Wellington Propertyscouts

March Newsletter - 3rd Apr 2018

3 April 2018 – Propertyscouts Monthly Newsletter 
Easter:  We hope that you had a happy and enjoyable Easter. Barring Christmas it’s the only other time of year where we can all eat far too much chocolate (and hot cross buns) and get away with it.  By the way, your next public holiday is already on the horizon, ANZAC day is on the 25th of April, a Wednesday folks. The next long weekend is 4 June, Queen’s Birthday weekend. Then we have the 6 month drought until the next long weekend, labour weekend in October… 

Landlord costs increasing:  There seems to be little doubt that this year will see increased costs for landlords.  The likes of the Governments Healthy Homes Guarantee Act (which will introduce minimum standards for rental properties), and also their plans to ring-fence rental property losses together with the likelihood of increased management costs from tenancy law reform all have the potential to have a negative impact for investors.  At the same time all of this is happening, rates and insurance costs are on the increase.  However, while the proposed Government changes are a worry to some in the industry, for most investors, interest rates are the bigger cost concern rather than regulatory costs.  In a recent media article, a prominent Auckland property investor, David Whitburn, put it all in perspective when he said that the increased costs can be factored in and compensated for by rent increases.  Whitburn went on to say that while the regulatory changes may be getting to people they shouldn’t be the ‘straw that breaks the camel’s back’.   He also added that industry changes are leading to a trend away from self-management and towards professional property management in a bid to stay on top of compliance requirements and costs. We agree with Whitburn and his view backs up our long-held contention that the days of DIY property management are a thing of the past. 

Has there ever been a better time to invest in property?  The answer to this isn’t as simple as it was perhaps this time last year.  However, there are still good opportunities out there for astute investors, especially if they adhere to time-proven strategies such as:

  1. Try to buy under rented properties (invariably these will be privately managed properties) and get the rent up to market rent ASAP.  This adds value to the property immediately.
  2. Add value to the property to increase the weekly rent.  An example of adding value might be adding a heat pump or insulation.   
  3. Be patient and buy well.  A good way of ensuring that you buy well is staying in touch with your Property Manager so they can put you in touch with property investors wanting to sell.  Often this will mean no real estate agents, and you know what that means – no real estate commission included in the price.
  4. Know your market. Trade Me and Realestate.co.nz are great for this.  Just load your particular search criteria’s and let their software do the work for you. 
  5. Persistence pays off.  Don’t give up.  Once you have decided on the type of property you want to buy and your budget, stick with it.  Persistence almost always pays off.   
When is the best time to sell my rental?  As the old saying goes “if you can rent it then don’t sell it”.  Speak to any avid investor and they’ll all tell you about the properties they have sold and then gone on to regret the sale.    If you have to sell your investment property, then please get in touch with us first and we may be able to put you in touch with an investor looking to buy.  

Real Estate companies waking up to conflicts of interest:  We’ve been concerned for a long time now with real estate companies using their own in-house property managers for rental appraisals of properties for sale.  There is a clear conflict of interest when they do this in our view.  We have heard of one company that no longer allows its agents to use the company’s property management arm for rental appraisals.  So good on that company we say.  By doing this they will invariably decrease the number of new property owners stung by purchasing a rental property on the basis of an in-house rental appraisal that the property is unable to achieve. 

Q.  How much notice does a landlord have to give a tenant of a routine inspection? 
A:  48 hours’ notice is required before a routine inspection and 24 hours’ notice for access to carry out any repairs or maintenance.  We often have problems with real estate agents thinking the same applies to them for viewings at a tenanted property.  That’s not the case.  For viewings with the likes of real estate agents or for viewings for potential tenants the ‘sitting’ tenant must agree to the viewing.  They are not able to unreasonably withhold their consent but what is and isn’t ‘reasonable’ can often be problematic and needs to be worked through carefully

Heat pump and fire servicing reminder:  It’s hard to believe that it’s time to start organising heat pump services and fire cleans in preparation for winter.  For safety reasons it’s important that fires are cleaned yearly.  Heat pumps should be serviced at least every two years.  We will be starting these over the next few weeks. We will send out a separate email shortly to all our landlords with heat pumps and/or fires in their properties with some more information on our plans and pricing.

Disclaimer:  Given the opinions expressed in parts of this email it’s important that we make it clear that the contents of this email are opinions and observations and made in good faith.  We suggest that in all cases independent legal and financial advice is sought. 

Regards from the team at Propertyscouts. 

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