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2793 posts

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  # 2197828 14-Mar-2019 11:24
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tdgeek:How suitable is your house for renting?  Does it comply with the new regulations for dry and insulated rentals? Landlords can be up for biggish money if they have sub standard houses, I imagine yours might be good as you live in it

 

Good question. Double insulation in the roof, but not wall or underfloor insulation, and windows are single-glazed. The reason there's no underfloor insulation is that the sub floor is too tight to get under there and do it, so I don't think getting an exemption for that would be a problem.

 

We did have some quotes for home ventilation systems a while ago, but opted against it at the time as multiple people who came in to quote commented that the house felt quite dry. It seems the only real benefit would be less window condensation for a couple of month each year.




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  # 2197833 14-Mar-2019 11:27
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gbwelly:

 

I wouldn't be doing it now.

 

I do like watching the unintended consequences Labour will be suffering for their meddling. Rents will be going up as rental properties get sold to first home buyers reducing supply, due to lower headcounts in owner occupied houses. Ring fencing losses will also require rent to increase to cover the true cost of running the property.

 

The reason I wouldn't recommend it is house prices will be remaining flat for a while yet, and increasing rents will make it difficult for tenants to afford so higher chance of problematic situations.

 

People can argue all they want with me that rent can't go up any higher, but when you get over 80 people turning up to view the property you know that the upper bounds are still yet to be found.

 

 

What do you mean by this, what sort of "problematic situations"?


 
 
 
 


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  # 2197838 14-Mar-2019 11:31
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gbwelly:

 

Paul1977:

 

What are peoples thoughts these days on a rental property as an investment?

 

 

I wouldn't be doing it now.

 

I do like watching the unintended consequences Labour will be suffering for their meddling. Rents will be going up as rental properties get sold to first home buyers reducing supply, due to lower headcounts in owner occupied houses. Ring fencing losses will also require rent to increase to cover the true cost of running the property.

 

The reason I wouldn't recommend it is house prices will be remaining flat for a while yet, and increasing rents will make it difficult for tenants to afford so higher chance of problematic situations.

 

People can argue all they want with me that rent can't go up any higher, but when you get over 80 people turning up to view the property you know that the upper bounds are still yet to be found.

 

 

 

 

 

 

Its long term so flat house prices isnt relevant

 

If rents rise as rentals turn to sales, thats a benefit. Its also a very slow process to date if you are referring to Kiwibuild

 

Problematic is due to certain tenants not prices


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  # 2197841 14-Mar-2019 11:32
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Paul1977:

 

gbwelly:

 

I wouldn't be doing it now.

 

I do like watching the unintended consequences Labour will be suffering for their meddling. Rents will be going up as rental properties get sold to first home buyers reducing supply, due to lower headcounts in owner occupied houses. Ring fencing losses will also require rent to increase to cover the true cost of running the property.

 

The reason I wouldn't recommend it is house prices will be remaining flat for a while yet, and increasing rents will make it difficult for tenants to afford so higher chance of problematic situations.

 

People can argue all they want with me that rent can't go up any higher, but when you get over 80 people turning up to view the property you know that the upper bounds are still yet to be found.

 

 

What do you mean by this, what sort of "problematic situations"?

 

 

Non payment, shooting through, damage , I assume


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  # 2197843 14-Mar-2019 11:35
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Paul1977:

 

What do you mean by this, what sort of "problematic situations"?

 

 

 

 

Unpaid rent:

 

They don't pay, you give them until end of the week. 2 days lost.

 

They don't pay, you give them a 14 day notice to remedy, plus 2 business days for delivery, you're now 18 days without rent.

 

They pay some and promise to catch up. Rent doesn't come. 7 days lost.

 

Log it with the Disputes Tribunal, 21 days, maybe more for a hearing, they don't answer their phone for the 'mediation' session.

 

House hasn't been vandalised, but hasn't been looked after either, bond doesn't cover it or the lost rent.

 

 

 

Most people say 'well it's your own fault for getting a crappy tenant' but it's not really like that. You are at the mercy of all sorts of other factors, e.g. a relationship breakdown or redundancy for example. Their problem becomes your problem.

 

 

 

 

 

 








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  # 2197844 14-Mar-2019 11:41
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tdgeek:

 

Its long term so flat house prices isnt relevant

 

If rents rise as rentals turn to sales, thats a benefit. Its also a very slow process to date if you are referring to Kiwibuild

 

 

 

 

Well it is relevant, would you invest $600,000 into a savings account with 0% interest for 10 years? No?

 

First home buyers benefit from the conversion from rental to owner occupied, but not for everyone who rents. Are you saying that is worth it?








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  # 2197845 14-Mar-2019 11:42
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"Is a rental property still a good investment option?"

 

Yes, [current] NZ tax regulations are (unfortunately) heavily biased toward property investment due to;

 

     

  1. Rental property held on Capital account - [currently] no capital gains tax.
  2. Property maintenance & interest paid on mortgages are deductible expense so typically rental operates as a "loss".
  3. By having property owned by a "Look Through Company" (LTC) losses can flow through and can off-set individual or other business tax resulting in tax credits.

 

It remains to be seen what new regulation may be introduced which would impact this however IMHO something is needed to address this "loophole".

