Selling Property with fixed term tenants in place

Lets take a hypothetical situation here, where you have your tenants are on fixed term contract to 10/3/2012, with the expectation if things work out, they would renew the contract annually. Due to the changes in the Residential Tenancies Act which came into force 1st October 2010, you must offer them a lease renewal at any time from 90 days before this date, so from the 10th December you should be looking at sending out a new fixed term offer. If you want to look at selling your property in the new year, you need to decide what you are doing before this date, assuming the property would sell to an owner occupier rather than an investor. Here are your options around the lease renewal process while the property is on the market:

1. Delaying re-contracting the tenants for a fixed term until the last possible moment - under the changes to the Act, this would now be 18th February (you need to confirm a fixed term contract 21 days before the lease end date). In other words, list it for sale late in the year, and if it hasn't sold by 18th February, take it off the market until the next year and fix the term of the tenancy contract again for a year. Downside is marketing a property for sale makes tenants nervous, and they may decide to exercise their right to not renew, and move out at the lease end date.

2. Allowing the tenancy to go periodic - this would mean you could give the tenants 42 day's notice that the property had sold and give it to the new owner with vacant possession, or the tenants could give you 21 days notice at any time. While this allows greater flexibility for your sales plans, the risk is the tenants give notice before you have sold the property, and you need to decide whether to allow it to sit empty, or re-let it, possibly for a very short term. The latter is not a great idea, as new tenants must be told if a property is on the market, and not many would like to take that risk of moving in then back out again in only 6 weeks time, so it may be hard to fill. Long and short of it, you lose great tenants, have a vacancy, have unknown tenants move in, and might still not sell it.

3. Put it on the market at any time of year, and if it sells, make the tenants an offer they can't refuse to move out on a date which suits the purchaser (officially known as 'ending a fixed term by mutual agreement'). No guarantees on this one as they could just refuse to move until their lease expires, or it could be very expensive. A friend of mine tell of when he tried this with the offer of "I'll pay all your moving expenses" thinking it would be a few hundred for a moving truck across town. The tenant decided to move from Christchurch, to Australia. It pays to be specific.

4. Offer the property to the tenants to buy (private sale). Saves you agents fees, and you can sell it to them at whatever date suit you both, the fixed term tenancy being ended by mutual agreement on possession day. Downside is establishing a fair price as you won't necessarily have competing offers from other parties as you would if you listed it with an agent, so your net result may be less than selling it conventionally. Of course, you could list it with an agent who sells it to the tenants, but this might also result in only the agent making something out of it... If you want to try a private sale, I'd recommend getting a valuation to establish price, and having your lawyer do the negotiation for you. (That’s my way of saying you will probably be too kind to the tenants at your expense).

Do talk to your property manager before you engage an agent - they should be happy to liaise with the salesperson regarding access and information they need about the tenancy, and should also discuss with them reasonable access to keep your tenants happy in case it does not sell. Your property manager should be able to recommend a salesperson they have found to be good.

Of course, you also have a legal obligation to tell the tenants the property is on the market. A client of ours who ignored our (oft-repeated) advice and listed her property for sale without telling us first found herself managing her own tenants through the sales process from out of town, and then having a very long vacancy when it did not sell (about 5 months!). Last I heard, she rented her property to Housing New Zealand. Shame, as it was a beautiful property. I am sure you wouldn't be so foolhardy.

What goes up... doesn't always go up.

Does the property market always go up? Some seminars and salespeople will claim it does, and produce graphs of property over the last 100 years to demonstrate. As a general trend, it does. But so does any other prices due to the force of inflation in modern economics. It also fluxuates, and this is normal. You can't have a 'general trend' if it only trends in one direction.

Wellington house prices are not currently continuing to climb, and depending on what you read, is actually dropping, which is a perfectly normal part of the cycle and not a cause for panic, but it is cause for strategic planning. There is some very good buying out there right now should you want to expand your empire further. My money is currently on 2013 being the turn-around year (the year I kick myself for not buying more property now). Last year I was saying 2012, so I reserve the right to change my mind!

Having a strategy is important, because it is a plan that overrides current market forces and fears. It is the motivation to ride out rough patches, and to act contrary to the crowd to see your plan through to fruition. If you change your mind every five minutes because of whatever the latest news article you heard said, you will not get very far because fear will rule your decision making.

The best investors don't plan for this year, they plan for the next 5, 10, 20 or even 50 years. You know the saying, 'will this be important in 100 years time?' to put your everyday faux pas into perspective? Imagine how powerful that would be applied to your property portfolio. Will the latest crisis actually matter a jot in 43 years time? Probably not. That is the power of a strategy and foresight.

What is Market Rent?

