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Pouncing on problems

Friday, November 28th 2008, 1:49PM 3 Comments

by Philip Macalister

I take it all back! Last week I made a distinction between landlords and property investors. It seems from a couple of comments to that Blog that differentiation wasn’t liked.

Fair enough. The point was to try and make a distinction between those who prefer the DIY approach and those that are happy to outsource management.

I think the key point to remember is that all investors are landlords and, while they invest to make money, they are also providing a service to other Kiwis.


One of the reasons I chose to talk about property management again this week (besides taking my previous comments back) was a story on Landlords.co.nz about a significant increase in the number of applications being made to the Tenancy Tribunal. Many of these applications relate to unpaid rent.

It is clear that things are tough out there and the one thing we are yet to see is rising unemployment. For the past few years New Zealand has done extraordinarily well to have a very low unemployment rate, both historically and compared to other countries.

That will change. There is little doubt about it. Next year thousands of people are likely to lose their jobs and many of these people will be tenants.

There is a huge need for investors to make sure they are managing their investments well and taking action quickly if the need arises.

In this piece the president of the NZ Property Investors Federation, Martin Evans, gives some good tips to help investors get through this difficult time.

The other thing which was interesting about last week’s Blog is that I thought some people may bag property managers. It seems there are plenty of people happy with the service they provide – but make sure you find a good one.
« Shaking up property managementRates down, down, down - market up? »

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Comments from our readers

On 28 November 2008 at 5:06 pm richard evans said:
There was some intersting data from mthe DBH which was showing an earlier than normal upswing in TT applications, when nearly 4,400 were lodged in september this year as compared to 3,500 at the same time last year.
I think there are 2 reasons for this increase; firstly the number of people renting has soared as sales fall away people have to move on and they have to live somewhere and secondly the rise in jobless numbers has started- several of my previously well employed tenants have been laid off and simpoly cannot afford their rent any more and have to downsize.

Property managers are reporting much higher than normal levels of vacancies, tenants making "offers" instead of simply accepting the advertised rent, and today there are 220 places in my town on Trade Me for rent, nearly 3 times the number 12 months ago.

We are certainly way ahead of last year's lets with a good 25 % increase in new tenancies, and that is largely fuelled by arriving tenants being unable to sell the home from whence they came!

Property managers are increasingly usefull for landlords as they are usually better placed to read the market than a landlord who only enters the market once every year or two.

Thats my view anyway!
On 28 November 2008 at 5:08 pm marion said:
I was starting to respond to your blog about Property Managers and I ran out of time last week. However I thought it was appropriate that as a property manager of 16 years and a good one, with my own company, I would like to support my colleagues in the industry who put up with a lot. I recently wrote this piece for a property management magazine as we had just decided to drop off part of our business, i.e. the casual landlord - why you ask- well here is why from a property manager's point of view:

"Ask yourself the question - where are you having to put most of your effort into? Are you doing 80% work for 20% of your clients? Take a look at your casual owners that is the owners who don’t want you to manage their properties.
We have made a decision in our company not to take them on any more and to promote our company as a Property Management Company, not a Rental and Property Management Company. Why you ask ? Well we found we were putting 80% of our effort into these 20% casual owners. They don’t pay a cent (unless you get money off them before you start marketing the property), they want you to get access through the outgoing tenants (who are in the process of shifting), get a key of them (which most are reluctant to do); as the owner either hasn’t got a key or is too lazy to drop one off to you. They want you to try above the market rent at the time, they haven’t maintained their property to the level you are proud to present to prospective tenants and then they criticise you because you haven’t been able to get tenants!

You are putting your reputation out there and the company’s reputation.
We would rather put 100% effort for 100% of the owners who have entrusted their properties to us, i.e. professionally managed.

Since making the change in our office we now have a more balanced life. We know we will pick up the small loss from casual letting, by taking on more managements. We have found that when we tell people we only do property management we quickly sort out the owners who understand the rental business, know that management fees are tax deductible and appreciate our efforts.

If you are in an office that make you take casual owners have a meeting with your Branch Manager or Licensee and get a policy written up, we had one over the past year and it did help i.e. it at least gave us some control.
Our policy was:

1. No keys no do

2. Do not take on unless you view the property first, i.e. a rundown property does nothing to enhance your reputation.

3. Do not do if they want over market rent.

4. Have a listing agreement (refer my forms on my link “FORMS” on my home page and have a clause at the bottom for them to sign saying that if they rent it or someone else other than your company they will pay the $100 plus GST to cover costs. We did find that over the year we did this we had about 5 owners paid us and only one refused and has never paid; you know the one that lied (no one else had the property to market-yeah right).

5. Charge them for advertising and your time if your company wants to include this in their policy-get the money up front.

FOR THE GOOD NAME OF THE PROPERTY MANAGEMENT PEOPLE WORKING HARD IN ALL THE OFFICES THROUGHOUT NEW ZEALAND, THINK BEFORE YOU TAKE ON A CLIENT – DON’T LET THEM RUIN YOUR REPUTATION.
On 29 November 2008 at 12:52 am Kaye said:
I totally agree!
Commenting is closed

 

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 ▼3.39
ANZ Special - ▼2.55 ▼2.69 ▼2.79
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone ▼3.49 ▼3.49 ▼3.49 ▼3.49
BNZ - Classic - ▼2.55 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 ▼2.69 ▼2.75 ▼2.99
The Co-operative Bank - Standard 4.40 ▼3.19 ▼3.25 ▼3.49
TSB Bank 5.34 ▼3.35 3.49 3.79
TSB Special 4.54 ▼2.55 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.55 2.69 2.79
Median 4.55 3.19 3.22 3.39

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