Investor News

INSULATION- The clock is ticking!

Greetings and I hope Spring is filling you full of hope and happiness.

INSULATION- Yes its still a hot topic I'm afraid, and only a small % of you have done anything about it, so here is another deal which looks pretty good to us.

www.insulationwarehouse.co.nz  or phone 0800 222 299.

They are offering the following;

#Free Insulation checking of your rental property.

#Free Timber borer check.

# 20% discount on under floor and ceiling insulation

#A FREE compliance statement.

This offer is to run till November 2017.

Please remember that we NOW have to identify on all tenancy agreements the known level of insulation and you only have till July 1st 2019 to have every rental property you own insulated to the compliant level. If the insulation is a bit old you might be shocked to find out that it does not comply so the free needs assessment will be a very good thing to do.

Also as the date draws near the availability of contractors will get less and prices will surely rise to accommodate late comers!  

Don't be a late comer.

POLITICS- yes it can divide a nation and a family. All I can say to The Labour party is that you cannot multiply wealth by dividing it. 

Richard, Pauline and the team at Rotorua Rentals.

The cycle starts again

We all love facts and figures; the media, politicians, economists, academics and people like you and me!

We would be naked without the stats!

Well, here is the latest sales data for June 2017 Rotorua.

Sale totals are down from 179 in June 2016 to 81 in June 2017 and most significantly the sales of houses UNDER $300,000.00 dropped from 96 last June, down to 28 in June 2017. The sales of higher priced homes have been little affected but the drop off of lower priced house sales has seen the median sale price jump from $285,000.00 last June up to $355,000.00  for June 2017- but don't get excited and assume that any old property must be worth $355,000.00 because it simply doesn't work like that.

So why mention all of that? Well it simply confirms that the 8-9 year cycle of boom and bust has started again, and we expect that the prudent investors will start to come back in as soon as there is a  perception that the cycle has bottomed out.

When will that be is the question, but probably around 2020 to 2021 which will also mark another general election and property investors will once again be seen as rogues and vagabonds by any political party looking for votes from the "have nots" in our society. We all know that robbing Peter to pay Paul will always be supported by Paul, whatever cloth the robber is wearing.

Another sign to look out for is a sharp reduction of sales people( no sales = no income), and you may remember that in 2007/2008, 5 real estate firms in Rotorua shut down.

A few weeks ago there was much ado about comments made by Don Ha, a well known Auckland investor, who was telling anyone who would listen, that he only purchased from a seller who HAD to sell, and of course the media took it upon themselves to vilify him as being a first class rascal, taking advantage of a desperate and broken person. Well I don't know Don at all, but the reality is that he is correct, and I well recall Sir Bob Jones saying that he only buys at the bottom of the cycle, and that's when sellers get desperate. The golden rule is-prudent buyer/willing seller.

So why do I mention this? Well property investors have been fairly quiet in the last 10 months, partly because of the 40% deposit rule but also because it has been a sellers market for much of the last 20 months, and that does not suit the prudent buyer.

Soon, however, there will be buying opportunities again, watch out for frantic adverts, vacant houses, reduced prices, change of sales agency, and I know many investors are getting ready for that and have started to "follow a house" and watch for departing sales people.

Beware of rising rents-because they won't keep going up. The day will come when there are more houses to rent than there are people wanting to rent them( its the same old cycle we have seen so many times)and today's rents will, at some point, be stagnant for a while, until the next boom, circa 2025.    

Invested in Perth WA?

I hope not because I learned today that there are over 1000 vacant CBD apartments there and rents have dropped by over 50% so that's the opposite of what we are experiencing, and that will be causing mayhem amongst local investors.

Must remind you about insulation and smoke alarms, sorry to nag, but its less than 2 years now until its compulsory and current contractors are flat out, and quoting 3 to 6 months delay, and you can bet your bottom dollar that prices will rise nearer the time!

All the best from, Richard and Pauline Evans and all the team at Rotorua Rentals.

More rules and regulations for you!

Greetings and apologies for the nagging, BUT some update on the Insulation issue has come to light-namely that there will be fines of up to $4,000.00 for landlords who do NOT adequately insulate their rental property by July1st 2019. Simply saying that there are some Batts or Insulfluff in the ceiling is not good enough, and faced with a possible $4,000.00 fine it makes GOOD sense to check.

Already the several insulation companies we use are getting very busy so if you have done nothing OR if you are unsure then please let us get on and find out, and yes there will be a charge for them to go and check, but probably a lot less than the possible fine.

The web site www.energywise.govt.nz has good information about getting a subsidy when the tenant holds a Community Services card, BUT the scheme expires at the end of June 2018 so we have 12 months left so please don't delay! There is more information on that web site too, so please take time to have a good look.

More news on the Meth curse.

It has just been announced that the safe level of contamination is now set at 1.5 micrograms per 110cm2 previously it was 0.5 so that's the new official safe limit, and we have been expecting that announcement for some time now. That's good news, but to those  landlords who spent money getting a place cleaned up for a level between the 0.5 and the new level will be a bit grumpy I expect? 

The market.

Tenant demand continues to outstrip supply but of course the continuing rise in rents will become unsustainable at some point. Rotorua has a high % of beneficiaries and Housing accommodation supplements have not been increased so if you are expecting a continual rise in rents, please don't expect!.

The market rules! OK?

Hello and I hope you all survived the two cyclones, but what a terrible time our neighbours in Edgcumbe had to endure. 

Rotorua was largely unscathed so we were very lucky.

The market never fails to remind me about cycles, and the usual 7 or 8 year cycle of BOOM and BUST has certainly started to appear as seen in the latest sale figures for the last 2 months.

The only thing that surprises me is that anyone is surprised!

Around 2008 sales here slumped to such an extent that 5 real estate offices went broke and closed up and we were swamped by ex salespeople wanting a job in our office so they could get a steady salary, so we will see who falls this time?

It is very clear that the 40% deposit rule has impacted on activity, and sales agents tell me much the same thing, but usually out of public hearing!

In total there were 135 sales in March 2017 and 175 in March 2016.

The April figures are similar ;This year 117 sales and in 2016, 183 sales.

So is there a buyers market yet? Not yet but it wont be long, so if you are thinking of selling please be aware that the boom has begun to deflate. In the last 2 weeks we have had 7 houses given back to us which had been up for Auction in the last 2 months, and 4 of them never got a bid, and in one case the tenant had vacated as soon as they could so the house has been sitting vacant for 5 weeks with a loss of $1500.00 rent and the loss of their marketing costs. 

Rising rents; Unfortunately a very high % of applicants looking for a rental home are simply not going to get one because of their credit history and/or past tribunal actions, so yes demand is high but the number of good tenants remains very stable, and we would prefer a good clean tidy tenant paying rent like clockwork and paying a fair rent rather than someone willing to pay anything just to get a roof over their heads and then proceed to create havoc!

We look at rents on a regular basis and prefer to apply modest increases that keep pace with the current market. We do worry that the tales of VERY high rents might not be sustainable when the market returns to high supply/ low demand. I know that 2 years ago we had exactly that scenario but I have no idea when that type of market will return.

We have just returned from the biggest property management conference in Australia and their market, almost without exception, is over supply and lower demand, which =falling rents. In Townsville, for example, we were told they have 1800 vacant rental properties which is a terrifying prospect!

The Election promises game has started of course with Labour promising to axe negative gearing, introduce a capital gains tax and generally attack property investors, which begs the question  "who then will provide the rental accommodation when you have driven us out of the market". He ignores the existing regulations and  the bright line test, so you have to wonder if he has been fully briefed?

A reminder about smoke alarms and insulation- sorry to nag but we came across a rental property we were asked to take on where there are no smoke alarms (" thought I had till July 1st 2019") and "why must I put insulation in- my tenants are quite happy?) so the overseas owners were a bit shaken when we told them the truth, and they had put the Bond in their back pocket too, so pretty much broke all the rules!

Best wishes to you from all the team at Rotorua Rentals.


The terrible drug "P"

Hello and we have today received more disturbing information about this dreadful drug which I do need to share with you;

In 2016 the Tenancy Tribunal dealt with 220 cases where P was involved, and it looks like they are already applying the proposed new limit of 1.5 milligrams, up from the current 0.5 so that is slightly better news.

However the insurance giant IAG last year paid out $14 million for P claims, averaging 60 claims a month, so they are feeling the pinch for sure-The result is that we are being told that the other insurance companies are expected to make similar changes that IAG are proposing, if not tomorrow, then in the coming months.

The changes we have heard about are; P testing between every tenancy or the claim might be denied; premiums for rental property will go up and Insurance excess to rise, possibly as high as $2,500.00 pa. Might pay to talk with your broker or insurance company?

We are already suggesting testing between tenancies, frankly its not worth the risk by NOT doing it, so please confirm with us that you agree with that being done. 

Some news about Rotorua sales activity in February which seem to suggest that the 40% deposit rule has impacted the market.

Sales fell from 137 in Feb 2016 to 95 in Feb 2017.

The number of houses selling below $300,000.oo in Feb 2016 was 71 and in Feb 2017 that figure was 42 sales- a 40% drop, quite dramatic I think.

The effect of course has seen the average sale price rise dramatically from $288,000 to $317,000 in the same period, and that is caused by the sharp drop in sales of houses below $300,000.00.

Tenancy Applications. We have this week upgraded our on line tenant's application form which gives us more data than before, and will reduce the number of trashy applications we have been getting. The form is owned by www.tenancy.co.nz and they get a copy of the application too, which they can check against their data base of the good the bad and the ugly! Demand has never been higher, but the overall quality has remained about the same, in other words a lot of enquiry is from people we can't help, or who have credit issues or past tenancy tribunal convictions, which means we are spending more time filtering these applications, but that's what we do. and that's why property investors hire property managers!


All the best from Pauline and Richard Evans and all the team at Rotorua Rentals.

 

Opportunity beckons!

Greetings and this is not a change of direction or anything, just that a friend of mine has inherited a property he cannot do anything with and wants to offload it.

So I offered to bring this to your attention in case you might want to do something with it? 

The address is 21 Park road, Western heights, and it has been badly trashed, HOWEVER it  sits on 2859m2 of section and the owner does have outline resource consent for 5 dwellings on the site.

For the record I am NOT a selling agent so if you want to know more I will put you in contact with the owner(he lives in Christchurch) and I take no part in the negotiations.

Price? I have no idea, that's not my department!

Feel free to go and look around, take some heavy footware as the section is overgrown and a ditch runs through the rear of the section.

Park road is a popular area with tenants due to proximity of several schools, shops, Doctors surgery and pharmacy. I would expect that a buyer would build those 5 units and create a nice little portfolio of rentals.

Also, for the record, this is not a property my company managed- it was self managed by the person who left it to my friend, so you can imagine how horrified he was when he first saw his inheritance!


Good luck,

Richard Evans

Christmas 2016

Season greetings; please have a safe and relaxed holiday time, and leave us to worry about your tenant, after all that is why you have hired us!

Planning to visit here this summer? Great and we look forward to seeing you, but PLEASE give us some warning so we can make sure the tenant is given proper notice and that we are here when you walk in to say hello!

Pauline and Richard are both on call outside of the office hours and unfortunately we seem to always get that dreaded phone call about 4.00pm on Christmas day; blocked drains, burst pipes, noisy parties, lost my keys, and anything else you can think of, so not much time for R&R. However we do have 2 grandchildren arriving on Boxing day and a grandson returning from a Rotary Exchange year in Chile early in January, so its not all work and drama.

Sorry to keep nagging about Insulation but 2 years and 6 months from now ALL rental homes must have a minimum standard of insulation so please don't leave it too late to get it done- we have had good reports of two firms so you might want to give them a call; eco insulation 07 847 6020 www.ecoenergycentre.co.nz and Insultech Insulation www.insultech.co.nz 021 702 264. Both firms work out of Hamilton.

News about testing for Meths or P. Just released are the draft proposals for National Testing standards- there are no such standards at the moment so its all been a bit of a mess, but the new suggestions for public feedback can be viewed at Standards New Zealand web site. Click on Developing Standards tab and scroll down to DZ8510 where you can download and read the PDF file.

The market-has cooled off quite a bit with sales volumes down, but its a double edged sword with sales down, supply goes up and rents stop soaring- and some of the crazy high rents we saw this year will no longer be sustainable. The reason can be many but the three principal ones are;

1. Auckland sale plummet- Barfoot and Thompson reported in the The NZ Herald that October 2016 sales were about 40% down on March 2016 so the Auckland "invasion " has wilted.

2. The 40% deposit rule has effectively reduced buying activity by most property investors, and we are now getting back into the rental pool houses which have been up for sale with no takers, so our supply has improved very well, which is good news.

3. Its the 8 year cycle, yet again the 8 year boom and bust- this last happened in 2008 and 2000, so its the same old thing- the trick is to know just before it starts, so make a diary note to start buying in 6 or 7 years time, to beat the next BOOM cycle. 

Tenancy laws. A ridiculous ruling by the Court of Appeal earlier this year ( Holler and Rouse v Osaki and Anor 2016-NZCA 139) has allowed tenants to get away with all sorts of damage issues, and we can only get an award from the Tenancy tribunal IF we can prove the damage was deliberate or caused by an illegal act. Damage caused by carelessness or negligence are no longer allowed- BUT we have now had a letter from Hon Nick Smith announcing a review of the Act and proposing a law change that will mean tenants can be charged for carelessness and negligent damage for up to the amount of the owners Insurance excess, but not exceeding four weeks rent, so that's a bit better.

He then goes on to say that he will be consulting with all interested parties, but no date was announced. The point being in all of this is to make sure you have good cover, and please check your policies-any doubts try checking out the web site of Real Landlord Insurance www.rlinz.co.nz that's who we choose to insure our rental properties with.   

We will be lobbying him, so I hope you will too? 

Please drive carefully and don't become a statistic.

To all of your family have a bright and happy time from all the team at Rotorua Rentals.

"A real friend is one who walks in when the rest of the world walks out"

Changes to tenancy laws

Greetings and I am continuing to update you about the recent changes which affect all landlords and property managers.

Enforcement of the current laws in regard to the standards of rental properties.

1. Removing the ability of a landlord making a payment to the tenant instead of complying with a work order where an order relates to smoke alarms or insulation, or the Housing Improvement Regulations. This is to ensure that rental properties are maintained for current and future tenants.

2. Currently "intentional breach" of a work order is an unlawful act with a maximum fine of up to $3,000.00. The Act will be amended to make "breach without reasonable excuse" an unlawful act, with the penalty unchanged- this removes a potential landlord defence of "forgetfulness"


Tenant abandoning changes.

The current situation is very unsatisfactory as it can take up to 6 weeks to confirm that the property has been abandoned and to get a tribunal hearing to get possession back legally- absurd as it may seem!

The changes are;

1.Allow owners 24 hours notice of entry on suspicion of abandonment- at the moment has to give 48 hours notice of an inspection( and can only be done monthly) and of course we must have reasonable grounds for believing the tenant has abandoned, and abuse of this power can attract a fine of up to $2,000.00 if it is used as an excuse that breaches a tenants right of privacy.

There is provision for the tenancy tribunal to hear an owner's application for possession  within 10 working days of receipt and can be heard "on papers" without the parties being present, and of course there are conditions that have to be met, but that's a big improvement over the current law. 

