Timeliness of repairs is also important to tenants.  Small remedial jobs should be taken care of quickly.  This works on two fronts. Firstly, tenants can see that the landlord cares about their property. Secondly, small repairs could turn into big ones and cost more if not taken care of quickly.  For example, cracking paint around windows may end up as rot around windows and become a costly exercise to repair. With good property management, the tradespeople used will generally give good quotes and do a good job.  Investors can trust the process and improve the relationship with the tenant by giving the go ahead for small running repairs.

The exterior of the property is also important.  A home that is weatherproof with a good painted exterior, has a tidy  garden, good pathways/drives and fencing and looks tidy from the street front will instantly create appeal to tenants who are viewing the property.  All properties – whether they are studios, flats, apartments or standalone homes require a bit of attention to look smart and first impressions do count.

Heating does make a difference to vacancy rates.  Homes with heat pumps particularly now that we are coming into the winter months have an edge on appeal to tenants compared to homes that do not.  Insulation is also important and can make a difference once the tenant has moved in and lived partly through a winter.  A home that is not insulated may not be as attractive to the tenant to continue to live in the home.

Gas heaters that have a flue and wood burners that are compliant provide good heating.  In our tenancy agreements we require tenants not to use portable gas heaters as there is evidence that they may be harmful to health and to your investment. Anecdotally, heat-pumps seem to have an edge over any other type of heating due to efficiencies, cost and the “clean green image”.

Investors that keep their properties in good condition can command market rent.  Investors should not be afraid to work with the property manager to review rents particularly if the investor is being proactive and the market allows for rent increases.  Good tenants who see owners reinvesting into their properties are more likely to stay on in the property even with small rent increases.  Good tenants understand that things need to go up and that includes rent but they do want to see that some of the rent is being reinvested into the home.

Another small but important aspect of keeping a property maintained is to install an exhaust fan in the bathroom hard wired to the light as well as having its own “on” button.  The exhaust fan should not go into the ceiling cavity – moist air should go to the outside of the building.  Small improvements such as a fan that does not cost much will preserve the lifespan of the paint in the bathroom and help the tenant manage mould.

Vacancy rates can be minimized through proactive maintenance regimes.  Good properties continue to rent well. Good heating does make a difference.

Outside of tidy kitchens and bathrooms, there is a preference for neutral decor tones. Tenants also prefer properties with good heating. We have seen tenants move from homes without reasonable heating into homes with heat pumps. Perhaps anecdotally, heating preference could explain some of the movement in August as it was one of the coldest months on record.

Tenants are prepared to pay more rent to live in good quality accommodation and it makes sense as an investor to attract the best tenants at the best market rental price. Investors are still buying and adding to their portfolios. A recent example is a 25 year old couple on one income who have purchased their fifth investment property. Following the rules of looking at investment as a long term plan, the couple raised finance by having confidence that the property would rent fairly well given its condition and attractiveness to tenants.

The couple purchased the investment property in Stokes Valley, Lower Hutt for  $177k. The property they purchased has all the hallmarks of a good investment property. It is a well-presented home in a sunny, slightly elevated spot in Stokes Valley close to all amenities. With two bedrooms and open plan living, it has the attractiveness that tenants are looking for being neutral in decor with a good kitchen, modern bathroom and decent heating.

Being on one income, it was important for the couple that the property rented quickly following settlement day. Photos and advertising were prepared in advance and the property advertised as soon as the keys were picked up. A great tenant (professional, early sixties) was secured four days later and moved in a week after settlement. The couple achieved market rent of $280 per week.

The property is proving to be cash neutral. The rent is paying for the mortgage including principal, rates and insurance. These smart investors have another asset that they will own in 20 years’ time when they are in their mid-forties. There are great rental properties like this one on the market for smart investors to keep an eye out for and to continue to add to their property portfolios. Good properties are renting very well.

In summary:

1. s16a of the RTAA states that if a landlord is planning to be out of New Zealand for more than 21 consecutive days, they must appoint a New Zealand based agent. They must also notify the tenants and the Bond Centre if a bond is held. If a bond is held, the Bond Centre must be notified in a prescribed form. If a landlord ignores this provision, a fine of $1000 can be imposed on the landlord.
2. If the property is part of a body corporate, then the new Unit Titles Act is reflective of the same rule in the RTAA. The responsibilities of an absent owner of a unit who leases or licenses their unit is to:

(a) Appoint a person in New Zealand to act as his or her agent unless an agent has already been appointed under the Residential Tenancies Act 1986 as above.

(b) Advise a body corporate of the agent’s name, address for service and contact details. If the owner doesn’t do this, then the body corporate can enforce the rules on the owner’s behalf.

 Further to above, a landlord may end up in breach of several other provisions by not giving access to a New Zealand based agent and non-performance of their obligations as a landlord.

It is best to have someone who knows what they are doing to protect your property and your interests as a landlord.  It is important to understand the Residential Tenancies Act and how it has changed.  Oxygen can help protect you as the landlord and ensure that you are not left open to risk.  While you are on holiday and when you return, Oxygen takes the hassle of day to day administration of your property away and lets you focus on the big picture.

There are 28 unlawful acts that can impose up to $4,000 of fines.   We will be posting these over the next couple of weeks. If you would like to receive a full summary of these please either email info@oxygen.co.nz or call us on 566 2233 and we will arrange a summary to be sent to you.

Investor demand is strong in the Hutt Valley and Wellington but nationwide investors are “sitting on their hands.”
The latest BNZ-REINZ Residential Market Survey of real estate agents found the housing market is improving but with a small ease in the strength of some indicators in comparison with recent months.

