Should we use the bond for the last few weeks rent?

We welcome questions from landlords on property management issues.  

John asked:

"A statement I often hear is that the landlord deducted the last rental payment from the bond.  Is this ok, or is the bond only to be used in the event of damage, or an order from the Tribunal?"

Yes, it is OK to deduct the last rent from the bond if the tenant agrees to it.  However, “is this best practice?”.  In my opinion, no.

Not because there is anything morally wrong with it, but simply because it puts you as the landlord at a disadvantage.  It isn’t possible to predict how a tenant will leave a property – whether it is dirty, damaged, or chattels missing.  I’ve seen the cleanest tenants just walk out without doing a final clean, with the belief that ‘it shouldn’t need cleaning, I am a very clean person’.  I’ve never seen someone so clean they move all their furniture to clean the fluff, mould, and cobwebs away from the hard to reach places on a regular basis, and this is revealed when these tenants move out.  I’ve seen tenants carefully arrange furniture to hide carpet stains – that’s a surprise to the landlord when they move out.  I’ve heard of ‘moving out’ parties result in properties being trashed on the last day.  Bummer. Or more innocently, moving furniture dings walls and smashes windows. Helpful friends of the tenants pack chattels, resulting in your drapes and/or other items going missing.  In all these cases, having the maximum bond to call upon would be really useful to resolve issues.  If the tenant has already ‘spent’ it with you on the last few weeks rent, you are looking at a much harder road to recover the funds.

I’m told Tenancy Tribunal typically has applications that are more than 6 weeks rent equivalent in value.  This tells me it is a good idea to keep the tenants to their obligations of paying rent up until their last day.  Assuming none of the application is for rent arrears, means if the landlord has 4 weeks bond to play with, that only leaves 2 weeks rent to recover, or write off, as it may be.

If you have any property management questions, pop us an email through our website, www.rentalresults.co.nz or phone us on 04 4711880.

Renovating bathroom? Tenant proof it!

When you are planning a bathroom renovation in your rental property, there is a lot to consider.  The most important is that the money you spend and work invested looks great for a long time.  Partly this will depend on the flair you apply to the style of the items you choose, and partly it will depend on the durability of the items you choose.  You can have beautiful design and durability at the same time, so think carefully about your choices.  Here is some items from things we have learned.

Walls and ceiling are usually going to be painted gib board (and aqualine gib is the correct product here).  However plaster board and paint are not the most durable.  We recommend lining walls with with hardiglaze , and seratone on the ceiling, to create wipe-able, mould- and water- resistant, durable surfaces.  It may be more expensive in the short term, but it will look great for years, not months, and won’t need painting again until you next rip out the bathroom, which we can't say for paint finishes.  Don't believe me?  Think 60’s Formica bathrooms, still going strong… so choose your pattern and colour wisely!  May I suggest white?  Use attractive joiner details so it doesn't look 'clinical' or  worse, like a morgue.   

Speaking of colours, resist the urge to go with the latest 'now' shade.  Lime green was so cool a few years ago, red has had it's day, I notice yellow is popping up more and more.  Do you really want someone thinking 'this bathroom is so retro' when you intended to modernise?  As much as it may pain you to do so, choose neutral tones, woods, and whites to have a room which is slow to date.  Trust the occupants to liven it up with their choice of towels and other personal items, and resist forcing your style onto them.

Trim and windows will need to be painted, use mould-shield paint in a high gloss finish – as this lasts longer, and really does deter mould longer.  

Floor mounted vanities are the norm.  However, we recommend wall mounted vanity units, using extra framing in the wall to support this (someone will always sit on it, or climb on it to change a light-bulb).  Wall mounted vanities will allow tenants to clean the floor easily, creates more visual room, and stops splashes rotting out the cabinetry.  Make sure wall lining is continuous behind it to increase water-tightness, and if you are painting, paint the wall before you put up the new vanity, so you can change it later without a 'tide mark' to paint over.

Bathroom fans are essential.  The fan needs to be placed close to or above the shower to reduce moisture in the bathroom.  Tenants won’t always leave it running long enough, so get it at the source.  It needs a delay timer, so it keeps working for at least 15 minutes after the light is switched off. This way most of the steam will be removed from the bathroom.

Put the fan and the lights both on one switch, so the fan is used more often.  Trust me, no one uses the fan otherwise, they are ‘saving power’.

Are you shifting the plumbing fixtures?  This cost may be avoidable with careful selection of fittings to suit existing plumbing.  Don’t rearrange the layout if it is fine as it is, it would only be unnecessary cost for little if any gain.

