Nelson PIA meeting 10 July and newsletter

[Glenn]

NELSON PROPERTY INVESTORS ASSOCIATION

JULY 2012 NEWSLETTER

PO Box 198 Nelson

Our next meeting is being held at the Nelson Suburban Club, Tahunanui Drive on Tuesday 10 July. 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. At the very last minute we have secured Nancy Caiger to address us. Nancy is the President of the Waikato property Investors association. Her web site http://www.caiger.co.nz describes her as Artist, Investor, Entrepreneur, strong supporter of community organizations. She was our inspiration to hold the Tenant of the year competition. Nancy was born in Singapore and arrived in NZ in 1993. She chose to settle in Hamilton and has been a property investor these past 18 years. Nancy is a long term buy and hold, positive cash flow focused investor. She tends to be a contrarian, and work on the “Be fearful when others are greedy, and greedy when others are fearful”
This strategy which she has employed over the various cycles since coming toNew Zealand has meant that she now has a solid portfolio with good cash flow and high equity. All of Nancy's New Zealand rentals are in Hamilton as she knows this market well. Nancy loves the thrill offinding great deals and helping investors in their journey to financial freedom. Recently Nancy started investigating the USmarket at net returns one can only dream about in NZ. Waikato is hosting the NZPIF conference again this year. She will no doubt make you all want to attend.
Please remember to book the meal by emailing Glenn.

MARKET COMMENT

Oh dear it is so cold outside at the moment everyone appears in deep hibernation. We have well and truly moved from a feast to a famine. One landlord said to me he was starting to fear the next phone call might be another tenant ringing to give notice. Hold on therewe have just passed the shortest day and I know it will get warmer any day soon.

ARE YOU BEING CHEATED AT MEDIATION

I have discovered after several years that not all mediators are equal. I recently had amediation re the inevitable rent arrears. The tenant was paying rent fortnightly and has been paying at least one week late for the last year. Of more concern the major issue was she owed over $600 in water. When working out the amount that the tenant owed the mediator said the debt was taken up until the date that the tenant “says” she pays the rent being in this case a Wednesday even though the rent period runs Saturday to Friday. Well on the day of the mediation the next period ended in fact 13 days off and not 5. I had a little “chat” with the mediator and her argument was that because she had beena mediator for the last 20 years she must be right. Well I offered to supply other mediator’s orders for her to see what other mediators are doing. I forwardedf our to her one of which was hers from six months ago. Would you believe it but she had done the same thing in that earlier mediation. That is she had made the same mistake and worked out the arrears to the day the tenant pays the rent instead of the day the next rent period started. The other three mediated orders from of course other mediators all had the arrears to the end of the current rent period.The “discussion” carried on post the mediation in a one to one technical discussion and a compromise was made by the mediator that she would change the order to take the amount owed (as apposed to arrears) to the end of one week and not the two as should apply when the rent is being paid fortnightly. Her argument / justification being that the tenancy agreement specified that the rent was to be paid weekly. Now the RTA specifies in section 23 (1) (b) that the landlord shall not require the payment of any rent before the expiry of the period for which rent has been paid already. Also section 23(1) (a) specifies a landlord shall not require the payment of any rent more than 2 weeks in advance. In other words rent can be paid fortnightly in advance and the mediator should have specified on my order that the rent owed calculation should have gone to the beginning of the next rent period that being two weeks off. In my case that amounted to a difference of $487 this being not an insignificant amount that would likely as not be used in enforcement proceedings. So fellow landlords do not let old hands bully you into agreeing to a lesser amount than you are entitled. If however you end up in tribunal in front of an adjudicator they mysteriously work out things differently. This is because they do not do many conditional orders.They generally do an immediate termination order unless the landlord pleads for a conditional order then in the flurry and lack of ability to negotiate you usually only get the arrears to the actual day of the hearing.