THE MARKET! Everybody is an expert and prices seem to be all over the place and I mean rental levels and sale prices too. I have a feeling that things are about to slow down though with the 40% deposit rule for investors having had an immediate effect- a prominent local real estate agent reported that last weeks 5 Auctions of typical rental properties failed to get a bid.

My problem with high rents today is that at some point in the future( next week or next month or in 2017) supply of rental property will exceed demand and rents will slump back( that has already happened in Christchurch where rents have slumped back by $100.00 a week) so buyers who are highly geared now will have to consider how to subsidise the mortgage when the change happens.

In early August we missed out on managing a property where the owner was expecting $400.00 a week and we had put the fair market rent at $320.00 a week and I saw a week ago that the first tenant installed at $400.00 a week by the new owners, had already vacated leaving a pile of rubbish and junk- hope they got 4 weeks bond!

I am now in my 40th year in this industry and it has all happened before, many times over, so don't assume that anything different will happen this time.

All the best from Richard, Pauline and all the team.


Insulation of your rental property-and other updates.

Greetings on the first day of spring.

I will be sending you several updates on various changes and rules around insulation, smoke alarms and abandonment in the next 3 newsletters and although the insulation doesn't become compulsory until July 1st 2019 its important not to wait till then as there will be not much chance of getting it done "at the last moment" and its pleasing to see that so may owners have already done it or ordered it- good on you! 

The new standards will require ceiling insulation with a minimum thickness of 70 mm, covering all accessible areas above habitable spaces. Concrete slabs count as underfloor insulation as does other habitable space immediately below. A habitable space includes bedroom, kitchen, living space, bathrooms, toilets and laundry, but excludes garages and storage space except where garages are used as living or sleeping areas.

These are minimum standards and are consistent with the national requirements for new buildings and alterations introduced in 1978. Property owners would be wise to install a greater level of insulation as the extra costs are not great. The new requirement that all new tenancy agreements from July 1, 2016 declare the level of insulation in the ceiling and walls and underfloor is also an incentive to have more than just the minimum.

We have been asked why July 1 2019 was chosen giving owners a three year window of opportunity, and that is because there are 180,000 rental properties that will require retrofitting of insulation and the three year timeframe is seen as a reasonable period given the capacity of the industry to install insulation in that number of homes.

There are some exemptions and they are as follows;

1.Properties where it's impracticable to retrofit due to limitations in the property's physical design;for example limited underfloor space or having to install a false ceiling or take up a floor and it is estimated that 100,000 properties will not be able to be cost effectively insulated.

2. Properties which are sold and immediately rented back to the former owner or  occupier for a period of up to 12 months. This includes properties acquired by the NZ transport agency for eroding projects or by private developers.

3. Properties where, within 12 months from the start of a tenancy, the landlord intends to demolish the property or substantially rebuild part of the property. The landlord will need to provide evidence that they applied for the relevant resource consent and/or building consent for redevelopment work.

Where a tenant considers a property does not meet the insulation or smoke standards or existing requirements under the housing improvement regulations, they will be able to use existing processes to take a case to the Tenancy Tribunal and the tribunal can make a work order and order exemplary damages of up to $3000, so the message is very clear don't delay and don't cut corners.

The current state of our market is still quite stressed with far more applicants than there are properties and a lot of very unhappy and unsettled would be tenants, lets hope it settles down soon because we are getting all sorts of taunts thrown at us when we say"we have nothing for you" like its our fault we can't help!

I hope you enjoy the arrival of Spring, the daffodils around Rotorua are looking terrific.

Best wishes


Pauline and Richard Evans

How tenants can now damage your property and walk away scot free!

Yes I'm afraid its true, want to know more?

On July 26th The Principal Tenancy Adjudicator, Melissa Poole, issued  a long awaited practice direction under section 115 of the Residential Tenancies Act as the fallout from the infamous Holler v Osaki case has started to bite.

That case exonerated tenants from having the cost of damages awarded against them if the damage was classed as accidental- in other words we have to prove that the damage was intentional- which in effect allows the tenant to simply say" I slipped and fell and the glass bottle I was holding fell on the  hand basin and smashed it" 

A further ruling is about the landlord's right to seek to claim the Insurance excess from the tenant and the answer is "if the landlord is insured then the landlord pays the excess."

We are now being told that any claim for damage MUST be accompanied with a copy of the landlord's Insurance policy, twice today, August 10th, an Adjudicator declined to hear any evidence about a claim for damage without sighting the Insurance policy and has adjourned without any evidence being allowed to be heard! 

The ruling is causing some mayhem in Tenancy Tribunals around the country as infuriated landlords are beginning to discover this awful truth. In a Taranaki hearing recently  the adjudicator had to get extra security in to handle an angry landlord.

Clearly this has to be changed so please write to your MP or Minister of Justice- I certainly will be.

A glaring example this week where we applied for a wide variety of issues against a tenant in tribunal, abandonment, dirt, arrears, rubbish and damage, including two smashed panes of glass in the French doors opening out onto the deck all fully documented and photographed- well the adjudicator, noticed that there were no security stays to hold the doors open, so determined that the landlord was at fault for not having security stays and declined the claim for the broken glass.

If this goes unchanged then several things might well follow; rent will go up;  Premiums will go up; some landlords will get out- reducing the rental pool even further: More tenants will get into arrears.

If you want extra information please look at section 269 of The Property Law Act( usually regarded as the Act covering commercial leases) which states that the tenant cannot be held liable for accidental damage if the landlord is insured. However Melissa Poole has ignored s270 which states that the landlord may recover any insurance excess, and goes on to say that s270 overrides s269. To me and many others it very clear that the Principal Tenancy Adjudicator has either ignored the relevant section or chosen to dismiss it-either way she has acted illogically.

Common sense tells you that if you break something then you pay for it.   

What's next? Insulation again- sorry but we need to share this with you.

From July 1st we have to identify, on the tenancy agreement, the level and type of existing insulation. That is not always easy for us to do and its probable that most owners don't know either. www.snughomes.co.nz will inspect and issue a declaration for the tenancy agreement for $85.00+gst and they will also quote for installing Insulation that meets the NZ Building Code requirements and if you accept their  quote then the $85.00 fee will be refunded, for quotes over $1,000.00, and install a free 10 year smoke alarm.

I know we are nagging you but you do need to know this and getting the job done now will ensure the house is fully compliant on July 1st 2019. It will also justify a rent increase, and keep a good tenant staying for longer.   

In the meantime, spring is nearly upon us, bring on the summer!


Pauline and Richard Evans.

 

Mid winter 2016

Yes its nearly the shortest day which means summer is on its way.

There are a lot of things happening in our industry right now and they affect us all.

July 1st sees the arrival of compulsory smoke alarms in all residential tenancies so if you haven't already done so and installed them- now would be a very good time.

Also from July 1st all new tenancy agreements must identify the level of Insulation at the property, although its unclear if "nil" is acceptable. That might be a means of making sure we all know about the July 2019 deadline for insulating your rental property? May I urge you to get on to that job in plenty of time- we are very busy organizing them already so no time like the present.

Don't like doing repairs to your rental?

Well please be aware of a recent Rotorua Tenancy Tribunal case ( April 2015) where a landlord has been fined $2032.87 for deliberately failing to remedy an electrical problem and a leaking roof- the events cover several months and the full case can be seen in the Tenancy Tribunal decisions in the Min of Justice Web site. If you want to read it just type the address of the house in; 43, Ford Road, Rotorua. The property managers asked for permission to use an electrician but that was declined by the owner who sent his odd job man along instead! So if you sometimes think we are being reckless with your money, just recall this case.

Now the changes to the Health and Safety legislation are in force, you can be sure that your costs will increase- and that is partly due to us no longer being able to send in an odd job man to fix small things, such as cleaning out spouting-Work Safe NZ now requires 2 men to do that job and they must be tethered to a safety harness, and scaffolding must be used in places where a long ladder was sufficient back in the day!

The Mad Mad market we are in is causing some grief- we have a chronic shortage of good rental homes and we are getting loads of enquiry, and many sad tales too, from desperate tenants unable to find a decent place to live. The flow on from that is rising rents, which, on the face of it, looks pretty good for owners who have been landlords for many years and now feel they are getting a decent return at last, and we have no problem with that. The issue I have is that some investors buying now, attracted by higher rents and a rising demand from tenants, may very well feel the pinch when the market turns(as it always does) to a low demand/high supply market and lower rents follow on from that. Witness the Christchurch market where there is now high supply, low demand and falling rents as the rebuild winds down and workers return home.  A fellow property Manager in Christchurch has had several rents drop by $100.00 a week in recent months, and that is why we get a bit nervous with soaring sale values and matching rent rises.

What to buy?   I get that question almost daily and there is a simple answer; A clean 3 bedroom family home with heating, fencing, garaging, insulation and reasonably close to  primary schooling. Every year since 1999, the Bond centre stats, and our own research show that at least 50% of all houses rented fall into that category. 

Landlord Insurance-BIG news coming your way very soon. REAL Landlord Insurance is bringing a range of new products to the market, and I have to say its the first time in ages that an insurance product has got me excited!

All the very best from Pauline and Richard Evans and our team.

Smoke alarms- AGAIN!

Hello everyone, and sorry to be nagging you again, but its clear that a high % of homes we manage still do not have working smoke alarms and because I don't want you to be prosecuted I would urge you to check out the link to National Smoke Alarm Services Ltd., where you will find a pdf for your attention.

We are being told that Cabinet has signed off the legislation and it takes effect on July 1st this year so you have about 60 days left-no pressure.

www.rotoruarentals.co.nz/pdfs/NSAS-Fire-Risk-Management-Programme.pdf  

I hope you will take the opportunity to at least check it out?


All the best,


Richard and Pauline Evans

Some bad news about meths and rental houses.

Hello and sorry to bring you more negative news on this subject, but The Tenancy Tribunal recently handed down a decision that we all need to know about.

The article was in the NZ Herald on April 12th and does not identify the tribunal reference number-  however Harper Properties are a well established and well regarded company in Auckland and Hamilton.

I hope this connection works! 

http://nzh.tw/11620699

This tends to reinforce the suggestion in my recent newsletter to you about testing between tenancies and before you buy!

Of particular note is the line " The landlord had bought the property just before the tenancy commenced and had not dealt with the former tenants" so it is unclear if the property was previously managed by the former owner or by a property management company.

May I please repeat the need to get excellent specialist Landlord Insurance cover that might protect you, and the only one recommended by the REINZ is www.RLINZ.co.nz and they will only cover properties managed by a professional property management company- so if you know any landlord who is self managing their rental property then please pass this on to them.  

Please check out their web site and I have the application forms in my office.

Best wishes

Richard Evans 

New rules coming our way!

Greetings and I hope this Easter break gave you some time to chill out and dry out too after last week's terrible rain downpours!

Smoke alarms- New laws require that rental properties must have working smoke alarms from July 1st THIS year, and I was sorry to see that so many houses still do not have them, so we will have to install them on your behalf, but the plus is that tenants will be responsible for replacing the battery, not you, so that's something I guess.

Insulation on privately owned rental property (as opposed to State housing) becomes mandatory on July 1st 2019, and as mentioned in an earlier newsletter, please don't leave this till the last moment as the contractors will get busy and you could miss out- You might like to try a company called ECO Insulation in Hamilton 07 847 6020 or www.ecoenergycentre.co.nz    

New rules for Health and Safety come into effect on April 4th and the impact is quite profound for residential property investors, property managers and tenants.

For private landlords who hire a handy man or lawn mowing man the impact will be greatest, and if they don't fix a problem or do it badly the landlord is liable to prosecution by Worksafe NZ as well as the Tenancy Tribunal- see section 45 of The Act which refers to a landlord being responsible to comply with Health and Safety regulations, so I am not making this up! Under the changes is a new animal called a PCBU and that includes landlords-a Person Conducting a Business or Undertaking is a PCBU and its the PCBU who gets prosecuted, not the lawn mowing contractor or handyman. 

The really big issue though is meth or P- a terrible drug. We have heard of two legal opinions about the need to have a Meth test done between every tenancy; One says yes it should be done and the other says there is no requirement for that, so the opinion will have to be tested by a Judge, in a Court, so lets hope its not one of our managed properties which becomes a test case! The point being that a landlord has an obligation to keep a rental property safe.

My opinion is that it is good practice to carry out a meth test between tenancies, so we are looking at 2 firms which can do that, at a cost of about $200.00 for an initial check( it becomes more expensive if the drug is found and at a higher level of contamination, but that would become a nightmare) Doing that test will demonstrate to Workplace NZ and the Tenancy Tribunal that all reasonable and practicable steps have been taken.   

We are saying that a drug test is a legitimate cost for tax purposes and a simple $5.00 a week rent increase would cover it(unless there are more that one test having to be done in a year).

Another option worth exploring is to install a Meth Minder- www.methminder.co.nz we have several owners who have done that, and its a way of demonstrating to Worksafe NZ and the Tenancy Tribunal that all reasonable steps have been taken to provide a safe home. 

How can you or I tell if there has been Meth smoked or used in the house? Answer- we cannot, so we either get the testing done or run the risk of prosecution.

What are we doing about it? Several things, including a contractor's agreement, creating a policies and procedure manual about the meth problem, and training our staff about the problem, and making sure that owners of rental properties are well informed. 

We now have an account with www.tenancy.co.nz which looks like it has the most comprehensive data base- In the first two days we picked up 11 possible tenants who had supplied to us a written application and had not been recorded anywhere else as having bad debts.

My strongest suggestion is to make sure your rental property is covered by www.rlinz.co.nz  Real Landlord Insurance; It is my opinion that if you have specialist landlord Insurance other than RLINZ it is possible that the cover relating to Meth contamination might not be as good as you imagine, so please double check. 

The advice we are getting from law enforcement is that use of meth is far higher than we realise and its a VERY big problem, so I am sorry for lecturing you about it, but you need to know. 

RENT levels, have certainly jumped up in recent months, partly driven by high demand and low vacancy levels, and my only concern is that when the market shifts( as it always does) to a low demand/high supply market, then these higher rents might not be sustainable, which will mean longer gaps between tenancies and tenants making offers- yes we have seen all this before, so nothing new!

Buying a rental this year? Please check with me, or someone independent first.I have seen some shockers in recent months.

Daylight saving is about to end, must mean winter is on its way!

Christmas and Holidays.

I was reading an angry letter in the NZ herald about the PC brigade wanting us to change from "Merry Christmas" to "Happy Holidays" so sorry but I'm obviously not  PC enough to do that, so from all the team at Rotorua Rentals MERRY CHRISTMAS.

What is going on with our rental market?

There was a lot of publicity about the chronic shortage of good rental houses in Rotorua and we featured twice on the front page of The Daily Post about the problem. So imagine my surprise reading the latest the statistics from the bond centre concerning bonds lodged in the months of July August and September this year which showed that 403 bonds were lodged in that period which is only marginally down from 12 months ago, but rents in the last 12 months have only increased on average by 4.3% which is a figure that will surprise everybody especially me.

As usual the highest percentage of homes was in the bracket of the $260-$310 a week range for three-bedroom homes which accounted for 34% of the market with a median price of $280 a week and homes in the upper price range with an median price of $350 a week accounts for only 5.5% of the market. Looking at this evidence it's hard to claim that the rental market is booming in terms of demand and dollars but in the words of some famous wit there are lies, damn lies, and statistics because the evidence in our office differs from those published figures, so what will be interesting to us will be the September October November data as we have been phenomenally busy and literally rushed off a feet with tenant demand.

