground

Bees indeed do live in the ground. Esp under tree trunks.