Wednesday, November 16, 2011

Essential Reference Checks

We are currently in the process of tracking down a tenant we inherited. The owner was dissatisfied with service they were receiving from their old property manager and passed the property and tenant into our hands. The tenant abandoned the property within a few weeks of us taking over management and the matter was referred to the Tenancy Tribunal.

As part of our application and the following debt collection of outstanding payment we needed dates of birth and other crucial information about the tenants. The previous Property Manager would not pass any information they had on the tenant to us beyond the tenancy agreement and rent record. Were they just being difficult due to the fact we had taken over management of the property? Alas, no. They did not have basic information that all Property Managers and Landlords should collect about tenants. This includes photographic ID (Drivers Licence or Passport) for all adult tenants. This would reveal their date of birth which is a key piece of information needed when chasing a debt. We also ask for several phone numbers and alternative address for service so that they can be contacted at the end of the tenancy. We also like to know all the names of the people who will be residing at the property.

These tenants were particularly slippery fish. Our research uncovered numerous Tenancy Tribunal applications against not only the head tenant but also of the other occupants. This should have been picked up when doing background checks and with the knowledge of the tenant’s history they should have never been offered the property.

As part of our regular checks we also check for aliases by combining first names and surnames of applicants. Doing this we uncovered several more Tenancy Tribunal applications against these tenants and currently have uncovered the total of 5 applications where they have abandoned property with rent in arrears and caused damage. This was in the last 5 years! No landlords should ever have to deal with these people. Unfortunately someone has rented them another property and we have a pretty good idea how that will end.

We also Google prospective tenants. This usually can confirm their place of work and other information they have put on the application form. It also can bring up information that helps you decide against them as tenants. The tenants mentioned above had a history of being director of companies that had been struck off and fraud charges brought against them. They changed accountants and addresses for service on a regular basis. Though this is not always an indication that a tenant is going to turn bad. Everyone can fall on hard times. But the information we gathered on these tenants movements over the last 10 years has revealed that they move around, are untrustworthy and would never be able to rent a property off us.

To save yourself undue stress and financial strain you must do the following before signing up a new tenant for a property:

Get a copy of their photo ID. This will confirm their full name and date of birth.

Check the Tenancy Tribunal website https://forms.justice.govt.nz/search/TT/ try variations of all tenants’ names. To get the most possible matches only use the first initial for the first name and first three letters of the surname. Also try the children’s names. If the family have different surnames search every first name with each surname. If you know middle names try them as well.

Do a credit check. Follow up any anomalies.

Google them and see what comes up. Check Facebook, Twitter etc. You could discover they hold a lot of parties!

Verify all referees are who they say they are. When checking work references call the reception of their workplace and ask to be put through, rather than call a mobile number. A mobile can belong to anyone.

If you don’t like what you are seeing, don’t go with the tenant, even if they give you a ‘perfectly plausible’ reason for all the stuff that happened in their past. Badly behaved people tend to attract bad luck. Don’t let it rub off on you.

Friday, November 11, 2011

How to make your rental investment more attractive to tenants

We have many ex-state homes on our books and in a few situations the homes are identical. This gives us a great opportunity to see what makes a property more attractive to potential tenants and what will increase its popularity and help it achieve a higher rent.

We recently added a new property to our portfolio. While visiting the property for the initial appraisal I had the odd feeling of deja vu. It wasn't until later that evening that I realised that though the cladding was different the basic floor plan was identical to a property that was only a 2 minute walk away. The previous owner had made some minor changes to the property. They had opened up the kitchen area by removing the laundry room. They had also modernised the bathroom and kitchen and installed a heat pump. Other than that the bedrooms and living room remained the same. This property proved very popular and we managed to rent it quickly for $350.00 per week. The property down the road was more attractive from the outside and had a fenced back yard but had trouble renting for $290.00 per week.

In another suburb we have another 2 properties that had the same original floor plan. The previous owner of one split the living area into two making it into 2 very small bedrooms and made the larger bedroom into the lounge. This made a 2 bedroom property into a 3 bedroom. They currently get around $315.00 per week for the property. The house is on a large bit of land and also has a garage. A few houses down the road is another house is on a subdivided section, which has no garage and is in its original condition. This property gets around $280.00 per week. All these properties are in a similar location so the potential to increase the rental on these properties is huge.

The third property is in a block of 2. The only difference between the 2 is that one has been well looked after. Maintenance has been attended to on a regular basis and the property has had good tenants in it who have looked after it well. This unit is the back one of the 2 and only has a carport. This is rented for $300 per week. The front unit on the other hand has a double garage and large storage area and it also has great sea views. On the downside maintenance has been neglected and the tenants did not take care of the place (please note: we were not managing this property!) This unit despite all the positives it had going for it was only rented out for $260.00 per week. Remember the other was achieving $300.00 per week.

We've just taken on the front unit. Under our care it has recently undergone a thorough clean and tidy and a modern paint scheme. The bathroom and kitchen are still yet to undergo modernisation but in its current revitalised state we have an applicant who is willing to pay $310.00 per week for the property. That's $50.00 extra per week or $2600.00 per year for a bit of well needed TLC. A recent valuation of the 2 properties revealed that
lack of maintenance made a $20k difference between the units. Again, with the potentially better property being valued lower as it was neglected.

With so many houses available on the rental market its important as landlords that we make the right decisions with maintenance and work that is needed to our property. A small insignificant change such as a good clean and a fresh colour scheme can greatly increase the appeal of a property. When making substantial improvements to the property its important to investigate what the market wants as the wrong expensive renovation might not improve your rental yield. While other well thought out changes could not only put significantly more money in your pocket but may also significantly increase the value of your property and its appeal to potential tenants.

When we do rental appraisals we are happy to share our observations with clients and prospective clients on how they could improve their rental yeild and property value. Book your free appraisal today to get the benefit of our experience.

Tuesday, November 1, 2011

How important are the photos on your Trademe advert?

One of our landlords recently moved overseas and asked us to rent out his family home. The weeks before he moved the house was fairly chaotic with preparations for the move and the tidying up of the house. It was hard to take good photos of the property as the place was in disaray due to packing and construction work. I managed to take a few photos and listed the property on the Internet. Admittedly the photos did not portray the property in the best light as I was trying to avoid suitcases and boxes. There was very little interest in the property and I was contemplating having to reduce the price. Once the owner had moved out I went back to the property and took additional photos. Within 2 hours of uploading the new photos I had 2 inquiries and another 2 in the following 24 hours. These people were extremely keen to view the property. The wording on the advert remained the same. The only change that was made was clean uncluttered photos that demonstrated the best aspects of the property.

We frequently see adverts with dark dingy photos, photos tilted on the side, contain people or show unappealing parts of the property. People generally will inquire about properties that they can see themselves living in. They don't want to live in a messy cluttered house with dishes on the sink. They somehow think the house is messy, not the current tenants. They imagine when they move into the house it will always look messy despite how much of a neat freak they are. However it can work both ways. A house that is presented nicely, colour co-ordinated with "nice" furniture leads people to believe that it will still look like that when they move in with their old mismatched furniture and the current tenant has moved out with all their "nice" furniture.

To make the best impression and attract the best enquiries present your property in the best possible way. Have it clean and tidy, well presented, and clutter free.