Smoke alarms. Forgive me for nagging at if you have not got a smoke alarm that works in your rental property by July 1 next year you will be breaking the law. One of the good points with the legislation has been the requirement that tenants are responsible for replacing batteries that run flat but I do believe there is still a lot of education needs to be put out to tenants and I hope that nobody reading this thinks that they don't have to bother with smoke alarms. At all our inspections of the next six months we will be making special note of the presence of smoke alarms, so you might get nagged again!  Try www.nsas.co.nz that's the web site for national Smoke Alarm Services Ltd and they are getting good reviews in the industry. BUT DONT LEAVE THIS TILL THE LAST MINUTE!

Bad behaviour. Unfortunately the summer holiday season seems to bring out the worst in some people who not only drink far too much alcohol and pay for it with money that should have been used for rent so typically the months of January and February the tenancy Tribunal becomes heavily overloaded with applications from landlords for rent arrears and party damage. It is so sad that such a special time of year creates mayhem and misery for so many people in our community, so we salute the people who have to clear up the mess and try to help people rebuild their lives.

Bad business. This year has seen quite an explosion of out-of-town investors buying property in Rotorua, mainly because it's become almost impossible to buy a rental investment in Auckland. Unfortunately some purchasers have been bitten by a dodgy business practice operated by a few unscrupulous vendors. Just in the last 10 days a new investor who asked us to take on a rental property with the current tenant in place, found that the vendors had uplifted 90% of the bond to cover the tenant's arrears, so instead of $1000 bond being transferred to the new owner only $100 came across and because the tenant is now unable to get another bond from Work and Income the only way to get the bond back up to where it should be is by getting an extra $10 or $20 a week from the tenant and hope they don't vacate anytime soon leaving more than $100 of arrears or dirt and damage.

Our webpage has been tweaked quite a bit this year and we have added two videos; one for potential owners of rental property and one for vacating tenants so if you have a bit of time up your sleeve please have a look and let me know what you think.

Visiting Rotorua? Its always good to catch up with out of town owners during the summer holiday period, but if you are wanting to check out your Investment property please remember that tenants need at least 48 hours notice of your visit, so if you can let us know in good time, that would be a very good idea.

On behalf of all our team we wish you an excellent Christmas, a profitable 2016 and, and above all, please take it easy on the roads.

Pauline and Richard Evans 

Spring and a new video for you

Hello and welcome to the first day of Spring.

This is just a short item to let you know that our latest video about "why choose Rotorua Rentals" is now up on our web site, so if you click on the landlord tab a drop down menu appears, just click on that title.

There is a scene at the end of a trashed home, ironically owned by the cameraman who made the video, so no prizes given for knowing who manages it now!

We have also launched an APP, so all of you who know how to, can download it from Google  store and Apple store.

Its early days yet as I get to learn how to drive it but its looking useful- appreciate any comments too please.

We are experiencing very high demand for good quality homes in the $300 to $400 a week range as it looks like people are moving here in big numbers now, which is good but frustrating not being able to help every potential new tenant.

Looking at the terrible scenes of refugees in Europe, makes me realise how very lucky we are to be living in New Zealand, puts our troubles into stark perspective.

Daylight savings start on 27th September this year.

Best wishes

Richard and Pauline.

Midwinter and lots of news.

Hello and welcome to this mid winter newsletter.

There has been a lot happening in the property management world in recent months and many of you will have been aware of the government announcement concerning smoke alarms and rental properties as from July 1 next year.

We are very pleased to announce our association with Smoke Alarm Testing Services and the information they have provided below I think is self explanatory. The complaint that many owners have is that tenants will often remove the battery when it starts beeping which of course defeats the whole object of having a smoke alarm in the first place and so this service we think will be very popular with everybody concerned.

WHY USE A SMOKE ALARM COMPLIANCE COMPANY?

Recently there have been an increase in tragic deaths due to house fires. This has led the NZ Fire Service to call for compulsory smoke alarms in rental properties. The NZ government has now announced new legislation for smoke alarms to be installed in all rental properties effective from 1st July 2016.

Some food for thought on statistics of the Fire Service this year:

  • 90% of all fire fatalities this year occurred in rental properties
  • Of the 27 fire deaths in the last 2 years only 2 had confirmed working smoke alarms
  • Most deaths in house fires can be prevented if there are working smoke alarms in the house to alert people and give them time to escape

What do we offer as a smoke alarm compliance company?

We offer a smoke alarm compliance program for the protection of your investment property and your tenants’ safety.

The media tends to hype up smoke alarms however they don’t always know all the facts surrounding them for instance:

  • Did you know that all smoke alarms have an expiry date?
  • There are two types of alarms – ionisation and photo-electric (photo-electric are recommended by SATS and The NZ Fire Service)
  • Alarms need to be installed and maintained by checking the location/position, replacing batteries, cleaned, checking the expiry date, and decibel reading output

Our prices:-

  • $99 inc GST per annum covers:
    • Check, test and servicing of smoke alarms
    • FREE – 9V Photo-Electric supply and installation of alarms if required
    • FREE – 240V Photo-Electric supply and installation of alarms if required (replacement of existing only)
    • Issue a certificate of compliance

Once the government releases the legislation documentation providing details noting what type of alarm and battery will be required by law - SATS will ensure we comply with these standards ensuring your property is fully equipped with the appropriate alarms/batteries ensuring compliance by law all inclusive of the $99 annual service fee.

Why engage in this service?

To ensure you meet your obligation of duty of care under common law we are encouraging landlords to be proactive before this legislation takes effect on 1st July 2016 by acting in the best interest of your tenants thereby minimising risk to their safety and are prepared and ready for when this legislation rolls out.

Contact SATS: Phone: 0508 766 532 / Email: info@sats.co.nz

Source: NZ Property Investors Federation and ONE News TVNZ.

The government have also announced compulsory insulation of rental properties and that will be very well received by tenants currently living in cold homes and although there are a few years to go until that becomes compulsory we believe there is no time like the present to get the ball rolling. Environment Bay of Plenty are recommending a company called Healthy Homes Rotorua and their website is WWW.Betterhomes.co.nz and we do suggest that you follow that through so that you are not caught up in the rush three months before the deadline date.

It is now quite normal for potential tenants to ask whether a house is insulated whereas a few years ago it was rather unusual, so having an insulated home will make it much more attractive to the good tenant that we all want.

We have been up to some exciting things in our company and if you look at our website you will see under the tenant tab there is now a video for departing tenants to see how they need to present the house in order to get their bond back. We decided to do this to reduce the number of tenants who claimed not to have any idea about what standard we required at a vacate inspection and it reinforces our commitment to maintaining a good standard of rental properties.

We have recently made a video for property owners explaining what we do and how we do it and that will also appear on our website fairly soon so I hope you get to see it. It is principally designed for out-of-town landlords who are looking for a property manager and we think it will be very well received.

We have also loaded into our website a stylised map of Rotorua identifying which areas we recommend that investors should consider buying in and highlighting the demand that we get from potential tenants in those areas. That is not to say the other areas are bad but demand in those other areas is much lower, so we are suggesting the areas we have highlighted in that map are the most likely to attract a good tenant and achieve good rental.

We will also shortly have up and running a Rotorua Rentals app which we will be able to load information on every day for tenants and landlords about what properties are available and general advice for property owners about the state of the market at any given time. According to the creators that will be a free download in the app store so look out for that in the next few weeks.

We would like to remind owners about the Environment Bay of Plenty hotswap scheme which has been very successful and very popular. If you have a non-compliant log fire at your property or an open fire I do recommend you get onto www.hotswap.co.nz  as we think it is one of the best value for money heating solutions available in Rotorua.

We offer a big welcome to all the new investors who have subscribed to our newsletter in the last 2 months, I hope you all get something useful from this.

best wishes,

Pauline and Richard Evans



Rotorua Rentals Winter Newsletter

Thank you for taking the trouble to read this and I hope we can provide you with lots of in useful information.

Many of you will be aware of the changes announced by the government concerning the requirement for all rental properties to have smoke alarms by July 1, 2016 and we have been able to identify a very worthwhile opportunity for you.

Below is a very useful opportunity to comply with the legislation provided by a company called SATS - smoke alarm testing services, an Australian company now operating in New Zealand and we believe their offer is pretty good and should be looked at quite hard.

We do suggests that if you decide to proceed with this that you don't leave it till the last week of June 2016 because it will probably be a possible for them to do every house in a seven-day period so please feel free to follow this up check them out and make a decision for yourselves. I hope you find this useful?

WHY USE A SMOKE ALARM COMPLIANCE COMPANY?

Recently there have been an increase in tragic deaths due to house fires. This has led the NZ Fire Service to call for compulsory smoke alarms in rental properties. The NZ government has now announced new legislation for smoke alarms to be installed in all rental properties effective from 1st July 2016.

Some food for thought on statistics of the Fire Service this year:

  • 90% of all fire fatalities this year occurred in rental properties
  • Of the 27 fire deaths in the last 2 years only 2 had confirmed working smoke alarms
  • Most deaths in house fires can be prevented if there are working smoke alarms in the house to alert people and give them time to escape

What do we offer as a smoke alarm compliance company?

We offer a smoke alarm compliance program for the protection of your investment property and your tenants’ safety.

The media tends to hype up smoke alarms however they don’t always know all the facts surrounding them for instance:

  • Did you know that all smoke alarms have an expiry date?
  • There are two types of alarms – ionisation and photo-electric (photo-electric are recommended by SATS and The NZ Fire Service)
  • Alarms need to be installed and maintained by checking the location/position, replacing batteries, cleaned, checking the expiry date, and decibel reading output

Our prices:-

  • $99 inc GST per annum covers:
    • Check, test and servicing of smoke alarms
    • FREE – 9V Photo-Electric supply and installation of alarms if required
    • FREE – 240V Photo-Electric supply and installation of alarms if required (replacement of existing only)
    • Issue a certificate of compliance

Once the government releases the legislation documentation providing details noting what type of alarm and battery will be required by law - SATS will ensure we comply with these standards ensuring your property is fully equipped with the appropriate alarms/batteries ensuring compliance by law all inclusive of the $99 annual service fee.

Why engage in this service?

To ensure you meet your obligation of duty of care under common law we are encouraging landlords to be proactive before this legislation takes effect on 1st July 2016 by acting in the best interest of your tenants thereby minimising risk to their safety and are prepared and ready for when this legislation rolls out.

Contact SATS: Phone: 0508 766 532 / Email: info@sats.co.nz

Source: NZ Property Investors Federation and ONE News TVNZ!

Contact Rotorua Rentals to discuss your smoke alarm compliance.

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Christmas 2014 newsletter

All of a sudden we have another Christmas, it just seems like yesterday since the last one!

The election is over, thank goodness, payouts to dairy farmer are down- bad news; Rotorua District Council has a new name- Rotorua Lakes Council; a new green cycle corridor is to be built through the heart of town; and a group of unhappy Councillors have formed a "democracy group" to challenge the perceived ramrodding through of contentious Council plans by minimal margins, without any consultation; looks like a battle is brewing.

Fortunately all of that has little impact on the rental market- demand for good quality family homes in safe locations remains steady and rents are creeping up a bit too.

As a measure of how frantically busy we are at this time of year we only have 15 vacant houses =1.7% of the properties we manage- so if you know of any friends or relations who might need our help-PLEASE let me know.   

Tenants are increasingly asking for insulated homes with heating, and homes that have those features usually attract a tenant at twice the speed of sound, especially as winter starts to creep up on us.

You may recall about 18 years ago, the National Radio sponsored Brian Edwards' book called Book of Excuses, with listeners to Top of the Morning radio show invited to submit entries, and I found a copy of the book and there is one entry that relates to property rental, so I thought you might like to see it.

" early this morning a mean looking character knocked on my door claiming he had kidnapped you and your wife and was holding you to ransom. So I gave him the rent money to save your life and thank goodness I see I was in time!"

Needless to say it was not the winner, but a mighty plausible excuse for sure!

Like many people outside Auckland and Christchurch we get frustrated with claims of an overheated property market and continuing attacks on Property Investors by elements of the media and politicians. We can only comment on Rotorua and in 2008, 2011 and in 2014 the published RV of most houses has gone down every time, that's a reflection of the prices achieved and sluggish sales volumes, and however much I point that out to journalists and economists and politicians, they really don't want to know. However I was pleased to see the new Labour party leader reveal that the Capital Gains Tax is off the agenda, so that leaves the fringe parties out in the cold on that subject- good thing too.

We know that many out of town owners will want to visit here at some time in the summer holidays and have a look at their investment property- which is fine- BUT please let us know in advance; we always get someone walking in on New Years Eve wanting to go through tomorrow at 10.00 am, and, of course, that cannot happen, so we would love to see you, but please let us have plenty of warning.

Many of you have taken up the policy with Barclays MIS to chase unpaid Tenancy Tribunal fines- the results they are having are very impressive and at least one owner on our books is now $1,100.00 better off that she was 6 months ago thanks to their work.

Our selected Christmas charity this year is Waiariki Women's Refuge- we think its awful and heart breaking that they get so busy at this time of year. 

We have just added two items to our web page which we hope will be of interest. One is a flow chart about why you might need a property manager-its a bit of fun I copied and edited from a Chicago USA property management software company, so there was a lot of editing to turn it into our language.

Also there is our new print advert about talking to me BEFORE buying a rental property- I am still seeing investors making rash buying decisions and failing to get an unbiased opinion, and then go grey with worry about the lack of a tenant.  

Pauline and I are very privileged that you have chosen Rotorua Rentals, we do take our work seriously and appreciate that we don't always get it right- but in the words of Alan Martin "its the putting right that counts" 

Please have a safe and happy Christmas.

     

Madness in the rental market.

A busy Spring and a heating up sales market???

Well spring is always busy for us, but a heating up sales market-I don't think so.

Why do we doubt the hype about Rotorua house sales?

The newest rateable values are now available with residential property values dropping against values 3 years ago-noteably Tarawera/Okareka values down 7%-the only exception being dairy farms. -Rotorua Daily Post 2/10/14.

Bad news for sellers- good news for buyers.

I talk every day to sales people who are barely making a living and I talk to vendors who have given up trying to sell or have accepted an offer way below their expectations- including one owner who has sold his house for $30,000 less that he bought it for in 2007.

On average we are taking on 3 new managements a week of houses which have been for sale for months and months and the owners have to move on, removed the For Sale signs, and have given us the property to rent out for a few years.

More of a worry though is the rent expectations that some new buyers are asking- an absolute classic on the weekend was a man who bought 2 adjoining properties, and did a nice tidy up, and based upon comments from the sellers agent is seeking $380 and $320 a week for each of them or $700.00 a week for the pair. They have been vacant now for 2 months, so when I went to see why they had not been tenanted he was mightily upset when I said the rents should be $320 and $220.00, that is $160.00 a week less than budgeted for.

Did he get an independent opinion before buying? Did he get a valuer's opinion about rent before buying?  Answer is NO to both questions. He is an Auckland based person and felt the rents were about right based on his knowledge of rents in Auckland, so who knows what will happen next to that situation, but clearly his finances are about to be hit hard.

