Dummies guide to rental properties?

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Talkiet

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#238046 30-Jun-2018 18:00

I've got a house that's about ready to be rented out and I've never been a landlord before... I've read the (pretty good by the look of it) guides at https://www.tenancy.govt.nz/ but wondered if there were any simple gotchas I was going to strike people might want to share...

House is a 20ish year old 3BR brick house in Chch with double garage, heatpump, gas hot water in decent condition. It does have earthquake damage that is not fixed yet, but it properly insured and fit for habitation. Insurance company is aware that house is not currently occupied and it ok with it being rented out.

Obviously one option is just to pay a rental management company some money to do it, but I don't know what they do, nor if they offer any real benefit. My dad has a property and used a place and they immediately managed to let it to a group of people that trashed it. Although I am aware of the myriad of things you can't discriminate on, I would hope that being someone that is likely to trash your place is one that you can :-)

So first of all, are there any good recommended places in Chch to do this and if so, how much say would I have in final tenant approval? How much do they charge and do they do everything (including maintenance, inspections, generation of accounts to enable claiming back of maintenance etc. WHo pays the tax? Do they calculate and inform of tax liabilities along the way?

Or.... I could do it all myself. In this particular case I MIGHT go with this as a likely tenant is someone I have known for over a decade and know very well - If I had kids for example, I'd trust him to look after them etc. Given that situation, do the rental property managers still provide enough benefit to be worth the money?

Any hints gratefully accepted. House is currently being properly prepped (insulation checked and augmented if needed, minor downpipe repairs, gutter mesh added, heating checked, paint touchups, carpet shampooed etc etc) and I'll be hoping to rent it out in the next 2-3 weeks.

Is there any benefit to spinning up a company myself to do it or is there no significant benefit over doing it privately?

Cheers - N

Please note all comments are from my own brain and don't necessarily represent the position or opinions of my employer, previous employers, colleagues, friends or pets.

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#2046515 30-Jun-2018 18:11

Hi Neil

A property manager is a sound option. IIRC its about 8% charge. We used one, it was fine. But if you can go private and get a professional couple, and ideally no pets, maybe a cat that sleeps outside, that should be safe. The issue is inadvertently getting a bad tenant. Trash the place, and that repair cost is plus no rental for weeks. A good tenant is gold, the other is lead.

invisibleman18

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#2046522 30-Jun-2018 18:36

Don't have advice of my own to give but the NZ forums at propertytalk.com will be useful for you assuming you haven't already found them.

chevrolux

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#2046524 30-Jun-2018 18:48

If you are in the same town/city as the property manage it yourself. There are far too many "property managers" around who do very very little for thier cut.

We rented our house out ourselves (in Palmerston North), we allowed pets which seemed to gather a ton of interest, so we ran an open home. It meant we got talk to everyone, but also just watch and listen to people as they walked around. My partner dressed nicely and greeted everyone, I dressed scruffy and walked around like I was interested in renting the place just listening to people.

Everyone interested filled in a little form, we short listed off that and and then got those people back for one on one interviews. Ended up with literally THE perfect tenants - they kept the place tidier than we ever did!

Long and short of it, just make sure you get a good feel of who you are renting to and shouldn't be an issue.

Talkiet

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#2046526 30-Jun-2018 18:53

Thanks. I like the idea of the undercover fake renter at an open home :-) And I'll go have a browse at propertytalk.com

Cheers - N

Please note all comments are from my own brain and don't necessarily represent the position or opinions of my employer, previous employers, colleagues, friends or pets.

davidcole

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#2046527 30-Jun-2018 18:55

Yeah given it’s only one, and in the same location, try it yourself.

As long as you stay in contact with the tenants you should be fine.

One option is you can use a realnestate company for getting you a tenant and they just get the letting fee.

But if you’re willing to interview that can be the best bet as you can guarantee your criteria. Smokers, pets, students, professionals or elderly couple.

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#2046538 30-Jun-2018 19:57

I second the idea of a property manager. We moved overseas for a period in 2007 and rented out our house and had it managed by one of the well known real estate companies. In return for their fee they do everything for you including repairs, inspections and rent reviews. I have no complaints.