Not many people know how to assess market rent for their rental property. Talking to someone on Monday, I asked them "How much rent would you like to get for this property?". Their answer was "We would like to get $300 per week". I almost choked. We are renting a far inferior (and I say that with authority, I own it) property close by for $330. I assessed their property to be worth at least $380 per week, and frankly, it would probably exceed the $400 mark. In theory, I could rent it from them and make a tidy $5000 profit every year by subletting it. Sweet. That is how much money they would be giving away. Five thousand dollars. Say it slowly now. Five big ones.

Fortunately for them, they were smart enough to get an expert opinion about the properties market value, and they will be thousands of dollars a year better off.

Do you think you can't afford property management on your budget? Ask us for a rental assessment, it's free, and it could pay you significant dividends. More money for less work for you, that's the best combination of things ever!

Black Friday affects Tribunal

I spent a lovely hour in Tenancy Tribunal on Black Friday a few weeks ago, just me, the Adjudicator, and the Court Clerk. The tenant decided he had better things to do. Normally a hearing like this when the tenant doesn't show is pretty quick. The adjudicator worked through things very thoroughly, which was nice, though unusual when the tenant does not show to contest it. Due to this diligence, we used all the alloted time, and I didn't get a copy of the order before I left the court. He promised to write it up and send it out as soon as possible, which he did.

When I received the Order the following Wednesday by post, I was pleased to see we had won all of the essential points, and even had Exemplary Damages awarded to us. The bond was to be refunded immediately, something we were looking forward to very much.

However, the Adjudicator had made a mistake when adding up the figures, and there were two conflicting numbers on the Order. I phoned the Court Clerk to resolve it but reached voicemail. My explanation of the issue on the message I left was misinterpreted, and several voicemail exchanges resulted before I ended up faxing the Order back with big circles around the affected parts and a note to the effect of 'these numbers are different, why?'. More messages exchanged, and I found out she'd get the Adjudicator to fix it next time he was in, in about 2 weeks time. Sigh.

In the meantime, there was no sign of the bond refund, and plenty of time had passed so it should have been done. A call to the bond centre revealed they had no request from the Court to release it. The solution was to send in the order we had, incorrect though it was, in order to get the bond released. A couple of days later it was in the account.

Finally spoke to the Court Clerk, who had managed to see the Adjudicator earlier than hoped while he was at the court for another matter, and had the figures corrected and the new order was on it's way out to us. Why had the Bond Centre not been notified of the bond release order? The Clerk had forgotten to fax it through. Oops. Simply human error again. Perhaps it was the curse of Black Friday.

Do check your Tribunal Orders carefully to ensure they are correct (and that is different from just not being what you had hoped they would be) and follow up with the Court if they are not. Check your bond actually gets paid out to you, and contact the Bond Centre if it hasn't been refunded in a reasonable timeframe. It's your money, make sure you get it.

Penne’s HOT hint of the month

Being the kind of landlord that’s always up for a great deal (especially when it involves little cost from me and increase the appeal of my property to potential tenants as well as adding value to the property). I was extremely excited when I uncovered the “Warm Greater Wellington Scheme” Most of us are aware of the up to $1,300 (or 33%) towards the cost of ceiling and under floor insulation that’s offered as part of the Warm up New Zealand Heat Smart Programme. If we are lucky we might even be eligible for 60% funding towards the cost if your tenant has a Community Services Card www.energywise.govt.nz/funding-available/insulation-and-clean-heating. The “Warm Greater Wellington Scheme” is a scheme where the balance (up to $2600.00) or portion of the remaining amount can be added to your rates bill and paid off over the next 9 years. www.gw.govt.nz/gw-s-offer/.

So for example my 60m2 unit needs insulation in the ceiling, under the floor and needs ground cover. This would have cost me approx $2800.00 to get a professionally done. With the 33% discount it would cost me $1900.00. The rest of the balance I can put on my rates, increasing my rates by $317.72 per year ($6.11 per week) The bonus is my tenant has a community services card so the balance on my rates will be more like $1000 and only cost me $3 extra per week. My theory is by making my rental warmer it will encourage my great tenant to stay on and its more inviting to potential tenants if and when she does move out.(In this rental climate we need all the bells and whistles we can get to attract good tenants) The measly $3 per week its costing me will be more than covered by rent increases over the next 9 years and its costing me nothing up front. For those who’s budgets are already tight a $5 or $10 rent increase per week to the tenants in lieu of a warmer home would probably be an easy sell. Getting the quotes and doing the figures will cost you nothing and could greatly improve your investments.

Arg! Mice!

When the weather cools as it is at the moment going into autumn, mice become a problem (colder weather encourages mice inside where they can be warm and have nice things to eat). Mice and other pests are difficult to get rid of once established. Here are our recommendations for preventing and treating mice problems.

We recommend using poison (available from hardware stores) to eradicate mice - the smell from one little mouse body is very small, usually not noticable, and not long lasting. Apparently mice head towards water when they are poisoned (it must make them thirsty), so that should lure them outside to die. Place poison in areas mice frequent – under the stove, in the hot water cupboard, in the attic, under the house, and anywhere else that seems likely - think 'dark, undisturbed, safe, warm'. Keep it out of reach of pets and children, and always follow directions carefully. If it is block baits, secure them as per the instructions. If mice can carry them away, they will store them somewhere and may never get around to eating it - expensive and ineffective, so secure your baits.

