Should I avoid becoming a landlord ?

[ermat]

I have never owned rental a property but logic tells me I should be considering this option. I am trading down and can afford 2 houses.
But I am nervous about becoming a landlord. I realise my success or failure probably all depends on my rental purchase decision.
Provided I do my research, should I be worried ?
I can finance the rental to roughly 80% of purchase price.

[Anthonyacat]

What's your worry?

Trading down gives you a bunch of cash you should absolutely invest somewhere. Whether it's property, a share portfolio, term deposits, or anything else is a matter of weighing risk with expected reward.

So, what risks are you worried about?

[jimO]

the main problem with being a LL is having tenants

[ermat]

When I think about it, my number 1 concern would be choosing the wrong tenant. The bad tenant stories worry me.

[Anthonyacat]

Solid background checks reduce that risk. Buying in a 'nicer' area reduce it further, as does keeping your property in above average condition, and hiring a good property manager to do regular checks.

Nothing can eliminate the risk, but it gets pretty small if you do the above.

[ermat]

How can I learn property management skills and manage it. myself?

[Learning]

How can I learn property management skills and manage it. myself?

Practice and experience.
Especially the unsuccessful kind. Nothing prepares you for the road ahead other than having already traveled it.

[ermat]

Can you suggest specifics that can help minimise management pitfalls.

[Learning]

I started off managing my own rentals and it's cost me dozens of days and thousands of dollars learning the ropes. 12 years on, 14 set of tenants across 3 properties, 4 TT rulings ( 2 in favour, 1 against and a draw), one mediation and a 4 year debt collection saga I'm still learning.

Spend a day or two lurking around the back row of your local TT. Spend a week or two reading this forum. And always remember that everyone's normal is different. Sooner or later a tenant will do something you never thought possible.

[ermat]

What is an average cost for the property management fee ?

[klauster]

You grow along with your mistakes, but making them at the beginning saves you thousands...

[artemis]

Educate yourself first as there are many fish hooks.

Join your local PIA. Ask ask ask.

Read. Tenancy Services website. The Residential Tenancies Act. Healthy Homes regulations. Unit Titles Act if looking at apartments. Minister Faafoi's announcements about changes on the way. Some good books around, recommend Matthew Gilligan Tax Structures 101 and Property 101. Check out a lot of Tenancy Tribunal decisions especially for the location you are interested in.

Run the numbers.Get a property accountant, but read IRD booklet Rental Income first.

[ermat]

Thanks, very informative.

[erinak]

Quote from artemis: (in my abbreviated form)

"Educate yourself first as there are many fish hooks.

Join your local PIA. Ask ask ask."

ASK, take it or leave it, and trust your gut feeling.

[Perry]

Stuff of Nightmares

Read. Tenancy Services website. The Residential Tenancies Act. Healthy Homes regulations. Unit Titles Act if looking at apartments.

Although good advice, the RTA is one of the most incomprehensible and indigestible pieces of legislation on the NZ statute books. Seems almost specifically designed to turn people's brains to mush.

Read the IRD booklet Rental Income first.

Much less a nightmare to read and get a fair understanding.