NEIGHBOUR COMPLAINTS ABOUT YOUR TENANTS

I recently received a vitriolic letter of complaint about one of my tenants from a neighbour who claimed she was the local neighbourhood watch co-ordinator. These tenants rent a below standard house in a very good street. The property has been on the verge of being sold under a mortgagee sale for some years so there is no spare cash to upgrade it and obtain better class tenants. Well the letter went on saying multiple complaints had been made to the Police and the council noise control. They suggested to the owner she should change managers to one of my competitors because I clearly did not care about what the tenants did. So I wrote to the Police and the Nelson City council asking for details of any complaints. The Police did not respond but the Council responded in writing that there had been no complaints? I pondered about what to do. I have no doubt that my tenants could be better. How do you make some bad people better and good people (owner occupiers) more understanding. Then in a flash of great divine inspiration I struck on a plan. Kim Mac Donald the Neighbourhood Support Nelson Coordinator (who spoke at one of our meetings) had just sent me a trial brochure the Nelson City Council had funded. I sent off the brochure to the angry neighbour suggesting she invite the tenants to join her group. With love we can over come all the evils of the world. Tenants and owner occupiers need to get to know each other and respect each other. Has Kim stumbled ontosomething here? Order your brochures to give to your tenants by emailing Kim at[email protected].

[Keys]

NELSON PROPERTY INVESTORS ASSOCIATION

JULY 2012 NEWSLETTER
If however you end up in tribunal in front of an adjudicator they mysteriously work out things differently. This is because they do not do many conditional orders.They generally do an immediate termination order unless the landlord pleads for a conditional order then in the flurry and lack of ability to negotiate you usually only get the arrears to the actual day of the hearing.

A comment you made in another thread Glenn lead me to ask this:
When you have an abandonment, do you ask for termination and possession to be effective 21 days following the hearing date with unlimited access to be provided for showing the property to new prospects? After all, the TT is taking the role of the tenant in terminating the tenancy and landlords are given the right to 21 days notice by the RTA.

[Glenn]

A comment you made in another thread Glenn lead me to ask this:
When you have an abandonment, do you ask for termination and possession to be effective 21 days following the hearing date with unlimited access to be provided for showing the property to new prospects? After all, the TT is taking the role of the tenant in terminating the tenancy and landlords are given the right to 21 days notice by the RTA.[/CENTER]
[/CENTER]

That is a tricky question. What the law says is 21 days from date of discovery. We have two different adjudicators and they have different interpetations of that portion of the act. So at the time of making my application I do not know which one will be sitting. One says go in a clean up the other says wait till the court gives you the permission/ possession.
The RTA says landlords have always been permitted and in fact expected to mitigate their losses. It is all about risk and loss of rent.
The action I take does that very thing. Not just mitigate but take advantage of the situation and the varying uncertainity. If you have a fixed term tenancy the best process is to clean up and find a new tenant then apply for a termination on the basis of non payment of rent without even mentioning the abandoment. The tenancy can finish at the date of the hearing or on the day the new tenancy commenced. The delay in obtaining a hearing far outweighs the 21 days notice provision.
If you have periodic I have had inconsistant rulings from the court on the 21 days notice. Like sometimes they grant it and sometimes not from the very same adjudicator. Getting a response from the tenant by text and presenting that text message as evidence at court is very helpful. It depends on when the abandoment occured. like after the application was made or before. As a rule it somes pays to not mention abandoment just say the tenant left and this is the cost of the clean up then ask for rent that you lost whilst the property was being repaired. The court seems to be happy to grant lost rent whilst a property is being repaired but not whilst it is being cleaned!
I am yet to find anything in the RTA that actually says anything about rent lost during repairs but they still grant it.

[Keys]

That is a tricky question. What the law says is 21 days from date of discovery.

True - for periodic. Let's go for the fixed term scenario. You can't take possession until the TT authorises it. You can't clean/relet until then. You can (and should) make a second claim for rent due following the TT hearing until the property is relet (61 3b ii). Have you tried that one?

Mitigation of loss is specifically excluded in cases of abandonment.

[Glenn]

Yes you are right but the wildly unpredictable outcomes of the tribunal mean that sometimes you have to stack the odds in your favour.
Is that not clear. Doing it according to someones book usually results in less money in the hand.
The law is one thing and winning is an entirely different matter.
Just look at the Scott Guy case as an example. Yes the accused is judged as innocent. That does not mean the jury got it wrong or in fact the accused won.