We recommend also blocking any gaps or holes mice might be using with foil scrunched into a tight ball and wedged in - apparently they cannot chew through that, it must make their fillings tingle (try putting poison in hole first - double whammy). The smell of mint is said to repel (try essence), as is pepper sprinkled along walls they run along - if you don't hear tiny sneezes, it must be working!

Traps need to be set so the snapping part faces the wall in a dark area (e.g. behind stove or couch) and baited with peanut butter. Cheese is not as reliable. Check traps daily, and when no mice have been caught for 2 days in a row, scrub clean, refresh the bait, and move to another area. If you use plastic traps like 'The Better Mousetrap', be aware that as the traps get old, the spring may loosen and only trap the mice. If you find a mouse clattering around with the trap attached, it is time to get a new trap. Of course, if the clever mouse is only caught by its paw, not neck, it won’t be killed either. Dispatch the mouse before it passes on the trick to its friends. Putting it in a jar in the freezer for a couple of days to euthanize it (out of sight, out of hearing) works if more direct methods do not appeal. Do NOT release mice elsewhere, they will just make baby mice to invade your property. It more humane to kill one mouse than them and their whole extended family.

Periodically check behind fridge, stove (including warming drawer), and inside the Hot Water Cupboard, and clean up any food and all mice droppings. You can monitor the effectiveness of the measures by how quickly droppings re-appear, so clean them up regularly.

Ensure food mice would like, such as pasta or rice, is stored in sealed containers as they can chew through plastic packets. Keep cupboard doors closed. Keep all areas tidy so there is nowhere for them to nest or hide, remove food waste, and wash dishes frequently. Check any areas where newspapers, bedding, or clothing is stored long term to ensure they are not forming nests in these. Remove rubbish frequently, and use bins that seal to avoid feeding them inadvertently.

We recommend landlords treat properties for mice and other pests annually. However, beyond that, it is tenants’ responsibility to take care of mice within their own homes. Everyone needs to take action on the mice to keep their population at acceptable levels, so it should not get worse as the weather cools further.

Street Appeal works wonders

How often do you sit in front of your property and really have a good long critical look at it? Probably just about never, I'm guessing. I'd say a more typical day is rush up parking where you can, carry stuff inside and get to work. Next time, stop for a minute. Perhaps park down the street a way, and really look at the property as you walk towards it. Drive towards it from a different direction every once in a while. Stand on the footpath on the opposite side of the road and take a good long look. What do you see? Hopefully, you see what everyone else sees, because that is what you need to see.

I have a property that a former owner painted pink. Not just one shade but two shades of candy pink. Not just in solid blocks, but in stripes, one per line of cladding. It is very distinctive. It clashes beautifully with the red roof.

I've known for a while that it probably only appeals to the former owner, and me as a purchaser as I knew it was easy fixed. It put all other buyers off, which is why I got it for a good price. What I forgot was tenants care about these things too. They don't want to live in 'the candy striped house'. So it sat there with very few enquiries until I got off my butt and got out that paintbrush. (To be fair, I was working on the inside of the property figuring it was where the occupants would spend all their time, and that looked great, but no one was coming inside to see)

Now, the street side of the property, is one colour, a trendy warm creamy brown (called Molesworth, if you're interested). Within 2 days of painting the first coat, I have lots of people turning up to see the house. Now I have my pick of tenants. How long did it take to make the difference? Well, about a month of being thick, then just one afternoon of painting. Sigh.

Sometimes these things are just so obvious we overlook them. What are your candystripes that are keeping tenants away from your property? Identify, then act.

Is your Electrician any Good?

A client sent in this photo of insulation in his investment property which had been left this way after his electrician had done some work on the lights. In my opinion, they haven't finished the job.

A good electrician puts back insulation after they move it. Some may argue that it isn't their job - they're sparkies, not fluffers (or whatever the slang for insulation installers is). Nonsense. If they moved it, they put it back. No excuses.

The electrician in question has compromised the thermal properties of the building with their carelessness. They are costing the occupant (tenants in this case) heating costs, and as this matter only came to the landlords attention when a prospective purchaser obtained a building report, it could have cost them the sale. They now need to spend more money getting someone up there to re-lay the batts. Hardly fair is it, when the sparky could have spent just 5 minutes setting it right before they packed up their tools.

When you are choosing tradespeople, choose ones that are tried and tested. Ones that take pride in their work, and always do the best they can. We fire tradies that treat properties as 'just a rental' because they have forgotten that it is someones home, and someones retirement income. If they don't respect that, they don't get work from us. Be as discerning. It is your home, or your retirement, on the line.

What we're doing for Earthquake preparedness

February we were rocked by Christchurch, in March, Japan. It’s really hammering home the ‘be prepared’ motto of the scouts.