I got some flack from my comments in this newsletter just before the election, with one subscriber taking offence with the suggestion that "you can't multiply wealth by dividing it" but thank goodness we live in free society where wealth is not a sin and should not be seen as undesirable. The reality of course is that most property Investors would deny being wealthy but would agree that they are prudent and wise and planning for the future so as not to be a burden on their children and/or tax payer.

That's a very commendable goal.

Without private property investors the supply of homes to rent would plummet, rents would rocket UP and governments would have to spend squillions of your money providing more state houses. 

Want some good news?  

Landlord insurance- its a bit of a dry subject, but we can't do without it; and RLINZ have added some new easy pay options which are so attractive I hope you will take a good look at;

The three easy pay monthly options are;

Optimum at $55 a month inc gst and provides cover for loss of rent up to $2,000.00 a week including contents up to $50,000.00.

Advantage at $44.00 a month with loss of rent cover up to $1,500.00 a week and contents up to $35,000.

Traditional at $33.00 a month with loss of rent cover up to $1,000.00 a week  and contents up to $25,000.00 a week.

In all three options there are terms and conditions of course, so it will pay to follow these options up in more detail, but our opinion of these choices is very positive and helpful with cash flow issues for some property investors. Please do check their web site www.rlinz.co.nz

Its interesting to note that many owners who have taken up policies with RLINZ have had an expensive previous "bad tenant "event and wish they had used RLINZ before.

OK that's a commercial for RLINZ but it really upsets us when an owner gets ripped off and driven nuts by the financial stress of inadequate insurance.

Tenancy Tales;

Day 1. Tenant gives us 21 days written notice as she is moving in with a new boy friend. All fine, no problem.

Day 5. We show a possible new tenant though the house and they agree to take it and sign a tenancy agreement. All fine.

Day 9. Outgoing tenant comes in to the office, a bit stressed and relinquishing her 21 day vacate notice as she is no longer moving in with new boyfriend. Sorry we cannot do that as we have already accepted your vacate notice and signed up a new tenancy agreement, so your vacate stands.

Well, tears and threats and bad language and we are certainly the devil incarnate- its all our fault of course, her lawyers will be suing us etc etc.., you can imagine the scene.

The silly thing is that had she not behaved like that we would have been pleased to offer her something else as she had been a great tenant in the place she was now vacating, but after that little display we decided not to offer her anything else. Needless to say that we have not heard from her lawyers.

One of the great things about our job is the excitement and endless variety we are presented with every day- not so sure about the effect on my blood pressure though!

We have recently taken over a nice property from one of our competitors due to the owner's repeated requests to get the advertising correct; Nice photo of a 3 bedroom house with one bathroom, heat pump and a single garage, when, in fact, its four bedrooms, 2 bathrooms, pellet fire and a double carport, so no wonder it was empty for 6 weeks! Lost rent exceeds $1,800.00, so an interesting legal battle is under way- we await the outcome!

Spring is our busiest time of the year with enquiry levels rising all the time. We are seeing multiple viewings now for the first time this year, and increasingly more than one tenant wanting to sign up on the spot-getting a bit like Auckland maybe?

Thank you for allowing me to invade your space with this newsletter, and if you, or anyone you know, is considering the purchase of an investment property in Rotorua, please make sure they get an independent opinion before they sign anything! 

   

Elections and property investment.

Greetings and firstly my apologies for the long gap since our last broadcast.

We had a cyber attack on our system from a French hacker who was trying to corrupt everything, but happily blocked now so normal service can be resumed. We were warned not to send out newsletter type broadcasts until the problem was fixed. 

Hacking and elections- we have got to be in the dirtiest campaign ever don't you think?

Hard to know what all the opposition policies(as they impact on property investment) might be as they seem keener to shovel dirt and trying to grab the moral high ground rather than giving us the real stuff.

What some parties haven't realised are the following truths;

You cant multiply wealth by dividing it.

You can't legislate the poor into prosperity by legislating the wealthy out of it( and of course all property investors are wealthy).

What one person receives without working for it, another person has to work for without receiving for it.

Governments can only dish out money to someone that has been taken from somebody else-sort of Robin Hood approach!

So I was pleased to see that the September issue of The NZ Property Investor magazine provided a deeper inspection of all party's attitude to you and me.

National will reform the RMA to reduce building costs. They will extend income related rents to community housing. There is a trial going on now with WoF for State Housing, and a good thing too, judging by the state of many state houses in Rotorua.   

Greens will want a mandatory WoF for rental housing and limit rent increases, and better security of tenure. And a capital gains tax-don't they realise that there are already tax traps for speculators and property dealers? If they kill of property investors, where are all our tenants going to live? I know the answer; the houses will be sold to Chinese investors who will remove the houses onto a container ship to be transported to downtown Beijing.

Labour will allow tenants to take landlords to tenancy tribunal if they don't put a WoF on the property. (AKA Healthy Homes guarantee) and they want a CGT too, but don't understand how it works in practice. Making the cost of owning a rental property even harsher will result in................RENT INCREASES!

United Future will encourage housing affordability.

Maori Party will require housing supplements to be paid direct to the landlord. That's a sound plan, very good.

NZ First want strict immigration controls. So when a Chinaman buys some farmland, he can put it in his suitcase and take it back to Shanghai? That's fiendishly clever, why didn't I think of that? And the Kiwi farmer who sold the farm does what with the money?

Internet/Mana - Is anyone there.? 

The blogging saga is a disgrace of course, but it has been going on for many years and before the Internet it was the diet of the chattering classes, so what's new? 

I don't know about you but I'll be looking forward to September 21st when all the shouting is over.

Sales and Rentals. Rotorua is like many other provincial centres with diabolically low sales figures(volumes and $ values) so its a VERY tough time to sell, but a great time to buy. The sales we are seeing are incredibly cut-throat and many of you reading this will have benefited from that.

Very often an attempt to sell whilst a tenant is in place will usually see that tenant move out as soon as they can find a house NOT up for sale, and at the moment they would have plenty of choice.

So the owners are then faced with no tenant and many weeks or months of no income, and the reality is that IF you can meet the market, then you will most probably get a sale, but the key is, of course, meeting the market.

Investment advice. We are not investment advisors, but we can tell property investors what rent you should get- and not what you HOPE to get, or the casual throw away line by a desperate seller along the lines of "......I think the place is worth $300.00 a week" The message is "make sure of getting independent opinion before you buy"

The telephone answering machine-I have had several grumbles about our system "when we ring you all we get is your answering machine" but if you follow the prompt you will be able to leave a message with the right person. The reason we are doing this is because we surveyed a typical 2 week period and our receptionist was answering 100 calls a day and only 1% were for her, so she never got any work done. I'm a bit like you, get annoyed when I ring a power company and its takes ages to actually get through to a real person, but we are not as bad as that!

Boring tenancies has been our slogan for a few years now, and I hope you agree that boring tenancies are the best? Who wants an exciting one?

Thank you for taking the trouble to read this, and may all your rents be on time, all your tenants calm and peaceful, and your tax is down to the bare minimum.

Very best wishes,

Richard and Pauline Evans, and all our team.



Christmas 2013

Hello, and I hope we are not all dreaming of a white Christmas!
 
When I talk to friends and neighbours they are very surprised when we tell them how frantically busy we are at this time of year. For some reason many tenants choose to exit their tenancy in December, some of them wanting the final done on 25th or 26th December on the grounds that they are flying away overseas the next day and they demand their bond money back IMMEDIATELY, and threatening to see their lawyer if we don't comply- water of the proverbial Duck's back of course.
That's part of the fun of being in this business I guess?
 
Some of you will be feeling the pinch of having your rental property vacant for a long time, and nobody hates vacant houses more than us- unfortunately Rotorua is plagued with a massive oversupply of rental homes, and has been for many months now. The figures are quite alarming-October saw 166 bonds lodged for Rotorua which is quite a drop. 10 years ago that would have been 186 lodgements. Now there are about 340 houses/flats to rent on Trade Me, about 100 more than 12 months ago. The latest census results showed a net loss of population in Rotorua of over 600 people; so its not rocket science to know why vacancy levels are so high.
 
But its not all bad news, houses and flats are still being rented and new tenant enquiry is about normal- but the problem, as reported by Professionals real estate in the last few days- is that sales have plunged again, due to the reserve bank's rules about 20% deposits. Essentially first home buyers have stopped buying- which means more unsold houses being put into the rental pool. I must point out too that demand for "nice family homes" in "nice areas" is still very high, so its not all bad news by any means.
What it does mean though is that rent increases for many rental properties is unrealistic, as tenants simply find it too easy to finder a better deal "down the road" and with so many tenants being on some sort of benefit, their spending power is limited and they know full well that there are plenty of houses to rent, so its often an easy decision to move. 
 
We were very pleased to win, by tender, a three year contract to take over the management of the residential properties owned by The Rotorua District Council, which was quite a feather in our cap. Its proving to be a good relationship and our dealing with Council officials is a delight- they are efficient, helpful and pragmatic.
 
Rotorua is under  new Civic Leadership with a new Mayor and new CEO and they are certainly showing good form, with good leadership and the just announced removal of the dreaded Development Levy will see an explosion in new developments- The levy literally drove big development away from Rotorua and reduced new projects and new subdivisions and increased the cost of doing anything, so the removal of the levy is very pleasing.  
 
Rotorua has now become famous as the Burger Joint capital- they are popping up everywhere, supplying lots of new jobs-great- and more obesity-not so great, and even the KFC store on Amohau st (reputed to be the most profitable in NZ) is being demolished and a new one constructed, yet closures continue with Tachikawa Forest Products being the most recent.
 
We are looking forward to 2014 with 2 new team members starting in January, including a completely new role of a full time letting agent and that will give us time to develop and progress with some exciting new computer software that I have been wanting to put in place for some time, including Video emails and newsletters- check out www.bombbomb.com hope you like it!
 
Pauline and Richard would like to send you all our very best for a safe and Happy Christmas and every good wish for a prosperous 2014.

Property Insurance-IMPORTANT news.

Hello and welcome to the new reality of property insurance.
 
I have had many property owners asking me to shop around for them as their premiums have shot upwards since the Christchurch Earthquake- and my only response is "this is the result of that catastrophe"
 
Since then the reinsurers have changed the rules of the game, so I have asked Kendal Russ of Telfer Young to supply a more detailed opinion for us all as we move into the change, including some advice about how to make sure YOU are not caught short if you need to make a claim on your own home as well as your investment property.
 
Changes in the residential insurance market.
 
Significant changes have recently been made in the New Zealand residential insurance market primarily due to the Christchurch earthquakes. Prior to the earthquakes most insurance companies provided replacement cover on residential properties on an open ended basis. "Like for like", full replacement irrespective of the cost or the level of premium. Following the earthquakes, to limit their exposure, insurers or the underwriters of new Zealand insurance companies are requiring insurers to provide cover based upon a pre determined "sum insured."
 
What does this mean to the residential property owner?
 
It means for new policies or on renewal of your existing insurance on your home or residential investment property, you are now required to provide a nominated "sum insured", which will set the upper limit of the insurer's liability in the event of a loss.
If an owner selects NOT to nominate a sum, typically policies are defaulting to a nominated sum of $2,000.00 per m2 of floor area, inclusive of all fees, demolition, escalation, and GST.
 
Unfortunately this will not always be accurate.
 
The difficulty for the owner is to quantify the cost of replacing the home, and the associated other improvements(drives, paths, decks, balconies, fencing, retaining walls, swimming pools etc.) There are many factors top consider, including the floor area, materials, quality, design, land stability and effect on foundation design, locational impact, demolition costs, planning and design fees, local authority charges and anticipated cost escalation not only during the annual insurance period, but also during the planning and lead in time for reconstruction and during the reconstruction phase.
 
Telfer Young have a large team of experienced Registered Valuers throughout New Zealand who will inspect, measure and assess the replacement cost of the improvements you choose to insure, inclusive of demolition costs, fees and escalation, and provide a written report.
 
Kendall Russ.
Registered Valuer ANZIV, MPINZ.
 
Rotorua 07 348 1059
kendall.russ@telferyoung.com
 
Market intelligence!
 
One of the issues we consistently battle is the MARKET. Its something that you and I have no influence over whatsoever. At the time of writing this, there are over 360 houses and flats to rent in Rotorua on Trade Me, which is about 100 more than 12 months ago, and we were freaking out about that high number then, so right now we have a problem.
There are too many houses to rent/ the number of houses being rented is static/ number of tenancy enquiries are static- ie the same as 10 years ago.
Q-So what the cause?
A-Lack of sales- unsold houses being plonked into the rental pool
 
Q. What can be done about it?
A. Be conservative with rent levels and expect delays between tenancies!
 
Two weeks ago I was asked  by a local owner, to take his vacant house on my books as it has been vacant for 13 weeks and he has spent big money advertising it and he "has never had such a delay ever before" I suggested he reduce the rent to levels of 5 years ago, which he did, and we had it let very quickly, now he is saying he wants to put the rent up as it was too cheap! Give me a break!
 
One of the issues is a perception that the sales market has taken off, well that's not true in Rotorua, and owners who have being trying to sell for the last 5 months, have either sold at "fire sale "level or lost all the rent they might have had.
 
To be fair it also has to be noted that tenant enquiry is always weak in the winter as people generally don't move house quite so much as in November and December. 
  
 
Lots of activity in Rotorua.
The new four laning of lake road is complete and its looking very good;
The new Redwoods shopping centre is being very well patronised,
and another similar centre is planned for Fairy Springs road on the site of the former garden centre. The new east side Bypass is getting closer to reality( thank goodness). The new Hunting and Fishing store by Mitre 10 mega is nearing completion, Carl's Jnr new burger bar on Amohau st is soon to open, new road changes in the central mall are about to happen for the planned expansion and arrival of K mart on the old Mitre 10 site-meanwhile the town centre gets more vacant shops and abandoned businesses, vacant bank buildings, and endless letters to the Daily Post about the distressing sight of a dying town centre!
 
The only answer is MORE people to live here, that will take up the slack in the vacant rental houses, and provide new customers for all the new Burgers bars and fast food joints.
 
Capital Gains tax.
I recently wrote a piece in The Chamber of Commerce magazine about Hone Harawera's plan to bring in a capital gains tax to pay for kids school lunches, a tax which, according to Hone, will bring in "millions of dollars". I don't know who advises these politicians but my article pointed out that capital gains only happens when Investors sell, and most investors don't sell, and there is already a tax on property traders, so its political grandstanding of the worst kind, in my view.
If politicians keep up attacks on property investors then everyone will sell all their rental properties and go and live in Noosa- but, hang on, who's going to buy them?
 
Local Elections coming up, make sure you get to vote- we have 3 candidates for Mayor in Rotorua, should be quite an exciting election!     
 
Our local MP, The Hon. Todd McClay has made it into Cabinet which is good for Rotorua and continues the tradition of Rotorua MPs becoming Honorable.
 
From all of our team at Rotorua Rentals, we wish you all the very best, and thank you for allowing us to be your property manager.
 
Pauline and Richard Evans.

One size fits all? I don't think so!

You might be thinking "thats a strange heading for a property management headline".
 
I was watching the VW cars advert on TV and was struck by their headline "the same, but different" and got to thinking about how that relates to this business of property management.
 