Floor tiling – this is pricey compared with replacing the flooring with commercial grade marmoleum – it’s the same stuff you had at the school canteen, that has lasted 50 years and counting…  If it gets scratched, it can be polished out as the colour goes all the way through.  Make sure they lay flooring before any fixtures (e.g. the loo, wall trim) are put in, to maximise waterproofing.  If you want to go with vinyl flooring, be aware it is relatively soft, so anything hard placed on it will mark it, and it will tear.  Marmoleum is significantly more durable.

If you use tiles anywhere in the bathroom, use large format tiles (to minimise grout) and grout a similar colour to the tile, preferably grey, so it ages gracefully.  Tenants won’t be scrubbing grout with a toothbrush, that is a higher standard than the 'reasonably clean and tidy' required.  Whatever you do, don't go for mosaic tiles, they will look horrible very quickly as the grouting stains.

We recommend insulating the external walls while the linings are off it it hasn't been already, this future proofs your investment, and reduces surfaces for mould to form on (as water doesn’t condense as readily on warm surfaces).  It is also a good idea to put insulation under and around the bath – tenants who like a long soak will thank you for it.  There will probably be enough in one bail to do both easily.  So about $100 in material.

Install a mirror.  Put in the biggest one you can fit to make the most of the space and light. A small bathroom really does look bigger with a big mirror in it.  Again, about $100 investment to make a big impact.  Be sure the mirror is sealed to stop the silvering coming off in a wet environment.

Towel rail – use a ladder rail – the more rungs and wider the better, and high off the floor (deters climbing - lets face it, your inner child has thought about it).  You want it to attracts towel hanging, not have them dumped on the floor or hung over doors, thereby saving the rest of the house from dampness and distortion.  Put the towel rail within easy reach of the bath/shower to prevent drips and splashes.  Heated towel rail might be a point of difference for your property, and increase heating in bathroom (therefore decreasing mould growth).

Shower screens are great to stop water splashing around the bathroom, especially for shower over bath arrangements.  Make it more effective by allowing for a curtain rail behind (bath/shower side of) the glass shower screen.  Your tenants will be warmer in the shower (and therefore hopefully cleaner as they linger there).

Do you need a new bath?  In many bathrooms with a separate bath, this is often underused, so may be in great condition.  Should you invest in a new one, or re-use the old one?  If the latter, it needs to be inspected carefully for wear, as a new bathroom around an old bath will soon look shoddy.  If new, choose the material carefully to maximise longevity of the surface condition.  We don’t recommend resurfacing old baths, it never lasts as long as they say it does, nor look nearly as good as it should.

Lighting can make a huge difference.  LED’s are a good idea.  Ensure the brand is reputable and they will last as long as they say they will.  Men, women want great light for putting on makeup, it doesn't matter what your opinion on that is, they will go where the light is right.  If you don't provide it in the bathroom, expect to clean hair dye, mascara and nail polish out of your carpet at some point in time.

Back to wall toilets are a good idea.  Make sure it has smooth surfaces with few nooks and crannies to make cleaning easier.  Will save you many expenses and frustration going forward, as everyone forgets to clean up drips around the toilet, and you as the landlord will need to do it between tenants.  A back-to-wall will make it much easier to clean this tricky spot.

Research the brands or models you intend to use to ensure they are durable, easy to clean, and look great (not ‘cheap’).  There is very little in price between great design and poor design, but the value of the finished product, your bathroom, is drastically different.  If you are going to spend this much on the bathroom (and it really does cost a lot to renovate a bathroom), make it LOOK like you’ve overcapitalised!  The money you spend should buy a lot of “wow”.  For example, be sure your slide shower is a durable one, heaps of these leak or slump in rental properties, I guess they get yanked around a fair bit.

Allow budget for hidden nasty surprises.  Often it is not until the wall linings are taken off that a leak is noticed, and it has been going a long time, and all the floor and joists are rotten.  On the upside, you found out before you put in the new bathroom...

Get building consent for anything that needs it.  While it is tempting to not get consent, it will lower the price you get when you sell the property.  If you think you will never sell, think again.  It is always an option if the worst comes to pass, so be prepared to give yourself the best price when you do by making sure all work is consented work.

Rental properties will get a lot of wear in its lifetime, rightly or wrongly, so specify surfaces that can withstand that and make your investment in a new bathroom last as long as possible.  With careful choosing of surfaces and finishes, your new bathroom may be the last bathroom renovation you do in that property because it keeps its good looks for a long time.