We are getting enquiries from people looking for safe houses due to concerns about earthquakes.

What have we done to be prepared? We have prepared a basic survival kit at the office of course (and our homes), but we also need to think of our tenants. In emergencies like these, tenants will have issues with properties and need assistance, and we will be the front line for dealing with it. Unfortunately, we are likely to be affected by the event too, and may not be able to travel to work until it is safe.

So, we’ve devised a plan that will enable us to help from wherever we can get electricity, phone coverage, and internet.

We are switching the software package we use to one that can be run from ‘the cloud’ (which is a fancy name for ‘on the internet’) should we need to operate away from the office. We have some internet-based phone lines to keep the lines open should landlines go down, and cell phones of course.

We are advising tenants and owners that any emergency updates can be found on our Facebook page. This will enable tenants and owners to report on their status and that of their property, and is an open forum to create a helping network. We have a plan to check properties for safety, and track tenants who have disappeared to minimise confusion at such a difficult time.

We are advising owners to ‘quake safe’ their properties to minimise damage. Chimneys falling have been a significant hazard during quakes. Hot water cylinders ‘walking’ has been another.

We’re also offering help to those in Christchurch. We’ve publicised available properties for those affected by the quake and wanting to get out of Christchurch. We’ve offered breaks away for the property managers down there, and to relieve some strain of the work they need to do. Many have offices and staff severely affected.

Are we over reacting? A recent visit to Plimmers Ark in the CBD reminded me that a magnitude 8.2 quake struck Wellington in 1855, causing significant changes to the landscape (ever wonder why the ‘Basin Reserve’ is called that? It was going to be a shipping basin prior to the quake raising the land at least 2m in the CBD, changing plans to a cricket ground instead. The damage to brick structures explains why the old Government Buildings, opened in 1876, was made of wood, albeit in the style of stone. The motorway to Petone would never have been built had the land not emerged from the sea – it used to be impassable at high tide). If it happened before, it could happen again. Are your properties taken care of by people who care what happens to them and your tenants should the worst happen?

Are you being scammed?

The internet, so convenient. Particularly for those who wish to do harm.

Early this year we were showing a lovely home in Kilbirnie and some prospective tenants turned up whom we were not expecting. ‘This is the place for $260 per week right?’ they asked, pleased at how nice it was. ‘No, it is $480 per week’ we replied, ‘are you at the right house?’. They confirmed the address, and sure enough, they were at the right place. They showed us the advert they had printed out from Craigslist. It was the same property indeed, but not our advert, though the details and photos had been copied from our TradeMe listing.

The prospective tenants had been emailing the ‘agent’ who was going to send them a tenancy agreement via email once they paid the rent and bond by internet banking. It was just luck they happened to bump into us at the property when they did a drive-by and discovered the person they were dealing with was scamming them.

The long and the short of it: If the deal is too good to be true, it probably is. If you can’t meet the person at the property, they probably have no right to be renting it. And if they want money up front before you can look inside, be very wary. If they don’t have a key, they have no right to be there. Check their credentials. Only deal with reputable companies with professional affiliations, like the Independent Property Managers’ Association. Rental Results is a proud member of the IPMA and Wellington Property Investors’ Association. The scammer is not.

What to do BEFORE you sell your rental property.

1. Talk to your property manager. You will need to know details of tenancy agreements including the expiry of any fixed term agreements, and what your rights and responsibilities are, including accessing the property for showing it to potential purchasers. Your tenants have a right by law to know the property is on the market, and the property manager is the correct person to tell them. Your tenants may want to purchase the property, which could save you sales commission and make it an easy process. Or other clients of your property manager may be looking to buy your property - ask. Your property manager can also recommend some sales people who may be able to sell your property with the least amount of disruption to your tenants. You want to keep your tenants on board throughout the process because if it doesn’t sell, you will need to live with the consequences. A tenant can make or break a sale with how they keep the property during the process. A good property manager will spell out to them that they are being evaluated along with the property – a new landlord won’t want to keep messy and difficult tenants.

2. Talk to your bank. Your lender may have some strong opinions about you selling a property. Make sure you can close the deal without losing your own house too. This is particularly important if you have a high mortgage on this or any other property.

3. Talk to your accountant. There can be some advantages to carefully timing your sale to fall into one or another tax year. Better to ask early than regret later. They may also have some strategies for avoiding the need to sell at all, or for dealing with GST, depreciation clawback, or capital gain issues.

4. Get the paperwork together, such as tenancy agreements, rental assessments, comparative market analysis, valuations, building report, LIM report, etc for the buyers to view. Having these documents on hand will make your salespersons job easier, the buyers happier, and your sale more likely to go swiftly and easily.

5. Choose the right salesperson. It is not necessarily the one who sold you the property. Some salespeople are better at selling family homes, others better at investment properties. Make sure they know your area well, have a large database of contacts, and good marketing strategies. Don’t just go for the one who names the highest price – they may just be angling for your listing. Have them back it up with comparable sales data for your area.