Every property owner that a property manager works for has one thing in common- they own rental property, and thats about it really. 
 
So we looked at all the permutations and characteristics of our own clients and came up with a wide range of "types" so I hope this doesn't offend anyone, so here goes!
 
Accidentals 1- Probably been trying to sell on the recent weak market and given it up as a bad job and put it up for rental in the meantime.
 
Accidentals 2- Inherited a parent's home maybe or been sent to a retirement village- family unwilling to even consider selling.
 
Accidentals 3. Broken marriage- messy divorce, legal battles, disputes galore about rent and occupancy costs.
 
Adventurers. Increasingly popular category with folks retiring and taking the opportunity to travel- often to Australia or Europe in camper vans, and travel for a year or two or more.
 
Seminar geeks. Been to seminars and webinars and internet experts, hunted down bargains on agents web sites, done heaps of research.
 
The professional investor. Been doing it for a long time, made mistakes and learned good lessons from that.
 
The D.I.Y. expert. What do I need a property manager for? 
 
Terrified and picky. Certain the house is being used for illegal things and wants a quote to change lightbulbs.
 
Totally indifferent. Doesn't want to know anything, not interested.
 
The reason I am telling you all this is because sometimes, we, as property managers, get it wrong- not wrong in OUR eyes but unless we know WHO you are in the list above we can easily offend or annoy you without realising.
 
So how do we overcome that risk and what needs to be done to correct any faux-pas we might have made by accident? 
 
Asking questions- simple really-here are some;
What do you want?
What do you NOT want?
How often do you want to hear from me?
Are you giving me a discretionary spending budget?
Do I need to consult you on issues costing less than a week's rent?
 
Its up to your property manager to gauge an owner's wants and needs, and it can be difficult where there is more than one owner, each one with different criteria, and possibly a different agenda.  
 
Have you, as a property owner, made sure your property manager knows YOUR category?
 
Might be a good idea if you do -it will make for a much smoother relationship and a better tenancy for everyone.
 
it looks like summer has arrived!
 
All the best from the team at Rotorua Rentals.
 
Richard and Pauline.
 
 

Rotorua rentals-September update.

Hello and thank you for taking the time to read this-well I hope you do!
 
We have very recently returned from a quick visit to Christchurch,and, despite seeing all the damage on TV, it was a BIG shock to actually see the damage- we were truly lost for words, and I'm not ashamed to say I had a lump in my throat looking at the disaster. We had friends with a shop in High st, so we went to look-High street doesn't exist anymore, very sobering.
 
Whilst in Christchurch we met with other LPMNZ property managers and we heard of two tales which rather shocked us.
 
1. A tenant was killed in the earthquake and in his pocket was the garage remote for the property he was renting. The landlord wanted the cost of replacing it to be reimbursed and asked the property manager to go to The tenancy tribunal to get an order for the cost to be taken from the bond- The property manager was sickened to be asked, and refused( good for her) and the owner promptly sacked her and went to tribunal himself- and was denied by the Tribunal.
 
2. A similar case, where a tenant was murdered, and the murderers wrapped the body in a carpet at the rental flat where the murder took place, and dumped the body in a rubbish tip.
The owner wanted the cost of a new carpet to be taken from the bond, and the property manager refused to take the case to the tribunal( again good for her) so the owner took it upon himself to do so- and lost, thankfully.
 
I doubt if such crass inhumanity is unique to Christchurch, but clearly there are some very callous people on the planet.
 
The rental market is volatile.
 
In very recent weeks I have had conversations with property managers in Tauranga, Remuera, New Plymouth, Palmerston North and Lower Hutt, and they all tell me about their very high vacancy levels during the winter, and having to DROP the asking prices just to get a tenant, and regretfully we are seeing some of that here at the moment. Rotorua property managers do talk to each other and it seems like a vacancy level of around 6% has been with us over the winter, a figure which is more that double the usual level- That is reflected by the very high volumes of available rentals on Trade Me, currently at just over 300, again that is an abnormally high figure.   
 
We have all had tenants packing up and going to Australia and sometimes the now vacant rental is taking a bit longer to rent. Historically we have only had vacancy levels of less than 2%, so the exodus over the Tasman sea has had an impact on supply and some of you reading this will know exactly what I am talking about as you might have a vacant rental property and never had to endure that before. Believe me we do worry about any vacant rental property and we do encourage potential tenants to "make an offer".
 
Waiariki Polytech in Rotorua.
 
Very recently they purchased the Thermal Holiday park adjacent to their campus on Old Taupo rd, to provide up to 300 beds for their students as well as a swimming pool and other amenities found in holiday camps- and that does make very good sense-HOWEVER it will also see an exodus of some magnitude of Polytech students who currently rent flats in town to the new campus- and who can blame them?
 
The point being that we will see a rise in vacancies of flats when that happens, so our message is clear that in order to maintain a decent level of occupancy the rents must remain low and/or the quality of flats might need to be raised- heating especially.
So if you are considering a purchase of a block of flats just keep that in mind.
I have this week cautioned two investors who were blissfully unaware of the Polytech plans, and it became clear (from feedback to the buyer) that was the reason the seller was trying to offload them, so one of them was able to negotiate a very keen price, the other one walked away.
 
Smoke Alarms.
 
This vital tool for landlords has been suffering from the beeping of a flat battery!
The reason tenants very often disconnect them is to stop the beeping and deciding NOT to replace the battery- Well NZ Fire Service has come up with a 10 year battery and in a sealed unit which can't be easily opened. Details at www.fire.org.nz
They are more expensive and there is a selection which you can check out at
www.mitre10mega.co.nz/shop/safety
prices range from $29.10 to $44.98 but dont expect tenants to install them- we use a handy man who has a ladder and the right tools!
 
Radio Interview.
 
I get interviewed by the local newspaper and radio from time to time and I am currently spouting our philosophy about boring tenancies. The reason is, obviously, that the tenant is perfect, the property is perfect and no issues have arisen. This came about when an owner complained to me that nothing was happening, and what was going on ( he was quite annoyed), so I sent him a video of the house, including an interview with the tenant and confirmation about the rent, in otherwords all was well- still only partly satisfied I asked him if he wanted an exciting tenancy with arrears and evctions and tribunals etc- and of course he immediately got the point; that we are paid to keep tenancies boring, thats how we measure ourselves, and thats what owners want.
The radio interviewer hadn't really understood that 95% of tenancies are trouble free and had difficulty grasping the concept of a "boring tenancy" - but you and I know what we mean!
 
From all the team at Rotorua Rentals, be safe and well and lets not forget the people of Christchurch.
 
 
  

In defence of property investors

Hello everyone and I hope that the cold weather isn't getting too much for you?
Those of you in Queensland and Europe will be warm as toast I'm sure.
 
I recently was in a "dispute" hearing where a very articulate beneficiaries advocate was being very snakey about property owners "who get fat on the back of impoversished beneficiaries"  and I was so annoyed that I couldn't reply coherently and it wasn't until a few days later that a friend e mailed to me a wonderful piece of work on that very subject; so much so that I want to share it with you.
 
Its an American anti welfare piece, but I think it fits well in New Zealand as we strive to get people off the welfare dependency ladder.
 
If it causes offence than I apologise, but I suspect that most owners of rental property will have some degree of sympathy with this- lets hope so! 
 
1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.
 
2. What one person receieves without working for, another person must work for without receiving..
 
3. The government cannot give to anybody anything that the government first takes from somebody else.
 
4. You cannot multiply wealth by dividing it.
 
5. When half the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going get what they work for, that is the beginning of the end for any nation.
 
I have long been a fan of owners of rental property because for the most part you are providing for your own and your children's future; you tend to be less likely to ever draw a benefit; you are providing a home for the less fortunate which the government doesn't have to provide; you are risking your own capital and are therefor entitled to a return on that; and you keep the banks solvent too!
 
Anyway thats my beef for now, I do get a bit fed up with the politice of envy though!
 
If anyone wants to see the full version about how Hiroshima is now a triving modern city, despite the Atomic bomb, and where there is no welfare system, then let me know and I'll send it to you.
 
Rentals matters.
 
Demand remains steady for straightforward 3 bedroom family homes with heating, but I see that the supply of rental property on Trade Me in Rotorua has leaped to well over 300, which is a concern, so that is continuing evidence of unsold houses being put into the rental pool, plus the traditionally quiet 3 months of winter
Auckland is still bucking the trend, as usual, and demand is far outstripping supply there- lets hope that demand drifts down to Rotorua soon!
 
Its good to see some investors coming back into the market- I have been carrying out more rental appraisals for buyers in the last 6 weeks than I have done in the last 6 months, and although its still a buyer's market it looks to have bottomed out- we shall see!
 
Tenancy Matters.
I was suprised to learn from colleagues in Tauranga and Wellington that they are experiencing an oversupply of rental property and they are having to knock back rents just to attract a new tenant. The Dominion Post reported that a few weeks ago as well, but when a Tauranga property manager started to tell me the same thing only a few days ago, I was a bit shocked. Its a complete contrast to Auckland, as usual, so I hope the situation here in Rotorua doesn't turn down- and the reason I mention it is because very recently The Waiariki Polytech announced the purchase of The Rotorua Thermal Holiday Camp next door on Old Tauo Rd, as a campus for there students- Great idea, makes a lot of sense- 300 beds are available there too.
Unfortunately many of those 300 beds will be taken up by students who are currently renting a flat in town, often 2 or 3 will share a  2 bed flat in Glenholme or Fenton Park, which could mean up to 30 or 40 flats in town will be vacated, and its a moot point where the new tenants will come from.
We are hearing anecdotal evidence that the vast supply of new flats in the Old Post Office building are struggling a bit and rents there have been savagely pruned in order to attract tenants- an ex tenant there has told me that he was paying $90 a week less than the advertised price of $400, and quit anyway after a few months as they were so small.    
 
Tribunal activities.
We have been on the receiving end of some decisions in Tribunal which have suprised us ( to put it mildly!) where claims for cleaning have been rejected. In one outrageous case I was accused of expecting a far too high a standard, akin to a Hospital operating theatre, despite detailed photos of cobwebs hanging off lights, breadcrumbs in drawers, burnt food scraps in the oven and particles of stuff around the seals of the dishwasher- and our $130.00 cleaning bill from a commercial cleaner was rejected! We can't appeal as the amount involved was less than $1,000.00 and in another case the tenant admitted burning a 12 month old vanity top in the bathroom with warm hair curlers- photos and videos were shown- but because the damage was "minor and did not affect the continued use of the top" the claim to replace it was declined- and again as it was under $1,000.00 
there is no right of appeal.
The reason we are sharing this with you is to warn you that we are seeing a quite new attitude at tribunal, so we might be suggesting in future that there is no point in claiming for"minor repairs" however galling as that might be.
 
We welcome aboard two new faces since my last letter to you, Jenna Flutely as a letting agent and Dee Hardie as our personal assistant- both have good experience in the business so they have hit the ground running!
 
Our favourite Charity is Neighbourhood Support and Pauline has just been re-elected as Chair of the Rotorua branch- congratulations.
 
Roll on the Olympics- good luck to all our athletes!
 
All the best from frosty Rotorua,
Richard and Pauline Evans and all our team.

Insurance and televisions!

Hello, and these are pretty boring subjects to be writing to you about- but there is a point to it!
 
Firstly we are increasingly aware of rising insurance costs and the strain that can sometimes put on cash flow for property investors- You know what happens, the rates demand comes in on the same day as the insurance renewal notice, and we have just spent $1,100.00 of you money on a new hotwater cylinder, and the tenant has just vacated!
 
It all happens at once- I know, it hit us on one of our own places on December 20th.
 
So as you know we are continually seeking ways to support our clients and promote Landlord Insurance with www.rlinz.co.nz so we are delighted to let you know that Rotorua Rentals, in conjunction with Real Landlord Insurance,have come up with a new option to reduce the strain on cash flow.
I hope it will encourage you to really look hard at your existing cover and compare apples with apples.
Current annual premium is $320.00 and that will move to $330.00 as from May 1st-new EQC levies- so an early sign up might be a good plan!
 
The new option is for a monthly premium of $31.00 and there are some special conditions that will apply, and the total annual amount will be greater then $330.00, so if the idea of a monthly amount is attractive please let me know. You might like to know that we are progressively moving our landlord insurance premiums with RLINZ to monthly as and when they fall due for renewal. 
 
Now televisions, and digital ones only.
 
As from August this year through to May 2013, the analogue TV aerials will be redundant and only digital ones will work.
 
For 90% of us who have Sky or HD tv sets thats not an issue, but owners with blocks of flats which do not have digital aerials and their tenants are using those aerials, MAY be forced to upgrade so the tenant can use a digital TV-moreover, if the property is a furnished and includes a TV in the chattels then the owner might have to replace that too.
 
At some point there will be, I am sure, a tenancy tribunal case to spell out some guidelines on the subject, so we look forward to that.
 
In our opinion its not good enough to say to an EXISTING tenant that the aerial will not be changed, nor will it be good enough to say we are not changing the TV.
 
What we do suggest is that any property which falls vacant before the scheduled change, should have the analogue aerial removed, so its up to any new tenant to get their own Sky dish of Freeview connection arranged.
 
A tenant looking at renting a property with an aerial on the roof would reasonably expect that it is a working one and we don't want to see you caught in further costs.
 
The Act does not say you have to supply an aerial, but if its there at the start of the tenancy you can't just remove it when it no longer works.
 
Chimney sweeping time again.
Yes summer is over for another year and we advise owners who are NOT on our chimney sweep list that it is a very wise precaution to get that job done now before all those log fires get lit!
 
Easter is only a month away now- doesn't time fly!
 
From all of us at Rotorua Rentals we thank you for letting us be part of your property investment team.
 
 
 
Pauline and Richard Evans
 
 
 
 
    

December 2011- A busy month.

Hello and I hope all your Christmas shopping is done, cellar and larder fully stocked?
 
December is our mad month and we will do more lets in this month than any other one- everyone wants to get in before Christmas day, but more annoying is the ones who have given their 21 days notice to vacate and want a final and bond refund on December 25th or 26th.
 
Now to get serious. We have just has two tenants die on us and its a very sad time for their families of course. The new legislation allows for the tenancy to end with a 21 day notice period as from the date of death. Neither of our landlords in theses two cases had specialist insurance cover, so although the bond covered the rent for that period there was not enough to pay for some clean up work which meant there will be a delay of a week or two before the property is rentable again.
So we are reminding everyone that we do recommend www.rlinz.co.nz and under their cover there is up to 6 weeks rent available. Please check their site out, and I can safely say that, in my opinion, it is the very best policy available for landlords to insure their investment.
 
The market-what can I say, one day we are desperately short of good stock and then we have an over supply a week later, but thats the market for you.
 
I have had several interesting conversations with fellow property managers around the country in recent weeks and they all have a similar tale of woe about low activity during the Rugby World Cup, followed by a pre general election shut down as people gave thought to that instead of moving house; The activity really only burst back into life a day or so after the election- we had, from our web site, 16 signed application forms on monday november 28th, when we typically get 20 or so in one week- and several were from high end tenants seeking executive style homes- before Christmas, so I don't know why folks don't plan ahead for important matters like house hunting- but thats people for you!
 
Can I remind owners about a tenant's right of peaceful enjoyment and if you are planning to visit the rental property this holiday time please make sure you get us to make an appointment; and its always good to see our owners, but we would like to know when you are coming, so we can be sure to be here. 
 
