Hi folks,

Having had a number of properties for sale over the years that have been tenanted I thought I would discuss the choice vendors have to make when selling -  do they sell with the tenants in or should they serve notice and sell without.

Let me point out that retaining tenants during a sale certainly keeps the rental income coming in. Also, unless the property is dirty and untidy, it will usually present better with furniture and household items making it look lived in and camouflaging wear and tear.

However, there are times when a tenant in residence could be a financially less rewarding scenario.

Tenants who do not want to move can put a lot of obstacles in the way of a sale. They can limit and postpone inspection access almost at whim in spite of legally having to provide ‘reasonable access’(what is ‘reasonable’ to one person may not be ‘reasonable’ to another). By the time this sort of obstacle is sorted out, valuable time has been lost and many purchasers have moved on. If the market is not trending up, this can result in a lower sale price as the market drops before the property can be sold. Most rental incomes can’t compensate for this kind of loss. Furthermore, if the seller is using the money for another financial project, delays in having the money available could cost them the project or render it more expensive if bridging loans are required.

Disgruntled tenants can also highlight the property’s faults in order to put off prospective purchasers and while many owners are happy to absent themselves from the property to allow the agent to show the purchasers around at their leisure and improve their selling prospects, tenants have no such motivation to leave the property and many more to stay watchfully present.

Sometimes, property owners have no inkling that tenants will behave badly in the event of a sale, but there is a bit of basic research investors can do to try and determine whether their tenants will play ball. Ask the property manager how easy it has been for the agent to get access for periodic maintenance inspections or for tradespeople who have been contracted to carry out work on the property. Tenants who have been slow to concede access for activities such as repairs that will benefit them are highly unlikely to come to the party when they think they will ultimately lose their home to a successful purchaser.

Thankfully in all my years selling property in Upper Hutt, I have met very few of the latter!

Posted in Tenants, Tips on Selling;

Hi folks,

The market is moving nicely as we enter the busy season.

I have been meeting more rental investors looking for property so I thought this week I would address some property management issues and offer some questions that a good property manager will know the answers to. Note the way a property manager answers the following seven questions... it will definitely help investors decide whether the prospective manager is up to the job.

1. How much notice must a tenant give to a landlord when they are going to vacate?
2. How much notice must a landlord give to a tenant that they require vacant possession?
3. How much notice must a landlord give a tenant that they are going to vary the rent?
4. What is the difference between fair wear and tear and negligence?
5. What is the maximum security deposit / bond a landlord can charge a tenant?
6. What is the minimum period a tenant needs to be in arrears before the landlord may commence formal eviction proceedings?
7. Can you briefly explain the steps involved in a formal eviction?

The answers to these questions will vary depending on local legislation governing residential rental arrangements in the area.

But if you are thinking about signing up with an agent who does not answer these questions with confidence, think about choosing another agent.

Finally, investors shouldn’t expect their property manager to have a detailed knowledge of the tenancy legislation – as long as they know where to go for the information when they need it.

Posted in Tenants, Rentals, Working With An Agent;

Hi folks,

Listing your home on short-term rental sites like AirBnB and BookABach can be an excellent way to get great returns on your rental.

AirBnB and BookABach have completely changed how we holiday, moving away from traditional letting methods to connecting the owner and renter directly, usually on short term lets.

It’s now easier for owners to use different renting methods to get a return on their property. We’ve seen recent reports of landlords in Auckland’s CBD choosing to only rent out their apartments on AirBnB instead of relying on a long-term tenant because of the higher returns and with occupancy rates sitting between 80 and 89 per cent, it’s an attractive option.

While there can be a bit more work around booking guests and handling cleaning, short-term rentals can work well  if you’re willing to take the risk and uncertainty.

Some other issues to consider include

• securing the right insurance
• working with an accountant to understand your tax obligations
• maintenance costs with a higher turnover of tenants
• how much property management you really want to do.

Owning a holiday home has an added bonus in that you have somewhere to holiday yourself - and if you structure it right, the house should pay for itself.

Posted in Tenants, Rentals;