6. Be clear about how long the property will be on the market, and have a plan B if you don’t get an offer you are happy with. Remember, the market will decide what price you get, you decide what you do with that.

7. Decide which improvements you will do to assist the sales process, and which you will defer. Anything which improves the presentation of the property is usually a winner with buyers. Don’t put off maintenance – less and less people want a ‘doer-upper’ and a negative building report could cost you a sale.

8. Invest in great photos. A picture paints a thousand words. Have yours say ‘desirable’. Make sure you own the rights to the photos – if you don’t sell, you can use them for advertising when it is for rent.

9. Keep good tenants in the property during the process. If you are not worried about paying the mortgage you can wait for the best possible offer. Good tenants make a property look homely with nice furniture, and many tell prospective purchasers what they love about the property. Bad tenants are a whole other matter…

10. Keep your property manager in the loop. They can help in so many ways, so treat them as partners in the process. They can be very helpful for testifying to the rent-ability of the property, rental assessments, and apportioning the rent on settlement and a well-managed property is easier to sell than a badly-run one.

Be Prepared - Just Incase

I thinks its fair to say the events in Christchurch have got us all realising that we could prepare ourselves a little bit better. The fact that hardware stores sold out of emergency supplies in the weeks following is a good sign that people are stocking up on essentials to get them through.

Things to think about:
If it is a major disaster then everyone will be affected this includes tradesmen and all the people in the emergency services as well as your property managers and potentially property owners. They may have family member missing, may be trapped themselves and may not be contactable. So patience is extremely important. Its a well known fact that people who get out there and help during extreme situations have a greater survival rate that those that sit back and wait for others to help them. So get out there and do what ever you can to help. Check on neighbours, friends and if you have power etc share it around.

Get a survival kit organised:
Find a location that will be easily accessible if your home is not stable. A lockable garden shed is ideal. Get a large waterproof airtight container a fill it with everything each member of your family will need to survive at least 3 days. This could include the following:
Water (3 litres per person per day)
Food (non perishable)
Torch and battery powered radio (with spare batteries)
Toilet paper, plastic bags and a bucket.
Other toiletries you may need.
First aid kit and any medication you may need.
Pots and pans for cooking (and any other utensils - don't forget a can opener)
Face and dust masks.
Towels and blankets
Sturdy shoes
Warm clothes
Pack of cards or travel games

Make a plan:
Maybe you share a flat with other people your age or maybe with family. Who ever it is you need to come up with a way of checking on each other and a location you will meet at. The internet and cell phones are a great way to let people know that you are safe - refer to the rental results action plan blog to find out how you can notify us that you are safe.

Always be prepared you just never know when something may happen.

Away for 21 days? – 1st April deadline to organise an agent

The Residential Tenancies Act 1986 was amended on 1 October 2010. One of the amendments was to ensure tenanted properties were being looked after when the owners were overseas for more than 21 days. From 1st April, all owners who are out of New Zealand for more than 21 days must appoint an agent to liaise with tenants and get essential maintenance done. Failure to do so will be deemed an unlawful act and can incur a penalty of up to $1000 (See Section 16A(6) of the Residential Tenancies Act Amendments).

An agent can be anyone who is an adult and able to make decisions on your behalf, whether that is Aunt Patty, your brother Bart, or your friend Nelson, it is entirely up to you. Of course, you want that person to know what they are doing – anything they do that contravenes the Act is the same as you contravening the Act. If they say “sorry dear, we don’t allow children in this property” it will be you hit with $4000 fine for unlawful discrimination. If they enter the property without proper notice, you’ll be coping $1000 penalty. If they don’t have the property clean and tidy for the next tenant, you could be facing $3000. If they fail to lodge the bond, again, it will cost you, this time up to $1000. And what if they just want to keep popping around to make sure the tenants are comfy? If it’s a breach of tenant’s privacy, you’re facing a $2000 fine. As Homer would say, ‘Doh!’.

In the face of such steep penalties for doing the wrong thing, plus the risks of your relatives not knowing how to get the rent paid, or choosing tenants who will look after your property, doing inspections, and getting maintenance done properly, property management by suitably experienced property managers is darn cheap. When you need to go away, choose Rental Results to manage your properties and keep you on the right side of the law and your money in your pocket.