The recession has produced great opportunities for property investors to add to the portfolio, and I have been very busy this year advising many of you about the realistic rent that can be achieved. I have been quite suprised at the number of times the seller or seller's agent have been very cavalier in their opinions as to a fair market rent and based it upon gossip and anecdotal evidence and guess work, usually designed to support an asking price, whereas I have to be able to produce a good tenant willing and able to pay the rent.
The reason I mention this is that I carried out an appraisal for an out of town buyer in May this year, who had been "told" by the agent that $300.00 a week was the norm for the area, and by October it was still vacant, which is when I was called in to bring them the sad news that $240 a week was more realistic. The salesperson has long since moved on of course, so there is nothing he can do, except bite the bullet! 
So please don't believe everything you are told, and don't always hear what you want to hear- it might cost you money! 
 
We will be doing our annual Christmas Ham draw for tenants who are up to date with their rent on Christmas day- actually five Hams will be given out and by pure luck they always seem to go to the most needy families, with lots of mouths to feed. Its one small thing we can do to combat the summer holidays cash flow problems some of our tenants have to contend with in the coming few weeks.
 
On behalf of all the team, Pauline and I wish you and your families a restful and safe Christmas and a Prosperous New Year.

Rugby World Cup and all that

Hello and thank you for accepting this newsletter, and I hope this finds you well, and prospering?
 
Now I have to admit that I am a fan of Sir Bob Jones; I like his directness, honesty and infinite common sense. He is not afraid to tilt at windmills like Don Quixote and, to him, sacred cows make the best burgers. ( Apologies to vegetarians).
 
I have just read his article in the latest NZ Property Investor magazine wher he takes pot shots at the capital gains tax policy being promoted by The Labour Party, and he wondered why so many jounalists and academics seemd to be in favour of it, and came up with the answer that none of them were likely to be affected as none of them had the qualities or characteristics to be Property Investors. They are in the main "side line critics" indulging in the politics of envy.
 
In the same magazine there is a most informative article by Mark Withers, an accountant himself, saying the a CGT would increase compliance costs and he can see accountants adding to their staff to cope with the extra work.He also makes the point that tax would only get paid when a property is sold, so as most investors are there for the long haul, it seems very doubtfull that much revenue would be produced anyway, but next to nothing in the short term- but we all knew that anyway! 
 
The rental market is brisk and active, with vacancy levels at their lowest for a long time- more especially in the middle and top end of the market with demand outpacing supply by quite a margin.
 
We have always loved our work because it never stands still, and we meet and get to know so many positive and buzzy people who share so many core values with us- I came across a sad little poem recently about a man who never did anything, here it is;
 
There was a very cautious man,
who never laughed or cried.
He never risked, he never lost,
he never won nor tried.
And when one day he passed away,
his insurance was denied,
For since he never really lived,
they claimed he never died.
 
 and most of our dealings are with people exactly the opposite of our poor cautious man,
 and whilst we still have to deal with some unpleasant and erratic individuals, its never a
 dull day.
 
So WRC and all that! I have been to one match only so far, Tonga v Namibia in Rotorua and it was the first time in years that I have been to an international game and I was struck by two features; Firstly that a huge % have no interest in Rugby and only go to show off their bodies, costumes and decorative body paint and drink as much beer as they can; and, secondly, the number of plain clothes police quietly going about their work, and trying not
to look too obvious. Interesting knowing that a crowd like that is likely to attract "people of interest".
 
My Australian friends have been very quiet since the defeat by Ireland and they are now optimistic that their game against the USA on  Friday will cheer them up a bit- lets hope so, as we don't like the sight of sad Aussies, do we?
 
One curious feature of the RWC has been the boom in outgoing NZ travellers happy to escape the event.
 
Marketing your rental property.
 
We are now running videos of vacant rental houses and flats on You Tube with very promising results. Enquiries are much more positive as they can see almost everything and
tenants hunting for a home find the service very usefull.
We are still learning how best to do it so we would welcome any feedback.
Go to You Tube, click on video and then enter rotoruarentals in the url box.
 
www.LPMNZ.com our new association, is very exciting and every week we are exposed to fresh ideas- as a result our new web site( being upgraded as I write this) will include some new features that we think will add value to you and your tenant alike.
We will be running videos on our web site too, fairly soon- isn't technology exciting!
Mind you I still find Jet travel a miracle so trying to fathom all this new stuff is a struggle, luckily we have brilliant staff here, generation Y types, who just love it!
I have even got another e mail for my i phone rotoruarentals@yahoo.co.nz if you need to get me direct, in a hurry.
 
Recession or not? 
 
Most of us are probably thinking/hoping the recesssion is waning and we might be right, but reading the words of economists and financial commentators, we might not be out of the woods yet- largely because of the looming drama with the Euro and turmoil within the USA which looks set to go back into recession. Our high dollar is great for imports but hopeless for exporters- I have friends here who are in the export business and their sales are lower than ever and in some cases its costing them money to export goods, especially to the USA, so we are still in the grip I believe.
 
On a less gloomy note we have the rest of the RWC and a general election to look forward, so we are going to have to put up with a media bombardment; Leaders debates; frenetic arguments from all corners and lovely day on Sunday 27th November with NO POLITICAL ADVERTS, won't that be nice!
 
Christchurch.
 
Its becoming even more distressing for the folks who live there with the new threat of Insurance companies possibly not insuring any new buildings, which of course means there will be no new buildings.
There is increasing evidence of residents leaving and businesses moving elsewhere, and we are seeing a slight increase in enquiry now from Canterbury, possibly as a result of the doubt still hanging over their heads about rebuilding.
Pauline and I have close ties to Christchurch, and I'm sure many of you will have too.
 
From all the team at Rotorua Rentals enjoy the spring and Go The All Blacks.
 
Richard and PaulineEvans
 

Keen landlord looking for a buyer.

Hello and I hope this finds you well?
 
We all know about the "buyers market" and how much longer that will be with us is anyones guess- but my guess is that it'll be a long time yet before we see any change, so great buying time, rotten selling time!
 
One of my landlords need to get a sale on his property here so he has asked me to send this out to my data base in case it spins any wheels, so to speak.
 
His name is Lance Dews lancedews@orcon.net.nz
 
The house is a 3 bedroom with log fire and garage currently let at $220 a week. The tenant has given notice to vacate after 22 months there, and Lance is taking the opportunity of a vacant house to effect a sale.
 
He tells me he paid $147,000 for it 5 years ago and would sell it for the same figure.
 
The address is 12, Marae st, Koutu, on an elevated site, CV is $150,000, section size is 920m2.
 
We are not involved with the sale in any way, and we ask that you e mail Lance direct for negotiations, we are not getting a commission or any sort of fee.
 
I will happily show the house to anyone interested of course. 
 
Spring is around the corenr folks, lovely!
 
 
All the best,
 
Richard and Pauline Evans
 

Mid winter 2011

The year 2011 has been an action packed time for us. Apart from the dreadful events in Christchurch, it has been a great year so far- for several reasons.
 
The growth in the rental market continues to take place, not just from frustrated home sellers but from tenants who have resolved to remain tenants.
 
The evidence is growing( been growing for 20 years ) that the home ownership dream of my youth has faded for more people than ever. I can see why, as being locked into a house that I can't sell due to the market or liquifaction, has profound financial implications for some home owners, and the relative freedom that a tenancy offers seems much more attractive.
 
I read last week an article in The NZ Property Investor magazine about a Christchurch landlord, Liz Harris,with 91 unrentable earthquake damaged properties in Christchurch, what a ghastly time for her, and lucky tenants who can move elsewhere.
 
But onto happier things.
We have also launched a new venture called The Leading Property Managers of New Zealand- www.lpmnz.com which has greatly increased our knowledge and sphere of contacts, so we have a very much wider range of contacts and ideas and business mentoring than ever before. The key now is to put in place some of those strategies so that we can offer a higher level of service and skill to our customer-you. We had the inaugural conference and launch here in Rotorua in May with over 80 delegates, a frantic time for us, but we are so lucky with our team here that we were able to devote 2 days away in the knowledge that things were continuing smoothly at home! 
 
The only negative this year, from a commercial point of view, is the decision by police national HQ to end the ability of property managers  to check whether a particular applicant is considered"suitable " or "unsuitable" by the Police. It was a very valuable and highly succesful facility for The police and us, but higher minds have pulled the plug on that.
It transpires that the local Maori party MP, Te Ururoa Flavell has climbed into several Govt departments and officials and forced this back down. What a shame! 
 
We are still able to get free data from The Tenancy Tribunal web site, but it only goes back three years, so we have decided to join Tenancy Information NZ www.tinz.net.nz which goes back many more years and includes the old Baycorp and Veda advantage material as well as 10 years of tenant information, unfortunately they do charge for the service, but on balance, the protection it will afford landlords will be well worthy of the cost. We will need to replace the free police service with TINZ and there is a fee of $12.95 +gst which we will have to pass on to you-However we will only be doing that for the final choice tenant, and not for every applicant, so we expect on average that most owners will not be charged more than once or twice a year at the most- If you are unsure about this, please let me know, but we do think its VERY important to protect your investment.
 
On an exciting note we have started advertising videos on You Tube of rental property, I don't think anyone else is doing that in New Zealand -yet!
Its very crude at the moment as I'm still learning the ropes, so please check them out and please don't give me hard time about it, we are still learning how to use it.
go to You tube- videos- rotorua rentals and take a look.
 
Yes I know You tube is free, but the i pad is not,so once we have the system up and running we will be offering the service to you for a nominal fee.
 
We are putting scripts on the Trade Me advert linking to You Tube, so its very early days yet to judge the results. My good friend in Florida who uses this all the time tells me that potential customers just love it as it gives them far more useful information than a plain old photo!  And its perfect for out of town and overseas tenant enquiry.
 
An added bonus for YOU will be our ability to email video to you of any issues at your property that are hard to describe in words.
 
Technology is a wonderful thing and probably out of date by the end of this week! 
 
It has come to my attention that some owners have not been getting their monthly e mail statements, despite the fact that they have been sent- the point is that we don't know they haven't been received, and they are floating around in hyper space- so if you have not received yours please tell us.
 
From all the very busy team at 1215, Amohia street, thank you for allowing us to be your property manager and less than 90 days till The Rugby World Cup- Go the All Blacks!
 
Pauline and Richard Evans

Christmas and New Year

Wow doesn't time fly by?
 
Its that time of year again, and we have all done our Christmas shopping and we haven't missed anyone on our christmas card list..Yeah right!
 
Every year we run a Christmas Ham competition for tenants who are up to date with the rent and we give away five hams- and by sheer luck they always go to the most needy families- and its one way of minimising the traditional Post Christmas cash flow issues which infect so many tenants.
 
Every year the number of Mediations and Tribunal cases skyrocket in January and February and we have our fair share of holiday time dramas, which is one of the reasons you employ us of course, so we are not complaining!
 
I have been telling anyone who will listen that we believe the recession is still here, house sales are limp as a wet rag and too many unsold houses are being dumped into the rental pool- However I need to qualify that a bit by clarifying which houses are easy to rent and which are very hard to rent.
 
The recession has been world wide so people arriving here from another town or country need to rent as they cannot sell their own home, and that has put pressure on demand for " better homes" especially more modern ones in the most favoured locations, and we have seen gradual rises in rents in that segment.
 
On the flip side we are seeing rent levels stall and sometimes back up a bit in the lower socio-economic streets- typically now, prospective tenants are making offers which are usually accepted.
 
Landlords and agents who have rosy coloured spectacles when it comes to rent levels have been worse hit- "last time we advertised it 3 years ago we were flooded with people wanting it..." and that was when there were 70 house on Trade me to rent in Rotorua, now its around 280, so do the maths.
 
What is also significant is the volume of lets- October '06 was 168, Oct '08 was 208 and Oct '10 was 188, so over the last 4 years the number of lets has remained static at the same time as supply has exploded by almost 400%.
 
The better news is the rent increase in the "favoured" sectors up from $220 in October 2006 to $262 in October 2010 and every month we see 50% of rentals are 3 bedroom homes in that price range. If you want to add to your portfolio please check with us first as to rent expectations and market demand BEFORE the agents sign you up!
 
As we are no longer Real Estate Agents I can point a bit of fun at them- I know how hard it is in this market to make a living, but overguessing rents to a buyer is very much a sin in my book, and that crime is less frequent these days with greater consumer protection than ever before.
 
We are able to identify our share of the market by comparing our bond lodgement numbers with the published numbers and we have been slowly climbing to the 25% mark which we have now achieved which we are very excited about.
 
On the commercial front we have taken a shareholding in The Leading Property Managers of New Zealand Ltd., and 2011 will see some strong branding and marketing for that company. If you are curious to see what that means please look at www.lpma.com.au for a comparison. The LPMA owners are our business partners in LPMNZ which is proving to be a highly valuable association and enlightening too.
 
Our team has remained steady and loyal- any company can only prosper with great people on board, so this is the team and this is what they do.
 
Nicole Aitu- Tenant selection, lettings and inspections.
Brenda-Lee Gunn- Tenant selection, lettings and inspections.
Patricia Druery- Tenant selection, lettings and inspections.
These three ladies work very closely together to make sure the right people get to see a vacant property and they don't rush in to sign up the first live body who wants it.
 
Darcy Sharplin- Arrears, Mediations and Tribunal; our ex bank manager who spent his life hounding customers about overdrafts!
Janelle Retemeyer- Repairs and maintenance- trademens quotes and work co-ordination-Part time
Andrew Davenport- Inspections co-ordination and reports to property owners and back up for Janelle. Andrew is new to the team so he is still settling in
Maree Passier- our brilliant IT expert and finance wizz-kid- Maree is the one who actually pays your rent to you. Maree has been with us since 1995.
Shiona Wenborn who holds the front line and deals with difficult customers and takes our messages, and bears the brunt of unreasonable tenants.
Janet Jones, part time and she does most of the advertising, and back up administration work- a very busy lady.  
 
Somebody once asked the Pope "Your Holiness,how many people actually work in the Vatican?" to which he replied "about half of them" and that of course doesn't apply to our team.
 
Our system is called task management as opposed to portfolio management, and that means one of the team will handle one aspect and do it well. Some property owners are used to having just one person as a point of contact so either Pauline or Richard can be that person, although we might not have an immediate answer at our fingertips, but we are always glad to hear from you even if its only to have a chat about taxes, or governments or the Black cap cricketers- on second thoughts please don't ring me about the cricket!    
 
Visiting Rotorua this summer? Thats great but please let us know so we can be sure to be here and free to talk- If you just turn up and we are out or away on leave we would hate to have missed you.      
 
One of our plans for 2011 is to get into social networking with Twitter and Facebook- that will assisit with communicating  with you and finding out your feelings on anything. At the moment I have very minimal knowledge about Twittering but I expect to catch up with one of my teenage grandchildren and they'll know for sure how to do it.
 
It was once said that "you should hire that teenager while he still knows everything" mind you we were probably like that too once upon a time?
 
TAXES and April 1st!
 
Every time a tenant gives us notice to leave we immediately revisit the rent in the hope we can squeeze another $5 or $10 a week, because we all know that little gst rises and removal of depreciation, higher council rates, all add up and every little bit helps.
 
