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  1. #1
    Join Date
    Jun 2005
    Nelson NZ

    Default Nelson PIA October newsletter and meeting notice

    PO Box 198 Nelson

    Our seventh and final meeting of the year is being held at Honest Lawyer Monaco on Tuesday 24th October 7:30 pm. We commence with our regular pre meeting meal at 6 pm followed by the meeting proper starting at 7:30 pm.
    Robyn Green from Wellington is speaking. Robyn was the secretary of Wellington PIA for many years. She is a big time investor of residential and commercial properties. She has spoken at a few other associations and her presentation at a NZPIF conference a few years ago left me with a lasting impression of someone who we should emulate. Send me your bookings for the meal. They are good value and it is always fun chatting to other investors


    Daryl came, Daryl spoke, and those that missed him will never know what you missed. I was really surprised at how many good tips could easily be applied to our local market. Waikato is of course five times Nelson’s size but the same principles still apply. One strong point he made was not letting the rents slip behind the market. He said if you want to be generous towards your tenants then give them a $7000 cheque every Christmas. I scoffed and chuckled under my breath. However this week I heard about a large block of flats that an old generous friend of mine just sold. The new owners have issued their rent increases, some of which were as much as an additional $150 per week. One of the tenants who I have known for many years recounted his side of the story. Nowhere in that lament did my friend’s generosity and lovely nature get mentioned. Anger, greed, poor maintenance, and looking for another rental were some of the words used. My friend gave away perhaps $50,000 a year of income yet the tenants appear not to be grateful. The only winner would be the government who did not need to help the tenants with accommodation subsidy. My friend is now too old and sick to enjoy the reward of the high market price he obtained. My thoughts are he would have been better to increase the rents many years ago and improved the quality of the units. That way the tenants would have had an improved standard of accommodation and when the owner changed perhaps the only emotion would be one of sadness because they could no longer chat to their caring old landlord.


    If I or any of you knew what the future held for our market our opinions would be sought out. Clearly there will be some compromises made by the various political parties and us property investors may well be offered up as burnt offering on someone’s altar. If human sacrifices are going to be made to appease the Gods then it is smarter to choose someone else’s family to go first.
    What I definitely know is the number of rentals advertised on Trademe in Nelson is at an all-time low of 55. This is 31% down on the same time last year and 70% down on January 2013 when I started saving the monthly figures. Nationally the total number of vacancies is down as well but Nelson was one of the big movers. Tasman’s vacancies are even less. Of course there are plenty of houses being consented in Nelson / Tasman. The year ending in August saw 642 consents issued across the area. Compare that with Hawkes Bay at 567 and Taranaki 579 which have far bigger populations. The average value of Nelson dwelling consents was $400,000 the same as Auckland and only slightly less than Otago which counts Queenstown in its numbers. So it is clear that new rentals are not being brought to the market.
    The media is full of stories about the dropping real estate values (but not in Nelson they say). You all know what happens to prices when there is a shortage. Without a doubt there is a shortage of rental accommodation in Nelson. The essential components of all commodity stampedes are how they start and how they end. The media always has a part to play in the mindless lunacy that can ensue as the panic sets in. An interesting case was published in the media this week. An ex tenant of mine who had faithfully paid her high rent to me for seven years was living in a shed. A number of good people helped her and she got a Housing NZ house. My view is this will encourage more people to publicise their plight. More publicity will fan the stampede. There is only one way to overcome a shortage and that is to create more supplies. Often politicians and those in power attempt to fix commodity shortages by accusing the suppliers of withdrawing their product from the market. We already see that in Auckland with some claiming foreign owners are buying up lots of properties and leaving them empty. Yet again there are suggestions that people are utilising their rentals as Air B&B units. A number of motels are being illegally used as long term accommodation despite not complying with some of the housing regulations and RTA requirements. I suspect these two opposing factors cancel each other’s impact out.
    In the past as the rental shortages started to bite people needing a short term rental have needed to buy rather than rent. This obviously exacerbates the shortage. So despite smarter experts than me saying the property boom is over I think we are going to see a significant lifting in price of the lower end of the housing market in Nelson. Auckland has moved well ahead of Nelson so I think we have plenty of room to move.


    I own a block of flats that used to be a motel. Some of the units have a near flat roof with diamond deck roofing. Being of the age that did not require ceiling insulation it is not practical to lift the iron to retrofit insulation. There is an exemption in the RTA for cases like this and it is not compulsory to fit insulation. However the bedrooms in the flats have a fibrolite ceiling from the days when the room was carport (according to the council plans). The fibrolite is cold to touch and dripped condensation. I searched the net and found I could buy a PVC truss core product that interlocks. They came in 5 m lengths 500 mm wide. After a bit of hard work fitting battens to the ceiling it was surprisingly easy to slip the panels into position and screw them up. Total material just on $1000 for a room that was 5m x 3 m .

    Regards and happy investing.
    This is the last newsletter of the year so have a safe and joyful Christmas.



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