Overcrowding Issues

We ask people why they want to move home when they look at rental properties we have available. The last year or so has had more and more people answer 'our house is too crowded'. We have begun to ask just how many people makes their house crowded. The worst number reported to date is 11 in a 3 bedroom house, four generations of the one family. We can't say how many people are under-reporting. Overcrowding has the stigma of poverty. We know a number of people tell us there is 4 of them in one bedroom, and we don't know how many more are in the lounge room floor. For tenants, overcrowding is an issue with health implications - mental and physical. There are safety and security issues. Hygiene is an issue - will there be hot water for everyone? Where will towels dry? Is there room in the kitchen to wash the dishes? Can that number of people be fed easily in a standard sized kitchen? Is there someone too quiet or too weak to get their share? And diseases love crowds - they get transmitted easily from close contact, particularly in humid rooms from many breathing bodies. Tensions run high and tempers flare - just check any reality TV programme to see what can happen when people are cooped up together too long. For landlords, more people has building issues - there is a lot more wear on the building and fittings. Stove elements burn out quicker when cooking large heavy pots full of food. Paint gets scraped, bathrooms never dry out between showers, bedrooms and living rooms get damp from all the expiration and perspiration, so mould develops everywhere. Plus, they have the risk of someone accusing them of providing unsafe and unhygienic housing. Saying 'it was fine when they moved in' doesn't really convince the housing inspector. There are large penalties for unhealthy homes - what is caused by the building and what by the tenants will be disputed. Are homes overcrowded because rents are too high? Maybe that is a factor for some. However, a home in Porirua rents for as little as $12 per room per day. Just 20 minutes down the road in Wellington city, this could be $33 per room per day, and occupied by a student, almost 3 times as high a cost. So no, cost alone is not it. Are homes overcrowded because people do not pass the checks prudent landlords do? I think we could be onto something here. Someone with a steady job, a steady family structure, a steady head, and a steady renting history should not struggle to find themselves somewhere to live. Those who seem to be piled in with all the relatives seem to be out of work, out of their relationship (for now), out of their tree, and out of favour with their previous landlords. Hmm, no wonder no one wants to take a chance on them. What's the solution? I don't think the landlord has much chance of sorting this out. Asking 'how many free-loading relatives will move in with you if you get the property?' is not likely to be popular nor solicit an honest response. Be careful with your tenant selection, restrict the number of occupants in the property, inspect regularly and hopefully tenants will get the message overcrowding is not good for them, nor popular with you.

EQ proofing for your house

When Christchurch was struck with a 7.1 magnitude earthquake in September 2010, there was a lot of damage caused by chimneys and hot water cylinders (HWC) when the houses were otherwise OK.

Why were these two items so destructive? Firstly, they weigh a lot. A 180lt HWC weighs around 200kg. That's as heavy as two rugby players. You wouldn't want them charging down the hallway at you, particularly when you are none too steady on your feet. I am sure you don't need me to explain what damage a chimney stack of bricks would do if it landed on your foot, or your head.

Secondly, they are made of different materials to the rest of the house. Most houses are wood, and have some flexibility in a quake. Bricks and metal cylinders are less flexible, so they get out of sync with the waves of an earthquake and pull loose of where ever they are supposed to be, relative to the rest of the structure. Out of place means causing trouble.

Thirdly, chimneys stick out a long way. They need to in order to do their job, but this also has the effect of leveraging the motion of the quake, and the further something is from the ground, the more it sways. Again, recipe for disaster.

A lot of this damage was preventable by simply strapping these items to the framing of the house to prevent them going their own way when the urge strikes. If you have a new HWC put in, your plumber should give it suitable seismic restraints. In my own house, the former owner has also secured it with a frame of wood around its base so it can't hop away. This is great, because not only will the HWC remain where it is, the water will be available for drinking if the main is disconnected.

If you have a brick chimney on your house or rental property, also get it strapped and secured in at least 2 directions. At worst, you'll never need it. At best, you'll save damage to your property, and maybe even save someones life. It is a pro-active insurance policy. Your regular insurance can't promise quite the same protection, so sort it out now.

Remember, Christchurch did not expect a 7.1 magnitude quake in September 2010, and it certainly did not expect a 6.3 in February 2011 as it was a fairly earthquake free region. If it can happen there, it can happen anywhere. Get prepared.

Why your Accountant should know you better than your Gynaecologist

Money and Sex. Two important concepts. Couples fight over them, comedians joke about them, but few people can talk seriously and comfortably with either topic. If you want to be healthy, financially and physically, it is time to change that. Your accountant should know if you have multiple business partnerships. If you have an itch to do something expensive, they should be kept in the loop. If you are rash with your spending, they can tell you what the limit needs to be, before you end up penniless and alone. Your accountant should be able to assist you stay liquid, but only if you tell them all. They can’t read your mind, and poking will aggravate sore spots. Get the salve early and learn how to stay healthy by telling your accountant all your dirty (financial) secrets.

Liar Liar Pants On Fire!

The dumbest thing a tenant can do on an application for a property is lie. "No, I don't smoke. No, I don't have any pets. No it will only be me and my partner living here, we don't have any kids. No, I've never been to Tenancy Tribunal. Yes, my credit history is good. You can't call my landlord right now, they're overseas. I'm leaving my current property because it's been sold."

These, and many other lies, are just so easy to see through. And if our automatic lie detector doesn't go off immediately, all red flashing lights and sirens, the second line of defence kicks in, the background checks.