 
Holidays
We all hope that you enjoy your Christmas break, and have a safe and peacefull time, and we'll be standing by the phones getting ready for noisy parties, blocked drains, blown over fences and any other diversion that always seems to happen about 4.00pm on December 25th, oh well thats our job!
 
All the very best for 2011 may we all get big Tax refunds!
 
 
Richard and Pauline and our team.
 

Investments flats for sale

Hello and this might be an oportunity to add to your portfolio.
 
I have been asked by one of our landlords to offer his 2 units for private sale.
 
WE are not involved in any way other than the fact that we manage the units.
 
If you are interested please e mail Per Nielsen at psn@xtra.co.nz
 
The address is 10a and b Trent Place, both 2 bed units with garage.
 
Rents are $195 and $200 a week, and we have never had difficulty finding a tenant.
 
They are nice units, fenced and well presented.
 
Per tells me the rates are about $4,000 pa and the RV is $464,000, but you would need to do your own research of course.
 
He is asking $320,000 for the pair.
 
You could also ring him on 027 544 6945.
 
He also has plans to develop the site for six units an he would consider a joint venture, or swap for a smaller property- in other words he would like to shift them or work on a deal. 
 
If you need a written rental appraisal for lending purposes then I'll be happy to oblige
 
Just for the record we are not selling agents and cannot be involved with any negotiations, and we will not be getting any fee.
 
Hope it works out for one of you?
 
Sad item in the Daily Post last night with the parent company of Harcourts Rotorua going into receivership (it is, or was, a branch of the Taupo office), so its a difficult time still for Real Estate agents.
 
Harcourts Rotorua continue to trade and they plan to create a new company, so we wish them well.
 
We are looking at a new version of the Tenancy Agreement created by the Auckland District Law Society, and I am involved with reviewing it at the moment.
 
Its a typical legal document drawn up by lawyers who never have actually filled out a tenancy agreement, so we are having a lot of fun making changes to suit front line property managers.
 
Well the windy weather has blown down more trees and fences- I thought summer was on the way!
 
All the best Richard, Pauline and all the team.

October 1st- A good date for Property Investors

Yes the Law has been changed and very pleased with it we are as well- actually I don't think it goes far enough, but not every Law will please everybody 100% of the time.
 
Opponents of the amendments think its far too harsh on tenants! Give me break- its nothing of the sort.
 
It certainly creates a better balance, with several new offences being liable for fines.
Of special note are the following new offences.
 
Tenant failing to vacate the property on termination without reasonable excuse $1,000.00
Harassing other tenants and neighbours $2,000.00.
Exceeding maximum number of tenants as written in the agreement $1,000.00.
Abandoning the tenancy without reasonable excuse $1,000.00
Using the premises for unlawful activities $1,000.00
Assigning or subletting without consent. $1,000.00.
We are pleased with these items- well overdue.
 
Landlord failing to meet obligations in respect of cleanliness, maintenance and safety requirements $3,000.00
Landlord interfering with supply of services to property $1,000.00
 
These two landlord items are of particular note for owners who refuse to carry out repairs or obey a work order from the Tenancy Tribunal following an action brought by a tenant. We will be watching to see any test cases which will surely happen. There is already enquiry from tenants seeking advice about how to go about this process, so the word has got out and someone is going to get dealt to- thankfully none of you will be made an example of.
 
There are several other changes; The 10 working day notice to remedy a default becomes a 14 day notice; Death of a tenant creates a 21 day notice to end the tenancy; new rules for Boarding house tenants; a fixed term tenancy becomes a periodic tenancy unless due notice (90 to 21 days)is given to a tenant that the fixed term will not be renewed; and some minor tidying up of Tenancy Tribunal administration.
 
The tenancy agreement supported by the Ministry( its the one we use) has had minor changes made to it, but its all in much smaller print- to fit it ontothe same size of paper-so that going to be a nuisance- its small enough as it is!
 
The GST rise and tax changes take effect today, and we are well aware that there is gst on our management fees. We have been, and continue to, examine all tenancies to see where we can realistically get another $5 a week of rent for the property, sometimes its simple and sometimes it isn't, for one reason or another.
 
One owner rang me some weeks back demanding a $5 a week rise to compensate for the GST rise despite the fact that the house had only just been let a few weeks earlier, and his maths had let him down as the extra gst on our fee was 41 cents a week and he had worked it out to be $4.10 a week, so panic over.  
 
Council election results are not too far away now, so we are hoping for a more lenient regime for resource consents and reserve fund contributions. That will encourage development instead of hindering, get people back in work and get the town moving again.
There are far too many vacant shops, but I guess we are luckier than Christchurch.
 
Which brings me to YOUR insurance of your rental property, especially loss of rents when a house becomes too damaged to live in. My colleague in Christchurch tells me that about 39% of her landlords did not have adequate insurance in the Earthquake and 75% of tenants had none at all, so imagine the carnage those people have gone through- we do remind you that we recommend www.rlinz.co.nz for Landlord Insurance, so now might be good time to check the cover you have and compare it with RLINZ.
 
Great to see the sunshine again- thought it had got lost!
 
 
All the best from Richard and Pauline and all the team at Rotorua Rentals.    

September 2010 newsletter.

Well the Act has been ammended - at last, and we think it will come into force on October 1st. There is an REINZ travelling workshop going around the country to teach property managers about the changes and how they will impact on our work for our owners and investors. We know pretty much whats in it, and some test cases will doubtless appear in the coming months to see if the changes are working.
I'm going to that workshop on September 22nd so I will precis that and let you all know the details.
 
The Council has declared war on houses with open fires and solid fuel fires to combat pollution. So far we have seen 3 fireplaces condemned and owner has had to replace or remove them and install a heatpump. The problem with heat pumps is that tenants have to pay for the power and they resent having to do so as many tenants get cheap or free firewood from their work in Forestry or timber processing.
So it was VERY good to see Enviroment BOP come up with a hot deal on clean heat.
 
Basically they are offering an interest free $4,000.00 loan over 10 years to replace a non compliant wood burner, best though if you check out their web site www.hotswap.co.nz or freephone 0800 468 792.
Unheated house are very hard to rent and with the current oversupply of houses the unheated ones are often sitting vacant longer. I read that the Green Party are trying to get legislation into the house setting minimum standards of heating and insulation for all rental property- probably at the landlord's cost, so that will be an interesting thing to watch.
 
South Canterbury Finance are now in receivership, but investors are covered by the Government guarantee scheme, which is all well and good, but cold comfort for Investors in Blue Chip, and all the other failed firms that cost investors millions of dollars and hundreds of broken dreams too. Am I glad to be a property investor, just like you. I can drive past it every day, its still there, the tenant is paying rent (most of the time anyway) and I can write off some expenses when I do my tax return and its fully insured- not a bad way to invest, despite the "hate property investors" mood of commentators and politicians!
 
Accounting news.
I have been getting some very sound advice from an accountant called Guy Gardiner who owns a company web site www.accountingnow.co.nz and he has given me some thoughts on LAQCs and R&M issues- too lengthy to print here, but very practical ideas so he has a free phone number too 0800 322 265. Could add to the pool of knowledge that we need!    
 
Smart Bonds. Launched a few weeks ago with TV advertising you might have seen, but they really had not spent enough time asking Property managers-they did so, but not till after the launch- so they have had to re-think the concept, and at the moment we dont have any plans to run with it. Hate to be a damp squib on a new idea, but there is no real "upside" for owners that I can see at the moment.
 
The rental market here is hectic at one end and weak at the other end. What that means is there is a chronic oversupply of houses in the $170 to $220 a week range and a shortage in "nice family homes" in the $250 a week and upwards range.
Sadly the sales market continues to implode forcing some owners to seek a cash flow from a tenant, so thats where the oversupply comes from, and tenants are not blind, they can now pick and choose- a rare thing indeed-so they usually choose the one with heating, fencing and garaging and who can blame them?
 
Of the 60 houses we have let in the last 40 days only 18 were under $220 a week, or 30% and I note that 3 years ago it would have been more like 50%. I also look at adverts for houses to rent and increasingly the photos are of vacant houses which indicates a longer vacancy period between tenancies. 
 
Ministry of Justice. The tenancy tribunal decsions are now becoming increasingly usefull since they went on line last year, as more and more cases build up, and we have had some delightful victories against potential tenants who deny their past until we show them a print out out of their tribunal decision. It all helps to reduce the risk for owners and recidivist bad tenants are getting their come uppance at last.
 
On behalf of all of the team at Rotorua Rentals, welcome to spring, and thank you for the priviledge of working for you.
 

A new product to be considered

Hello and I hope this finds you well?
 
Rotorua is in the grip of winter frosts and bright sunny days- do we envy the folks in Queensland?
 
There is a new bond system being promoted very heavily across the country so you might wish to check it out at www.smartbond.co.nz
Its run by very respectable local Rotorua business people and is a based upon a similar UK model.
 
Its actually an Insurance policy and it designed to allow tenants to not have to pay a bond but pay an increased rent(to cover the monthly premium) which gives a landlord( alledgedly) a "bond type" cover instead of the traditional bond.
 
Its being closely looked at by The Department of Building and Housing and The REINZ and I have had 3 meetings with them to iron out some detail- IE rubbish removal and cleaning which doesn't seem to be included in their policy and reducing the minimum contract from 6 months to one month in the event of an eviction or abandonment within the 6 month period shown in their policy. So they have some answers to respond to.
 
They think it will be very popular with Gen Y tenants, and they may be right, and we can see advantages and disadvantages too. 
 
We plan to join anyway and run a few test cases to see how it works in practice.
 
So the second reason for this communique is to see who amongst you would like to give this a try, because it would be done in an owner's name. Rent would be increased by the size of the premium and paid monthly by us from rent received, and we can't and never would, involve you with something like this without your consent.
 
I would appreciate any comments too. 
 
Curiously we have been told by The Bond centre that bond lodgements for the first 5 months are 2.2% DOWN, which is almost unheard of. Its a head scratcher for sure, and no one seems to have any theories about why, but its a sign that letting volumes have fallen a bit in 2010, maybe its a sign of lower immigration or people moving in together to reduce living costs during the recession- who knows.
 
The shortest day is past, summer is just over the horizon!
 
 
All the best 

New Sales Data for Rotorua

The Daily Post has just published sales data from Quotable Value New Zealand for the 3 months to 31/03/2010, together with comparisons for the same periods in 2009, 2008, and 2007 so for those of you who have not seen that data you might find this interesting.
 
The data is for the north island but I am only quoting the Rotorua numbers. This information might be on their web site if you want to check? Its www.qv.co.nz
 
The reason we are so interested is that so many owners have been tempted to sell, unbelieving or unaware of the current market, only to lose 2 or 3 months rent, and eventually come back to the rental pool.
 
In 2007 the number of sales for the 3 months to 31st March was 427.
In 2008 the number was 181; 2009 down to 172 sales and in 2010 it was down again to 169. So certainly a levelling out has happened.
 
Suburbs like Ngongotaha saw a fall from 42 sales in the 3 months to 31st March 2007 to 9 in the same period in 2010 and Pukehangi is down from 63 sales to 22.
 
Median price changes are not unexpected, but the 3 months to 31/3/10 compared to the same period to 2008 show quite dramatic price falls in % terms;Glenholme down 8.6%;Ngongotaha down 12.1%;Pukehangi down 11.6%; Western Heights down 7.8%;Springfield down 6.9%; Utuhina down 5.6%; Lynmore down 1.1%;
 
The sale prices compared to the 2008 Capital Valuation are all down for the first 3 months of 2010, with the sole exception of Pukehangi( up 0.4%), but the range is not too great; varying from -10.5% in Fordlands;-8% in Springfield;-9.8% in Western heights;-10.9% in Mangakakahi;-8.6% in Glenholme and -5.1% in Lynmore.  
 
Parts of the Bay of Plenty and Hamilton have, however, seen dramatic increases in median prices in the 3 years to 31st March 2010; Huntingdon in Hamilton up 133.3%; Ohauiti in Tauranga up 42%; Pyes Pa in Tauranga up 86.7%.
 
Of course there are sometimes wide varieties caused by factors having nothing to do with "the market" so its not an exact science, but the 60% drop in volume in the 3 years to 31st March 2010 is quite startling- 4 real estate firms have shut up shop in that period too.
Sales volumes are down all over the place, so we are not alone. Ohauiti sales were down from 45 in the 3 months to 31/3/07 to 10 in the 2010 period. Pyes Pa down from 110 sales to 24, Hamilton Huntingdon down from 122 sales to 29, so you can see how many people will be hurting. 
 
The demand for high quality family homes to rent continues unabated, and there is no doubt that cashed up investors are getting some very good purchases and mortgagee sales are well up.
 
So our message is simply that if you can afford to be beaten up by the market, and cannot afford to hold on, then this market is for you, otherwise hold on- the next boom is on its way- if I knew when I would tell you for sure!
 
 
Richard and Pauline and all the team.
June 23rd 2010

June 2010, Winter has arrived.

The budget has been and gone, the ammendment to the Residential Tenancies Act is before the House now, property sales have slumped again, and people still need somewhere to live. News about a big event for us- scroll down.
 
Well the attack on property investors was all that was expected, and everyone has different version of the truth as it will affect things after April 1st 2011.
Certainly commercial property will be hardest hit. Bill English was in Rotorua on May 26th and I asked him why he didn't differentiate between Commercial and Residential investment property, and his answer was to the effect that they were unable to find a model anywhere to use- which was a very wishy washy comment in my view.
One landlord has calculated that an extra $5 a week rent rise would compensate him, and another thought $20 a week was more realistic- we'll see. At least the depreciation that would have been claimed will not have to be repaid when sold, so its a bit of a no brainer from that point of view.
 
The rise in GST was well leaked weeks before the budget, so I suspect retailers will have a hectic September, and a much quieter October 
 
The Amendments to the 1986 RTA are progressing through the house, 2nd reading has been done and local experts reckon September will see it pass into Law, lets hope so.
We are not aware yet of any major changes, but we do know the 10 working day rule has been changed to 14 days. However I will be sending you all information when I get some.
 
The pressure to increase residential rents is always there, but as at June 1st there were 245 properties to rent on Trade Me, a 300% increase over 2 years ago.
One of our major competitors had 90 houses to let in their saturday adverting in the To Let column of the Daily Post. This has been the situation for 2 years now with very flabby sales pushing owners into becoming reluctant landlords. Almost every day we are getting owners taking down For Sale signs and giving us the keys, having lost 90 days rent whilst its been vacant-thats $3,200.00 for a $250 a week house, and the lawns have gone to pot in the meantime. Many agents we deal with are being very honest with owners and telling them thats it a better time to buy than sell. And the number of houses being let has remained very stable at around 250 a month- much the same as five years ago, so its not hard to see why rents have not gone up or why there are so many vacant houses around and gaps between tenancies seem to be getting longer.
 
The International Visitor Survey done for the year end April 2010 shows visitor Spending and Arrivals; only visitors from Australia were up,12.6%, and their spending was up 9.4%, most other arrivals were slightly lower than the previous year and overall spending was down 2.2%. As our economy is so reliant on overseas visitor numbers the impact of even such a small change has spread to destinations like Rotorua more rapidly and with greater impact than with centres not so reliant on the tourist $$.
Three Motels have shut down and two have been converted into rental flats and the third looks like a bomb site. Most Hotels are hiring fewer staff and being highly competitive and pro-active with functions and events, so thats good for the consumer, but fewer staff means fewer people looking to rent, especially for flats in the central areas- but its not all gloomy as people coming here from out of town have to rent here as they can't sell there, if you see what I mean?
 