 

If you're interested I'd recommend checking out: https://www.gra.co.nz/property-leaders-one-day-event 

 

Fred99:

 

The most basic analysis suggests that house price inflation has progressed at a rate double that of the increase in income.  While that difference may be only a few % annually, compounded over 30 years there's been a 145% increase in incomes but a 450% increase in housing costs.

 

Basic arithmetic tells you that can't continue indefinitely, the big question is only about when divergent trends correct.

 

 

Unfortunately that's how the current global debt-based economy works... Inflation will always continue - and exponentially so when it comes to property due to finite space and increasing population.


 
 
 
 




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  # 2197846 14-Mar-2019 11:42
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gbwelly:

 

Unpaid rent:

 

They don't pay, you give them until end of the week. 2 days lost.

 

They don't pay, you give them a 14 day notice to remedy, plus 2 business days for delivery, you're now 18 days without rent.

 

They pay some and promise to catch up. Rent doesn't come. 7 days lost.

 

Log it with the Disputes Tribunal, 21 days, maybe more for a hearing, they don't answer their phone for the 'mediation' session.

 

House hasn't been vandalised, but hasn't been looked after either, bond doesn't cover it or the lost rent.

 

Most people say 'well it's your own fault for getting a crappy tenant' but it's not really like that. You are at the mercy of all sorts of other factors, e.g. a relationship breakdown or redundancy for example. Their problem becomes your problem.

 

 

All true, but I don't know that this is more likely in the current market than it has been historically. There's always the risk of getting bad tenants.

 

We only ever hear the rental horror stories, I'd like to think that most renters are pretty good - but maybe I'm being naive?


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  # 2197850 14-Mar-2019 11:47
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Paul1977:

 

We only ever hear the rental horror stories, I'd like to think that most renters are pretty good - but maybe I'm being naive?

 

 

They are nice, normal people. Just sometimes bad stuff happens. I've never had to deal with malicious damage, just be aware you do actually earn your money. News reporting is comprised of slum lord and nightmare tenant stories. This is uncommon.

 

 








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  # 2197889 14-Mar-2019 11:53
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Aredwood: I vote no. Solely due to Labour being in power, and the risk that they might do more “knee jerk” type policies in relation to rental properties.

I wouldn't be surprised if a law that regulates rents gets enacted.

You also need to ask yourself the question. If I dont buy a rental property, what would I invest in instead?

 

I'm with you on this, we were on the cusp and have aborted, due to the unpredictability of the whole Labour thing and seeing where the CGT ends up in. Right now in my opinion, investing in something else and waiting for the dust to settle would be better. 

 

I predict more Landlord "taxes" to come yet, possibly even more aggressive if they get a second term.

 

 


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  # 2197890 14-Mar-2019 11:53
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gbwelly:

 

tdgeek:

 

Its long term so flat house prices isnt relevant

 

If rents rise as rentals turn to sales, thats a benefit. Its also a very slow process to date if you are referring to Kiwibuild

 

 

 

 

Well it is relevant, would you invest $600,000 into a savings account with 0% interest for 10 years? No?

 

First home buyers benefit from the conversion from rental to owner occupied, but not for everyone who rents. Are you saying that is worth it?

 

 

OP has this house freehold, he either sells it or keeps it to rent. Yield will be ok, that will increase over time, seems to be nearly compliant, and at retirement there will be capital gain. Capital gain is the ONLY reason you become a landlord

 

Yes its worth it


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  # 2197900 14-Mar-2019 12:04
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It's an easy calculation to make. Take your capital cost of the house, take your income from rent for the year and deduct your expenses for the year. This lets you calculate a percentage return where the value of the house is the principal, and the net income from rent is the 'interest'. Now compare that to a term deposit with that amount of capital for a year.

In general you will find that it's a wash, although with a term deposit you haven't had to do any work. So, how to make money? Well, most people are betting that the value of the house will go up, so the rental period is just marking time (and breaking even) until it's worth selling the house. Unfortunately there is no guarantee the the value will go up (or by how much).

Do it now, on the back of an envelope.

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  # 2197904 14-Mar-2019 12:06
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tdgeek:

 

 

 

OP has this house freehold, he either sells it or keeps it to rent. Yield will be ok, that will increase over time, seems to be nearly compliant, and at retirement there will be capital gain. Capital gain is the ONLY reason you become a landlord

 

Yes its worth it

 

 

Which on current recommendations is about to become 33% less attractive.




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  # 2197916 14-Mar-2019 12:13
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Also, is there any tax advantages/disadvantages to turning an owner occupied house into a rental compared to buying a house specifically to be a rental?


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  # 2197918 14-Mar-2019 12:15
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networkn:

 

tdgeek:

 

 

 

OP has this house freehold, he either sells it or keeps it to rent. Yield will be ok, that will increase over time, seems to be nearly compliant, and at retirement there will be capital gain. Capital gain is the ONLY reason you become a landlord

 

Yes its worth it

 

 

Which on current recommendations is about to become 33% less attractive.

 

 

A) You will find that will decrease, going by words around the traps

 

B) If you want taxfree buy a painting, or search for another means to earn tax free

 

 

 

 


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