I'm not surprised so many people try lying on their tenancy applications - they might just get away with it, and for some people that is easier than being a better behaved tenant. The problem is, when we catch them in a lie, that's it. They don't get to live in the property, no matter how innocent the omission.

Why are we so hard-arse about this? Well, would you give someone you couldn't trust a quarter of a million dollars or more? No way, right? So why should we put a tenant we don't trust into a property worth that much? We are not that stupid.

Trust starts with telling the truth. If the truth isn't pretty, what do you need to do to be a more desirable applicant? Live that life and get better properties. If you are an honest tenant, apply for properties here.

Mediation Matters

When things go wrong in a tenancy, apply for Tenancy Tribunal as soon as it is clear trying to sort it out with the tenant (or the landlord, for that matter) isn't actually advancing the situation, particularly if you are getting promises that are not being kept.

Most likely, you will be scheduled for Mediation. Here are some things you need to know:

The mediator should be impartial. They don't favour the landlord or the tenant.
They should explain their role clearly to all parties and explain the process.
They should let you discuss the issues and reach a decision, while keeping everyone cool.
They shouldn't ask leading questions.
They should not suggest solutions.
They should help all parties reach agreement.
They should know the tenancy laws, and guide everyone to a lawful solution.
They should make clear what has been agreed upon, and write up that agreement.
They should write up mediated orders in a timely way and send them to be sealed by the Tenancy Tribunal promptly.
They should always act professionally and calmly.

If they don't do the above, you have a couple of choices. If you cannot reach a decision in Mediation, you can have the matter referred to Tribunal. This will take longer to get an outcome, and this may not be satisfactory if the problem will get worse with time (like rent arrears accumulating).

Or if the mediator has failed in their duty to be impartial and professional, you can complain about how it was handled. To do this, contact Department of Building and Housing on 0800 83 6262 and ask them to put you in touch with the mediation team leader and state why. In our experience the team leader has returned our calls the same day, and has acted swiftly and appropriately to see matters handled correctly.

Is shame stopping you succeeding?

A while ago, I had a prospective client who said she wanted us to manage her property but would not get me the tenancy agreements and other paperwork we needed to get started. I thought 'maybe she doesn't want to go ahead with property management'. When I finally confronted her about it, having followed up with her about 8 times, she admitted 'I haven't given you the green light because I am so embarrased. I've realised I didn't lodge the bond, and my rent records aren't up to date. I don't know where to start, and I'm disappointed with myself for not being better at this'.

Oh, is that all! I made a time with her to go to her house and sort through the loose pile of papers, extract the essentials we needed and had her write a cheque for the Bond Centre. Together we quickly tabulated the rent record from her statements, she signed our management contract, and the rest is history. The relief she felt once she admitted what was holding her back, and the quick solution (it took about 2 hours, including a coffee break), was obvious and immediate.

We quickly tackled the immediate problems with the tenancy - some rent arrears and maintenance items - and brought to an end insidious behaviour that was costing the owner money (the tenants were bending her around their little fingers).

She's gone on to buying more property and renovating them, something she is skilled at, plus furthering her career and spending more time with her family without this millstone around her neck.

She is so thrilled with our service, and that we didn't laugh at her, she happily gave us her own home to manage as well when she moved out of town.

Are you letting your secret shame from stopping you getting the help you need? Don't be embarrassed, we help people like you all the time. Contact us for help right away.

How much is getting a good tenant worth?

Some of our clients prefer to manage their own properties, but they don't like selecting a tenant. Perhaps they realise how much time it takes up, and they don't know the right questions to ask, or they assume the first person to show up is good enough, and learnt the hard way this isn't always so. So they come to us for help.

We can find and evaluate a tenant for your property, get them signed up to a robust tenancy agreement (with 34 legally binding special clauses for your protection), then hand them over to you for the inital inspection and day to day management.

How much is this worth to you?

Saying the right things in the advert to attract tenants, but not mislead, is an art in itself, and it seems taking good photos is beyond many people. A picture paints a thousand words, so make sure they are flattering ones. A good advert makes a big difference to attracting the right people to your property.

Some properties rent easily, but some you need to go to what seems a million times before you finally find a tenant who likes your property, and you like too. That's a lot of time, and travel right there.

Then there is the actual selection process. Calling four referees, checking Tenancy Tribunal history, and credit checks take a bit of time and effort, particularly knowing the right questions to ask. And what not to ask - you don't want to stray into unlawful discrimination - that could cost you a lot of money and stress.

A solid, legally binding tenancy agreement is vital for success. Knowing the peak season for renewing leases can make thousands of dollars difference each year. Using fixed-term tenancies to your advantage. Having all the right clauses that will save you heartache and money, and stand up in Tenancy Tribunal if it is needed can make the world of difference to the outcome of any problems that do arise.

What is it worth? The difference between success and failure, that's what.

Good Reasons for Your Property Manager to Fire You.