Our big news is that we have been admitted to an elite group of property management companies called The Leading Property Managers of Australia- LPMA. This is a very exciting event for us as we now have extraordinary access to all the latest and best in business practice, property management ideas, planning and training on a scale we have never seen in New Zealand. Many Kiwi firms, like us, have been regular visitors to the LPMA conferences in Australia and being exposed to such a wealth of knowledge is really inspiring, so we are rather chuffed being admitted to this group.   
They have a web site, if you are interested, www.lpma.com.au  and soon we will be bringing news about The Leading Property Managers of New Zealand.
 
We welcomed a new team member this month, Brenda-Lee Gunn, an experienced local property manager, so she has settled in well and we welcome her into our team.
Pauline's year as president of her Rotary Club is about to end and Richard has been elected Chairman of the Rotorua Community Charitable Trust and re-elected Chairman of the REINZ Residential Property Management group for New Zealand.
 
We are very lucky to have a great team working alongside us, I know they enjoy working for you in a busy and effervescent enviroment.
Keep warm and dry!     

2010 a year of change???

Well who would have thought that a National Government would put its name to an attack on many of its own supporters?
 
Suggesting that investors in Residential rental property are "rorting "the system is a bit rich- after all the rules were not set by investors, but by politicians.
 
And if you want to drive investors out of property, fair enough, but if you want them to invest in the stockmarket, the lenders will want property as security and not the shares being bought. Looks like a no brainer to me.
 
And where are tenants supposed to live and is the government going to run a massive house building programme-a la Soviet Union- to house them all?
 
Investment adviser Martin Hawes suggests that house values will fall if investors stop buying, and he may be right as we are seeing, even now, landlords trying to sell
their rental property, but the market is so oversupplied with unsold houses that many bargains are there for the taking, so it might become a self fulfilling prophecy.
 
And if a landtax- widely reported as likely to be $500 a year- is slapped on investors then a quick $10 a week rent rise will fix that adding more misery to beneficiaries who might soon be looking at 15% gst, Ah, but thats ok because Social Welfare will increase the various housing and accommodation supplements, so they will need more taxes for that.............. sounds a bit wobbly to me, but what would I know? 
 
Personally I do think a special tax needs to be created for property speculators, but my philosophy is much like yours, I think, and that is to never sell, but refinance every 5 to 10 years and take that "profit" to another investment property.
 
While all that is going on I want to share some "facts" with you.
 
I have looked at rental data for the last 4 years- significant as that straddles the boom time and the recession.
I have taken October as a typical month and based it on the bond lodgements made, and yes I know there are late lodgements and non- lodgements, but over time that levels out and patterns emerge.
 
Rotorua rental properties.
October '06. 173 bonds lodged, 52% for houses under $250 a week.
October '07. 148 bonds lodged, 46% for houses under $250 a week.  
October '08. 208 bonds lodged, 50% for houses under $250 a week.
October '09  185 bonds lodged, 51% for houses under $250 a week.
 
Take what you like from that data but it fails to show the crucial supply and demand situation.
 
I have said this before, so forgive the repeat;
 
House sales here and especially overseas have been, and still are, very low- no dispute, so "we'll rent it out for a couple of years until things improve" and thats ok except the volume of rentals for Rotorua on Trade Me has exploded from an average of about 80 three years ago to around 300 today, and probably 200 of those have been taken off the sales market- and a very high % are places likely to rent below $250.00 a week and often in less desirable locations.
 
Look at the % below $250 a week, there has been no explosion in new tenancies, so that segment of our rental market is seriously oversupplied. Yes I know "we've never had delays in the past", "always got a new tenant from just one advert" but that was then, this is now.
 
So owners who are able to add value to a vacant rental property are going to get the quickest results- heating, fencing, garaging, new carpets, tidy up the bathroom and kitchen, and settle for a more modest rent- By the way " a weeks free rent" and "no letting fee" produces no real difference in enquiry.  
 
Now consider the dilemma of an overseas family, arriving here, unable to sell their UK, Canada, South Africa, or Aussie home, wanting a high quality home to rent here- or any where in NZ, see rents of $400 a week as not exceptional, and with a favourable exchange rate to boot, they are soaking up the high end homes at an astonishing rate.
 
The reports I am getting from all over the country are all about the rapid sign up rate for high value homes. We get so much enquiry for Executive homes over $400 a week, that we could easily let 10 a week, if we had them, and usually we have several couples at viewings on the first day, so there are lots of disappointed people out there.
 
Where will it all end?
 
I expect your guess is as good as mine.
 
And finally a nice little quote which caught my eye.
 
"Ambition never gets anywhere until it forms a partnership with work"
 
From all the team at Rotorua Rentals we thank you for the opportunity to work for you and wish that all your plans for your future come to pass.    
 

September 2009

Greetings from Team Rotorua Rentals.
The property business continues to fascinate and engulf all of us who work in and around it, and as usual there are dozens of experts happily giving advice- ranging from the most cynical pessimist to the gushingly optimistic- its been like that ever since I can recall ( I started in 1963!)
In July it was reported that there was a 300% increase in Mortgagee Sales over July 2008, nationally, with Hawkes Bay reporting an 800% increase, which is a terrifying figure, and likely to be pounced on by the Pessimist. The Optimist will focus on the increased sales volumes that have started to appear- however they will also ignore the heavily reduced prices that are being realised.
It is the Property Investors who are driving the increase in sale volumes, taking advantage of some very real bargains to be had out there. There is also evidence of Trades being done or "property swaps" as we call it, and that is often a good device to reduce or increase a portfolio without too much pain.
The Rental Market in Rotorua has been flattish this winter, with vacancy levels at the lower end much higher than usual, and even the good middle range family home has been harder to let than in the past, but that has started to change in recent weeks, so we expect vacancies to reduce in September- the green shoots of a recovery! Looking at the statistics for rental volumes from The Dept of B&H (they administer the Tenancy Bond centre) for June there were 179 bonds lodged in Rotorua which is about 50 down on the 2008 number.
NZ Property Investor magazine reports a comment from First National Real Estate that rents have dropped 3.5% nationally in the past 3 months, and older, colder homes struggling to find a tenant. They went on to also report that Ashburton vacancies were at 18% and Whangamata at 14%, both very high figures, and we would put our vacancies at about 5%. New Plymouth property managers tell me their vacancy levels are less than 1%!
So if you are an investor looking at different markets, the awareness of vacancy levels are crucial items in your business planning model. 
For those with a bigger section and are thinking about building a 2nd unit- or maybe planning to build a garage for your tenant- we suggest trying Totalspan Rotorua.
They have done a couple of projects now and it all went so smoothly, but they also do easy payments- a typical 6x4 garage cost about $8,000.00 and repayments were $42.00 a week. They also do sleepouts and sheds of course, but give them a call, Tony Young is the local owner 027 448 0068.  
 
Team news. Many of you will have had dealings with Nadia about repairs and maintenance issues, well she has delivered a baby girl into the world and mother and baby are doing just fine.
We also farewell our inspections man, James Johnstone who leaves us to join the family firm of Grant Johnstone Nissan and Suzuki, and we welcome on board his replacement Richard Marshall. Richard is an former National Bank man so he has good credentials and is a leading light in local amateur Theatre circles. So with 2 Richards here now be carefull who you ask for when you ring!
 
So with Peonies finally popping up we can say spring has sprung at last, which means lawn mowing, spraying roses, weeding flower beds- now I see why people live in apartments!
 
Pauline and Richard Evans and the team.

RTA Part Two

Residential Property Management-The impact of proposed law changes.

 

Recently I set out some of the features of the Residential Tenancies Amendment Bill that we think are important, and having read ALL the stuff now I can add some other bits and pieces.

 

New clause 24 amends section 40(4) requires the tenant to prove damage was not caused intentionally or negligently. This is a much tidier way of putting it and is based upon lots of frustrated owners and property managers facing unfair decisions coming from Tribunal, who, quite correctly, can only apply the law as its written.

 

 

New fines for new unlawful acts have been introduced and increases are proposed for several existing fines that the tenancy tribunal may impose.

 

Here are the new fines and their limits;

 

Landlord failing to appoint an agent if out of NZ for more than 21 days- Fine $1,000.00

Landlord requiring unauthorized form of security Fine $1,000.00

Landlord failure to meet obligations in respect of cleanliness, maintenance, or building and health and safety issues-Fine $3,000.00

Landlord interfering with supply of services-Fine $1,000.00

 

Tenant failing to vacate on termination without reasonable excuse- Fine $1,000.00

 

Tenant using or permitting premises to be used for unlawful purpose-Fine $1,000.00

 

Tenant harassing other tenants or neighbours –Fine $2,000.00.

 

Tenant failing to ensure number of residents does not exceed maximum allowed- Fine $1,000.00

 

Tenant assigning or subletting without landlords consent-Fine $1,000.00

 

Tenant abandonment without reasonable excuse –Fine $1,000.00

 

Some landlords require a tenant to have a guarantor, but under the 1986 Act the Tribunal cannot make an order against that guarantor and this Bill is looking at changing that so a guarantor can be held accountable.

 

There are several items offering options on things like Clandestine Laboratories, Tenancy Tribunal procedures, and several Acts are involved like The Retirement Villages Act 2003, The Unit Titles Act 1972, and, for the first time, a whole section on boarding houses.

 

The submission process has now begun and they have to be in by July 3rd, so if you are reading this after that date then you are too late.

 

Some of the changes we are still keen to see included are: Changing the 10 working day notice to remedy to 5 days; Requiring tenants who miss a rent payment to compensate an owner who might have to pay a penalty to the bank for a late or missed mortgage payment; and including Text messaging as a legal form of communication.

 

I have no idea how likely it is that those points might be accepted, but at least we’ll try.

 

Richard Evans

NEW IT and Changes to the RTA

Hello again, as winter takes a hold, and houses without heating are much harder to let, but I'm sure you're sick to death hearing about that!
 
New IT We have taken a new software programme called Soundsreal which allows us to do a voice over commentary on a house to rent advert on our web site.
As a very UN nerdy person I am proving a hopelessly slow pupil but from what I have seen its going to be good.
We have a free trial over the next 6 months, so we will be featuring a few selected homes to monitor results- free trial is a free trial so no cost to owners- but if we continue past Jan 2st 2010 there will be a cost for owners who choose to have it, probably about $50 or so.
Currently we don't charge you for any advertising and plan to keep that policy in place except for this Soundsreal.com, and only if it gets good resuts.
 
Finally we have a copy of the planned ammendments to the 1986 Residential Tenancies Act. In the first dozen or pages there are enough changes to believe that this will be a good piece of legislation.
It seems to redress the perception that owners had little or no rights and tenants could get away with murder- Now I know thats not true, but try telling that to an owner who feels they have had a rough deal from a Tenancy Tribunal decision.
 
If anyone wants the link for the full 140 page version please e mail me and I'll send it on. 
Some major points of note are the creation of unlawful acts by tenants- actions which were not unlawful in the 1986 Act, such as subletting, and in section 40 a new clause- (3a)which creates 4 new types of unlawful acts by tenants- so the general theme of this bill seems to be moving the playing field to a more level site! 
 
Here are some highlights from the first few pages.
 
Death of a tenant situation has been well tidied up.
Owners going overseas for more than 21 days must appoint an agent.
Deleted the 4 weeks rent tenant's liabilty plan.
Deleted tenant advocates at Tribunal.
42 days notice to tenant for owners occupation is stricter- must be for principal place of residence and for inmmediate family only.
Tenants still to pay letting fees to agents.
Fixtures installed by the tenant and not removed at the end of the tenancy become the property of the landlord. Clause 25 amends section 42 of the current Act.
Landlord can claim for costs incurred in debt collection- Clause 21 amends Section 32 of the current Act.
 
So if this gets through the lawmakers we certainly will have a brighter future for property investors and property managers.
 
We have also joined Skype, which I have never heard of a month ago, but its a great system- if you are on Skype we are using the handle rotorua rentals, so please give me a call.
 
Rental housing stock. Still high with 230 on Trade me this morning- May 25th.
We are letting out 2 houses a day, but still getting unsold places coming into the rental pool.
Some pundits are saying the housing"crisis" is easing, but that is not very obvious to our eyes. Lets see whay happens in the spring when sales usually pick up.
 
Thats all for now from Pauline and Richard Evans and all our team.
May 25th 2009.  

March 2009 newsletter

Hello and welcome to my first e mail newsletter.
 
In the old days we used to send a monthly one by snail mail but that became too much of a burden, now with new software its a whole lot easier.
 
There is a lot to share so let me talk about the market- some of you will be more than a little annoyed with long vacancy periods, and those are properties in a very particular part of the market, often the cheaper end. The cause is oversupply and nothing more than that. The mammoth fall off in sales in the last 18 months has seen rental vacancies rise in almost direct proportion to the fall in sales as many unsold houses have come flooding onto the rental market.
 
There has been a 300% rise in vacant rentals in Rotorua on Trade Me in that period and some of that has been taken up by people arriving here and having to rent as they cannot sell where they have come from, whether from Vancouver, Cape Town, London or Hamilton, and those people are generally renting the higher value homes, so that end has been in high demand, but demand at the lower end remains weak. With an increasing number of tenants being made redundant or being put on shorter hours we are seeing an increase in arrears and vacate notices and that is the symptom of the recession that the world is wallowing in.
 
Rotorua is not unique- reports I get from REINZ friends around NZ and in Australia tell much the same tale- 400 vacancies in Dunedin, a massive glut of vacant apartments in Auckland are 2 of the most recent reports I have been told about.
 
Even so it is taking longer than ever before to place good tenants and increasingly they are making offers below the asking price and often having it accepted- thats a revolution in property management I can tell you! 
 
In December 2008 we bought the property management business of Harcourts in Rotorua which gave us a new property manager, Nicole Aitu, and another parcel of properties, so we have seen a dramatic rise in our business and that has allowed us to make some big changes in our office and add new software- many of you now download your own statements direct from our website, so I hope that helps?
 
We have added a Property Inspector, James Johnstone, who co-ordinates and carries out the inspections which frees up time for Senior property manager Sandy Jennings and Nicole Aitu to focus on our core activity of renting houses.
 
Pauline and I have been very busy with a quick trip to a property management conference in Brisbane wher they do amazingly big numbers- had dinner with a man whose company manages 19,000 houses in NSW and Victoria and if his Property managers don't meet monthly targets they don't get paid- pretty tough!
 
I have been putting in a lot of time trying to persuade the new government that a Property Managers Bill is vitally important, because property managers have been deliberately excluded form the Real Estate Agents Act which is due to come into force in November this year. We see that as a scandal and immediately puts at risk all landlords and tenants as there would be NO governace of the property management industry- who you're gonna call when things go wrong?
 
We should know by late May if we have been listened to.
 
Pauline will be appointed as President of her Rotary club in June, so she'll be one of the youngest club Presidents in the country- quite an achievement.
 
If you don't want to receive these newsletters please let me know as I have no desire to annoy you. 
 
 
With very good wishes to you,
 
 
Richard Evans