Happy renovating!

Rental Results has renovated many properties for clients, from very simple to practicably rebuilding.  We recommend you take great care in renovating, as a lot can go wrong.  Get great advice and stick with it.  You can contact Rental Results via our website, www.rentalresults.co.nz

Why your real estate agent should work with your property manager.

Occasionally, a client will sell a rental property.  That’s fine, we are happy to work with them and their real estate sales agent, providing tenancy information and keys directly to the agent, arranging tenancy agreements to suit the situation, helping resolve any issues.  Usually, it works fine and everyone is happy.

Occasionally though, the agent just doesn’t get it.  

Perhaps they don’t tell the tenant when they are coming to show the property and turn up unannounced.  This is a big no-no under the Residential Tenancies Act.

Perhaps they treat the tenant like they have no money, when the tenant is actually seriously considering buying.  Oops, could have had a great win-win situation here.

Or, they tell the tenant too much, like ‘there is an offer on the place and it settles next month’ and the tenant gives notice to vacate, only to have the conditional offer fall through.  The client is left with an empty property.  Few people want to rent it, because who wants to move in to a place only to move out again in 6 weeks time should an unconditional offer be received?  And yes, it does happen, houses are sold just as a tenant signs an agreement, I’ve had it happen to me!

What’s the solution?  Before you engage a real estate professional, ask them what they expect of the property manager, and what they will do to keep everyone informed.  Instruct them to communicate with the property manager about anything that may affect the tenancy (especially any offers being made), and the property manager is to instruct the tenant.  That way if an offer falls through, the tenant isn’t needlessly concerned about the security of their tenancy.

Be clear on whether the house is going to be re-rented should it become vacant during the sales process.  Your property manager wont thank you to be wasting time trying to rent a house that is also trying to be sold.  Also be clear on who is going to connect power and gas when the property is vacant, should you need it to show the property at its best.

Why lawn care is important.

Mowing the lawn and caring for the garden is a waste of time and money, right?  Wrong.  At best, a neglected lawn allows weed species to flourish.  At worst, it can damage your house.  How?  Long lawns create habitat for mice and rats, attracted by the hiding places and seeds and other food sources in the lawn, and protected from predators.  Once they are in the lawn, it is a small transition to the house, where they set to work chewing on wiring, plumbing, woodwork, soft furnishings, and food.

This can result in a lot of expensive damage to the property, as well as possible disease transmission to the occupants.  Not good.  We once saw a property so badly overgrown the rats had bitten through the wires in the fridge motor.  An easy fix to restore the fridge back to working order, but a lot of hard work to chop back the overgrowth from the house and kill all the rats (two buckets of wax bait were needed, the first was consumed practically overnight).  Sale price was significantly affected by the neglect, $60,000 drop in what the owner had paid for it.  Estimated cost of yard care to maintain property value?  Around $1,200.  No brainer, right?  

Another neglected property actually had holes the rats chewed through the walls, and muddy rat footprints marking their paths through the house.  At the property viewing, wearing muddy gumboots inside was no problem.  To clear up that yard would have taken months of hard work.  Lots of investors said ‘no’ to buying it, unsurprisingly.  A bit of regular yard care would have saved lots of expense in damage, and also increased the sale price.

Make sure your properties yards are maintained to keep up property value, and prevent expensive damage to your houses.  If tenants are not doing it, hire a contractor and build it into the rent.

Knowing clients plans sells house

We like knowing what our client’s plans are.  It helps us to help them.  One of our clients, Mr H, had a lovely property but wanted to cash up and leave town.  Another of our clients, Mr D, loves to buy character houses, and was actively looking to purchase.  

So when Mr H mentioned to us he was thinking of putting his property on the market, we instantly thought of Mr D, and gave him a call.  Yes, he was interested, so we put him in touch with Mr H, and the two of them negotiated a deal.  

We now have a very happy Mr H, who sold his property without much fuss, bother or uncertainty.  We also have a very happy Mr D, who bought a property which matches his wish-list very closely.  We are happy we have helped two lovely clients get what they want.  All because they both made sure they told us what they wanted to do.

If you want to have that added extra of property managers who want to help you reach your goals, give us a call, we are happy to help.

* Because we don’t sell real estate, we didn’t do this for a commission.  We did it because we care.

Rotting carpet wants rubber.

