Is rent to rent a viable strategy in NZ ?

[OnTheMove]

We have all probably seen the videos on youtube, "become financially free in a month", mostly stemming from the UK.

1. Firstly is it legal in NZ to manage a property, rent it out in booking.com etc and offer the landlord the going rental rate with say a 3 year garunteed rental agreement?

This is clearly outside your normal lease agreement as it breaks sub letting.

The strategy is not subletting the property technically, its managing the property and renting the rooms at your own rates and garunteeing cashflow to the landlord. Thats clearly a different contract.

2. Lastly, it clearly does work in the UK, is there any reason it couldnt in NZ?

[Wayne]

If the LL allows sub-letting then you could.
Whether you can make enough margin on the rent is another story - do the numbers.
I suspect the rental would then become commercial and attract GST etc.

Depending on how you set it up it could be just a management contract with set return (as you seem to imply) or subletting.
If a management contract then the risk is on you.

[OnTheMove]

If a management contract then the risk is on you.

I think this is how they are doing it in the UK. Just go on youtube and search rent to rent. Its flooded with it. I do believe it works, but I think it takes people much like those that are prepared to make 300 offers at 30% below MV before they get 1. And yes it appears the risk is very much on these people doing it. But they must have some risk strategy which is the bit I dont get, only so much you can learn for free haha.

[OnTheMove]

Hmmm this might sound DUMB, but another similar strategy could be 30 year interest only, then manage as airbnb booking.com etc. Of course technology will change. It could be a winning little semi retirement income/part time job without the red tape of working out the legalities....

If it was truely successful just do what most do and hire a local manager and cleaner. The last place I stayed at was set up like that. But was owned outright. Filthy rich :-) But of course holiday accommodation is seasonable. Im referring to city locations. And the benefit of rent to rent in the UK is they dont need much money down vs a deposit on a interest only property.

[eri]

you realise of course that councils like auckland are looking to charge airbnb type short-term rents, commercial rates

instead of $1500 maybe $3400 with the new tourist bed taxes

this may not concern you too much initially, as you won't be questioned by council and get the massively increased rates bill

but if you misrepresent the situation to the owner and they get hit for the higher rates

you could find they give you 90 day notices

or even shorter notice if you're not really the tenant and have broken the terms of the lease

[OnTheMove]

you realise of course that councils like auckland are looking to charge airbnb type short-term rents, commercial rates

instead of $1500 maybe $3400 with the new tourist bed taxes

this may not concern you too much initially, as you won't be questioned by council and get the massively increased rates bill

but if you misrepresent the situation to the owner and they get hit for the higher rates

you could find they give you 90 day notices

or even shorter notice if you're not really the tenant and have broken the terms of the lease

yeah it would need to be included. no 90 days notice, this isnt a standard rental agreement situation. i havnt seen a contract that they use in the UK, but they garuntee rent up front for 3 years. so have no idea what they use for termination notice.

geeze thats a lot of difference in rates. thanks for the heads up. does this apply to even the home owner who rents out 1 room as air bnb, boy thats a bit rough lol. it will kill the concept in NZ, so typical of our councils and government. not focusing on helping businesses instead tearing them down.

[eri]

https://www.aucklandcouncil.govt.nz/property-rates-valuations/your-rates-bill/Pages/accommodation-provider-targeted-rate.aspx

Ray Pitch, who runs a small online accommodation business out of his Pakuranga home, said he was hit with an $11,000 rates bill this year.

https://www.radionz.co.nz/news/natio...ncil-s-bed-tax

you have to be very careful trying to use schemes from 1 country in another

we all know you can get the death penalty in indonesia

for stuff that is completely legal in other parts of the world

and if you think there are a lot of odd conflicting laws around the world for drugs

there must be twice as many for money

of course the penalties aren't usually as harsh

they just take all your money off you

[OnTheMove]

haha that made me giggle. yep hence why Im asking. it certainly sounds cost prohibitive. So many people in Auck rely on Air Bnb to afford their Mortgage. Another dagger in affordability.

does this apply to anybody renting a room in their house? whether airbnb booking.com or even trademe flatmates. its unethical to say what is commercial when renting a room and if you can get more rent who is the council to say its commercial. idiots.

[eri]

from the first link above

"The new rates do not apply if only part of the dwelling is let, such as a bedroom."

[OnTheMove]

from the first link above

"The new rates do not apply if only part of the dwelling is let, such as a bedroom."

I was just reading the council information. Its all pro rata on how many days are rented etc. Also if you are using say a seperate Granny Flat, then the rates dont apply to the whole building just the granny flat.

Im interested about that tax that chap received though, is it because it was deemed a business?

[Wayne]

People are always happiest when others pay tax (rates is a tax) rather than them.
When they have to pay the tax it is unfair etc but they don't mind getting the benefit of others having paid it.

[Perry]

Tax / Rates / whatever are supposed to be universal.

So-called 'targeted Rates' are one of the items that give the lie to that concept.

Seemed a good idea at the time, but . . . .

Some councils use unimproved property value as the figure to base Rates on.

Some use 'capital' value.

Most councils - and Herr Goffler's is the leader - are all about increasing income and empire-building and almost never about reducing costs.

What we see is the result of that.

Of course, Herr Goffler says that's not true.

But the valid observation in response is simple: if Goffler's going to tell a lie, he tells a big one!

To Herr Goffler, it can be validly said,

Your Council's actions speak so loudly that Ratepayers cannot hear what the Mayor is saying.

[Wayne]

Tax / Rates / whatever are supposed to be universal.

What do you mean by 'universal'?
Everyone pays something or everyone pays the same?

[Anes]

What do you mean by 'universal'?
Everyone pays something or everyone pays the same?

Everyone pays something

[Wayne]

Everyone pays something

If that were what 'universal' meant then
"So-called 'targeted Rates' are one of the items that give the lie to that concept."
Wouldn't be true would it?