Running an NZ property from overseas

[landlordtobe]

Hi everyone,
With the Sydney house market out of control, I'm now looking homewards to get my little foothold on the property market.

I would really appreciate some advice on the sort of bank account and things l'll need to operate an IP from across the ditch. An NZ bank account is a given (and hopefully 100% offset against the mortgage - is this easy to achieve with lenders?).

I'll be using a property manager. When it comes to things like rates, insurance, various expenses, is it advisable to have a credit card or cheque book attached to the account, or do investors find they can pay for just about everything through a combination of net banking and the PM withholding rent for repairs etc?

Thanks for your thoughts on this

[tamara]

Hi Landlordtobe

Our propert manager pays our rates as they are sent directly to them. They also complete all minor repair and deduct the cost out of our rental income. We receive a monthly statement sent out to a NZ address and a copy emailed to us also which is very hand as post is unreliable and slow in this part of the world.

We have a cheque book for insurance and the incase situations. It aslo comes in handy if we need a deposit for our next purchase or such like. (It is in NZwith a person who can write a cheque if necessary, gathering cobwebs at the moment).

We stay in touch with our PM via email and my husband phones them on one of the infrequent trips he makes to NZ. They are such a vital part of our team.

We have found the best insurance deal for us has come through our insurance broker. I have done ringing around also but their deal is as good as anything I could get.

I am sure that a visa card could come in handy but for us we dont use it for our IPS. We keep an eye on our balances and payments via internet banking and have close working relationship with our personal bankers. This has come in hand a couple of times.

I do hope this helps. I am sure that other people are set up other ways.

Tamara

[CJ]

I have a NZ bank mortgage with a linked line of credit which has a cheque book. Bank balances are checked online.

Rents are collected by Property Manager who will also inform of any maintenance that needs doing. they also pay for my landlord insurance as it must be done though a Registered property manager (one of the criteria for the insurance). Remember that Preoperty manager takes a cut of everything so if they pay your rates for you, that will charge thier 7.5% admin cost.

My cheque book is with my Parent who will take care of any expenses that need paying (ie. annual bodycorp - PM could pay but 7.5% on $2.7k is quite a lot for paying one cheque). Rates is paid by direct debit (though this took 3 attempts and much frustration by myself and my parents to get the bank to authorise (a bank problem which hopefully is now sorted).

PM does all the hassle work so in theory my parents dont need to be disturbed other than the occasional cheque.

Only one property at the moment so not to difficult but extra admin on Parents shouldn't be much if I had more properties as PM should do everything.

[lissie]

You wont need a cheque very often - but why not get the book anyway - it will only cost a few dollars for the whole book - and you mail quickly enough from Sydney. Also check what the limits are for daily transactions on internet banking - some are really low. You can get rates direct debited from your a/c - or pay via interent bill payment ditto insurance. Would imagine your could do the same with body corp . A cheque is useful in the event of the unewpected- ie paying the digger that removed the slip (subsequently reimbursed by EQC)

[Monid]

Though we are in NZ we have most things automated in any case, minor repairs are handled by the property manager, rates etc are paid via direct debit and we either use check or internet banking to pay the rest. So given the NZ bank account it should be fairly easy.

[landlordtobe]

Thanks everyone, that's really useful info - I was surprised to hear about the PM premium on expenses!

Did anyone have any thoughts on the other part of my question - is it difficult to get a 100% offset account? Or is it more common to have partially offset accounts? I'd like to store a few thousand in the offset account for a rainy day (in which the property leaks...), plus savings for my next property, but if it's only offsetting 2%...

thanks!

[CJ]

Why not use of a line of credit (LOC) account rather than an offset acount. I thnk they are effectively the same thing in that a LOC acts like a big overdraft. Pay it off when you have funds or take it upto the limit when the louse leaks. LOC or revolving mortages are very common.

Charged at floating rates so a bit more expensive than fixed rates at the moment.

[tamara]

I agree with CJ. We have our buffer money sitting in a LOC account.

It gives us the flexibility to put our "in case' money onto our mortgage and when we need to we can draw upon it.

Tamara

[lissie]

Offsets not exist in NZ - basically because the tax laws are different from Oz. A LOC will give you the same effect - its a floating interest so you will probably want to fix the majority of the loan and just leave a float of $20k or $30k as a LOC. This can operate has your main bank a/c too - you dont need a separate one. Any spare $ you can park in the lOC reducing your tax - but take the excess funds out at any time too.

By 100% offset against mortgage I think you mean that any $ in there reduce the mortgage - this is the case with a LOC becuse it IS the mortgage (all or part). You will still need 80% LVR as an overseass resident though.

[fudosan]

I also like LOC for its flexiblity.

[landlordtobe]

Thanks all, I particularly like Lissie's suggestion of part LOC, part fixed, if LOC has a higher interest rate...

[CJ]

http://www.propertytalk.co.nz/postt2216.html

that link refers more to LOC. Haven't reread but my comment was along the lines of split into a fixed portion and a LOC portion. Have the LOC for the amount you hope to be able to pay off over the life of the fixed portion and fix the rest at the lowest rate possible.