This is the tale of a house where the carpet was water-stained and rotting because the aluminium and glass exterior door was missing the rubber seal in between the frame and the glass panel.  This meant the glass would rattle in the wind, and rain would get into the gap and seep into the house, wetting, and eventually rotting, the carpet.  Expensive solution: replace carpet regularly.  Cheap prevention: replace the rubber seal around panes of glass.  No point in doing the first without doing the second too.

If you have trouble figuring out what is going on with your maintenance issues, get an inspection done by us.  Call for a time for Rental Results to walk through your investment property with you to point out the maintenance items you’ve missed.   This will potentially prevent you spending thousands of dollars in future repairs.

Renting to FAMILY or FRIENDS

I’ve never heard the story that goes “I rented to friends/family members and it was great.  I got market value of rent, paid on time every time, and I did regular increases during the tenancy.  My friend/family member let me know about maintenance needed, and they actually took care of a lot of the little things themselves, and I was really pleased about it.  I did inspections of the property every three months, and the place was immaculate each time I visited.  At the end of the tenancy the property was spotlessly clean, I was able to re-rent it immediately, and I authorised the refund of the entire 4 weeks bond money.  We are still close today, and I’d recommend it to anyone”.

Instead, I hear stories like the one I heard last week.  The landlord rented the property to their step-son, rent free, on the condition the step-son invested money and time in doing up the (very dated) property.  Three years later, the property was in worse condition than ever before, the landlord was about $70,000 out of pocket for rent, and took two months to clear out the rubbish and clean the house.  It is still very dated.

Sadly, that is just the latest story in a long list of tales of woe where people rent to friends or family.  If you are tempted to do someone you know ‘a favour’, get property management to be the go between.  It makes rent issues non-existent, inspections will be done regularly, and you can be sure they are kept accountable.

Call us at Rental Results if you need help with these issues.

Have a story to share?  Email Jackie with your tale.

Earthquake PROOF?

Recent repeated large earthquakes affecting Wellington were a good reminder to property investors to check their policies and to have a plan in place for upgrading their properties.

While we are fortunate to escape the devastation Christchurch suffered so far (partly due to a justifiably paranoid City Council), there was still a reasonable amount of building damage in the form of cracking in plaster, cracks in chimneys, leaking pipes around hot water cylinders, and other minor damage.

We recommend getting properties checked by a suitably qualified tradesperson should tenants report any damage as you will want to assess the seriousness of the issue correctly.  Tenants are not necessarily a reliable source of information about property damage – we’ve had a number report cracking which were there prior to their tenancy, and others who want to move out of modern buildings which were not affected because of the ‘earthquake risk’.  We wonder if they are leaving the planet too, because there are few places to go where earthquakes are not a reality.  

Under the Residential Tenancies Act, tenants and landlords may give 3 days’ notice if a property is destroyed.  Christchurch has redefined ‘destroyed’ as after the big quakes there tenants would move into a property more nervous tenants left, being grateful it was better than the place they just at.

Things to check when assessing buildings for quake damage: Cracking in concrete; in foundation, in chimneys, in pointing on roof, in any concrete walls or floors.    In plaster: cracking, usually on joints, particularly around doors and windows.  Also check ceilings.  Leaks in pipes, particularly around hot water cylinders (the cylinder moves differently from adjoining building elements due to weight and inertia), and in pipes, especially waste pipes.  Check windows for cracked glass.  Check doors and windows are able to be opened and closed easily, they haven’t become stuck in the frame.  One of our tenants reported the door frame was moving so much during the quake they couldn’t get the door open.  It’s a good time to get hot water cylinders strapped, chimneys strapped or removed, and header tanks restrained, to avoid more damage next time.  Yes, another, bigger quake can happen:  You don’t need a long memory to remember Christchurch’s experience.

If you have a qualified tradesperson assess any damage, you can give more assurance to your tenants that they property is safe and fit for habitation.  Do be quick about getting assessments done, it’s good to get any EQC claims in within a month of the event.

Rental Appraisals:

Did you know Rental Appraisals with Rental Results are free?

Brilliant for checking if you are getting the right rent currently, if you wish to refinance, you are thinking of renting out your property, or you are doing your due diligence on a property purchase.  Our rental appraisals are more than just a number.

We’ll point out marketable features of your property tenant’s desire, and also what you could do to improve the desirability of your property.  We love it when you get the ‘most bang for buck’ so we will tell you plainly what is the most cost effective changes you could make.  We’ve saved people the expense of replacing kitchens with a few helpful suggestions, and increased rental yields substantially, so we know our appraisals are worth thousands of dollars.

Book your appraisal today by emailing Jackie or phoning 04 4711880 to get enormous value for a small cost of your time.