When we came back to NZ we kept it managed by the same company and haven’t looked back. From the start we’ve only ever had two tenants.

quickymart

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#2046586 30-Jun-2018 22:20

This is from a few years ago now, but still...

https://www.consumer.org.nz/articles/property-managers

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alasta

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#2046752 1-Jul-2018 12:48

As a tenant who goes out of my way to look after my home I try to avoid any place that has a property manager. If I can deal directly with the landlord then I can build up trust over time so that they don’t feel the need to invite my privacy every few weeks.

invisibleman18

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#2047256 2-Jul-2018 10:07

Completely agree with that. Have also had much better experiences dealing direct with landlords. They tend to care about the property so deal with any repairs or maintenance issues quickly, and really appreciate a good tenant who looks after the place. Property managers only tend to care about raising the rent the day they are legally allowed to, and trying to find reasons to hang onto the bond at the end.

clevedon

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#2047275 2-Jul-2018 10:29

invisibleman18: Property managers only tend to care about raising the rent the day they are legally allowed to, and trying to find reasons to hang onto the bond at the end.

Generalize much?

All the property managers I've used have been great to deal with and looked after my rentals very well. Never had any of the experiences you've mentioned.

I might as well say all tenants trash places and skip on the rent just to balance it out aye?

sleemanj

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#2047288 2-Jul-2018 10:50

Just get a property manager, mine inspect every 3 months and send a report with photos etc pointing out anything that might need attention, and if anything does need attention I just tell them to arrange it and bill my account. When the current tenants finish up it's going to need a spruce up, again my involvement there is pretty much going to be "yeah get some quotes for what you think needs doing and I'll authorise you to action them".

I have about zero interest in advertising, dealing with tenants, organising maintenance and repairs, inspecting, and least of all knowing the RTA inside out back to front.

I use Irelands here in Christchurch because that's who it was with when I acquired the property so just carried on with them, I've found them fine but my brother and sister in-law had some difficulties with one of their PMs (since left the company I think) when it came to finding new tenants and have moved to A1 I believe.

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Talkiet

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#2047303 2-Jul-2018 10:54

Thanks everyone for the replies so far... Has been pretty helpful. I guess I have to speak to a couple of those companies now and see if they'll satisfy my requirements. (Having a say in tenant selection and some form of contract exit clause)

Thanks James for the specific mentions... I guess it's worth asking if anyone has any additional Chch specific PM recommendations.

Cheers - N

Please note all comments are from my own brain and don't necessarily represent the position or opinions of my employer, previous employers, colleagues, friends or pets.

invisibleman18

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#2047308 2-Jul-2018 10:59

Did say it was from my experience, perhaps I've been unlucky. Have found it better dealing direct with landlords in terms of things like getting a plumber quickly etc, or just coming around themselves to fix something.

MikeAqua

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#2047393 2-Jul-2018 12:10

The biggest risk is bad tenants. Here are the things I look at: -

1) Credit check;

2) Regular income and can comfortably afford the rent (verify income with employer);

3) Previous landlord references with previous address. Some people have a friend pretend to be their previous landlord. For that reason you need to ascertain the name of the person you are speaking to and check that it matches with names on the rates database or company records or ...

4) Meet them and use your BS detector

Other gotchas:-

If you agree to the tenant having pets any damage they do is fair wear and tear - according to the tenancy tribunal.

Losses are now ring fenced for tax purposes. But ... interest repayments are a tax deductible expense, principal repayments are not. Because of this it's possible (depending on size of mortgage) to have negative cash-flow but 'make a profit' you have to pay tax on. For that reason you are best to arrange your affairs so that you have equity in your home, but none in your rental

If possible price the rent for positive cash-flow after tax.

The best time to set or change the price is at the start of a tenancy. Once you have tenants, they can object to any rent increase.

Mike

trig42

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#2047398 2-Jul-2018 12:19

Another good thing about a (good) property manager is that they chase up non-payment of rent pretty quickly and effectively.

If you are getting in a tenant you know pretty well, will you feel uncomfortable confronting them about late rent payments in the event they do miss one? You'd want to jump on that pretty quickly, because if they are late with one and get no reaction from you, they will feel better about being late again.

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