When you place your property with a property manager, you are engaging a professional to give you good advice. You pay them for that advice, so you'd better pay attention! There are some things people do which make it tricky for property managers to do their jobs, and put them and you at risk of legal action. Here are a few good reasons for your property manager to refuse to work with you again.

1. Refusing to do essential repairs or maintenance. Under the Residential Tenancies Act, this could lead to a fine of up to $3000 being awarded to the tenants, on top of your repair bill. If you think repairs are expensive, you'll be very concerned about fines on top of these costs. If you think a proposed repair is not essential, then discuss that with the property manager. Be sure you have defensible grounds should it go to Tribunal.

2.Putting the property on the market without letting them know. Tenants must be notified if a property is on the market for sale - it is the law. Contact by the real estate salesperson should not be the first inkling tenants get! Always tell your property manager if you are going to list your property as they will have strategies for keeping the tenants happy, the property in good order for the showings, the rent coming in during the sales process and you out of hot water with the Tenancy Tribunal. It may also affect lease renewals, so don't try to sneak around.

3. Talking with tenants without letting the Property Manager know. No, we are not paranoid, we have seen a lot of trouble come from conversations between landlords who do not know any better and tenants who do. Like rent holidays over Christmas, agreement for improvements, agreement to end leases early. All of which cost the owner dearly. Don't be a chump - if ever you are talking with your tenant (whether it is at the supermarket or the property) and you have a property manager, simply say 'please discuss this with the property manager, that's what I pay them for'. Because you do.

Is it worth having tenants pay a letting fee?

Should you go with a company that charges a letting fee to tenants?

Some companies charge tenants a weeks rent as letting fee, plus 3 weeks bond, plus first rent. Others, like ours, don't ask tenants for a letting fee, but instead get four weeks bond and first rent. From the tenants point of view, it is the same upfront cost. From the landlords point of view, it makes a big difference to how secure their property is. One week extra bond can make a big difference between rectifying any damage or rent arrears, and being out of pocket. Ask your property manager how much bond they charge, and why. Four weeks is the legal maximum - why ask for any less?

We also find better, more financially savy tenants choose to avoid letting fees whereever possible, and they don't mind paying a higher bond because they know they will get it all back at the end of the tenancy as they don't cause damage and they pay their rent on time. Which would you prefer - financially savy, clean, responsible tenants, or the other sort?

Another thing to consider is 'what is in it for the property management company?'. Surely there is the temptation to maximise income by choosing short-term tenants, because they will get their fee again and again and again. Good for the company, not so good for you. Each vacancy costs you money, particularly if you need to sort out issues from bad tenants too.

In our opinion, the best way to get great tenants quickly is to avoid charging them letting fees.

How to impress the property manager

This is the time of year where properties are in high demand, for the good properties you could be competing with 10 or more other people.

How do you get your application to the top of the pile?

1. The initial inquiry
Before contacting the Property Manager make sure you research the area and thoroughly read the ad. It doesn't look good if you stand someone up because when you pulled up outside the property you decided it wasn't for you.
If you email the Property Manager make sure you leave your name and contact phone number. It will save time and get you through the property at the next available showing.

2. Make the first impression count
Do you introduce yourself on arriving?
Do you take off your shoes before entering the house?
How do you walk around the house?

We want tenants who respect the property and are good communicators.

3. Are you prepared?
Have a filled in application form ready to hand over to the Property Manager if you decide you would like to apply for the property.

This shows you are organised.

Most of all be yourself - talk to the Property Manager and ask any questions you have.

Good luck and happy hunting.

She don't drink Speights but.

It's a hard road finding a perfect tenant. When choosing a tenant, it is important to be aware of selection bias. Too many men (sorry boys) have fallen for the pretty young thing who turns up to look at their property, and forget to ask vital things like 'can you afford the rent?' and 'will you actually be living here?'. Yes, sometimes the person who views it is not going to be the occupant, and why do you think that might be? Yep, some tenants know the effect of sex in advertising, and some are not above using it to their advantage, and your disadvantage.


If you know you are prone to the pressure of a pretty smile, make sure you have a robust selection process. It can be as simple as having an application form and making sure you only consider people who actually complete it. Don't justify any gaps on the form - if tenants aren't willing to tell you the information you need, they have good reason to hide it, which isn't good for you.


And of course, ask for references. And then call them! Check they are genuine - that is, not just a mate posing as the old landlord. Its easy to do so, ask them some questions about their investment - you know, one-landlord-to-another kind of chat. It really sorts the posers from the genuine articles.


Your insurance policy may have requirements for robust selection criteria, particularly if you have cover for malicious damage or non-payment of rent. Make sure your claim will stand up to insurance scrutiny by checking your small print and doing the above. Otherwise you are paying too much for your insurance, because no claim will ever be honored.


Too hard? Give us a call and we can take care of it for you, and top it off with our tenant selection guarantee. 04 4711880.