The survey found a net 3% of responding agents saying they are seeing fewer investors in the market, however there were large variations on the reported amount of investor interest across the country.

The Hutt Valley was the stand out location as far as agents reporting investors active in the market, with a net 66.7% reporting investors buying.

“In Wellington’s Hutt Valley investor demand is quite strong even though overall buyers are not considered to be too motivated,” the report said.

Wellington and Porirua were the regions with the second-most active investors, with 26.9% of agents reporting investors buying property.

Other locations where agents reported strong investor activity included New Plymouth City (20%), Waitakere City (16.1%), Other Auckland (15.8%) and Auckland City (10%).

Bucking the national trend for investors, the survey found a surge in first time buyers across the country.

“In contrast to the disinterest of investors the level of enquiry from first home buyers continues to grow with a net 28.8% of agents saying they are seeing more such buyers.”

The report said this measure has been at strong levels since July, suggesting more first time buyers believe now is the right time to make a purchase.

Another measure that has seen a rise is around auction clearing rates, with a net 13.4% of agents responding that auction rates are rising. The report claims auction rates are a leading indicator of market strength in other countries, and “this result suggests that fundamentally the market remains firm.”

On the issue of prices, a net 17.7% of agents report they feel average house prices are on the up, a measure that has been in positive territory since July.

After four strong months when more agents reported rising numbers of people through open homes only a net 7.7% reported a rise this month, and while more reported rises than falls, “the result does suggest some easing in the momentum of improvement.”

The survey results also suggest more potential vendors are entering the market, with a net 36.8% of agents reporting an increase in the number of appraisals requested by potential vendors – a record level in the seven months the survey has been running.

“First home buyers remain keen to buy, investors are sitting on their hands, it appears to be neither a buyer’s nor a seller’s market, and there are signs of more potential vendors coning forward,” said the report.

“We read the measures as indicating a market generally improving but showing some signs of a mild pause.”

In the space of one month 27,000 people have downloaded Realestate.co.nz’s upgraded iPhone app which allows users to search for rental property. Chief executive Alistair Helm said the amount of people who have downloaded the app – plus the 40,000 downloads of the original version – demonstrates its popularity among home buyers and people looking for rental property.

View the free app in the iTunes app store.

Helm said usage of the app was consistent with the ratio of usage of the company’s website, with around a third of users looking for rental property and two thirds for property to buy.

“On the weekends three or four thousand people are using it, and in a month you’ve pretty much got everyone using it at some stage,” Helm said.

“It’s almost every property gets viewed at least once in the month, and that’s pretty amazing when you consider the extent of properties both for sale and rent.”

Helm said one aspect of the apps use that had taken him by surprise was the amount of people using it overseas.

“All you need to do is locate it geographically and move it to New Zealand and start looking as if you were in New Zealand, so Australia, the UK, US, Asia, [people in] those kinds of countries are using it. In the hundreds, not in the thousands, but significant enough that it’s not just the odd person. It’s Kiwi’s abroad and probably people looking to move.”

Helm cited the fact the app utilised “all the features of the iPhone” such as the geolocational map function and the ability to use photos for its success here and overseas.

“There’s a lot of smarts which play to the advantage of this over anything else in the market today.”

One of my own investment homes was pretty tired.  I had only been there once since I bought it in June last year largely because we didn’t want to disturb the current tenant who indeed was a very good tenant. When she decided to move out, I liaised with our property manager who made a couple of good recommendations….

The snifter green coloured walls in the first bedroom needed to be repainted a nice neutral colour.  The powder blue walls the same in the second bedroom.  Re-carpet both, install a fan in the bathroom to be wired to the light switch and redo the bathroom ceiling that was peeling from moisture and no fan.

With there being no interest from tenants to take a tenancy application form before the renovation began, the property has just been rented to a middle aged lady who happened to have lived in the property some years ago.  She moves in shortly….

Small low cost renovations can make the world of difference in attracting the right tenant.  The funds spent were worth it as all are tax deductible and the thought of weeks of vacant property and top up mortgage doesn’t suit.

We won’t need to do anything on the property for at least another year.  Rely on the advice of your property manager to minimize vacancy and get the right tenant for your property.

A buyer who was (and still is) keen to purchase in a “pet friendly” body corporate walked away from a sale and purchase of an apartment in Wellington last week. The property had everything that the buyer was looking for including the ability to have a pet but because the body corporate was not run properly, the buyer walked away looking for a better run one.

 The buyer said to us, “We are not able to proceed with this apartment, unfortunately. We really liked it but the Body Corp. was unable to provide meaningful financials, there were arrears looming and no sinking fund. It was all too uncertain.”

This scenario will not be unusual to body corporates who are not taking their new obligations under the Unit Titles Act 2010 and its Regulations seriously. The new Act does give body corporates an opportunity to improve their governance, financial management and maintenance planning. Well run body corporates who already had good structures in place and are working towards further compliance will benefit as buyers ask for information that they will expect to be available and furnished to them under the new disclosure regimes.

Sometimes we are so used to what we have in our own country that we tend to take it for granted.  The Rugby World Cup will bring tens of thousands of visitors to our Pacific islands and further showcase our country to tens of millions more around the world via television.
They will find friendly, hospitable people living in a land full of opportunity and privilege – and some will decide to migrate here for a better life; for a fresh start.
But it is not just those who can afford to travel to the other side of the world to watch men smash into each other for the sake of a funny-bouncing leather ball, who can appreciate this land of ours.
I remember when New Zealand became home for many refugees from Cambodia during the Pol Pot era.  I was one of the many volunteers who welcomed them and helped them settle.  Each week, I was involved with helping them learn English and was able to closely observe these people, who came here with nothing, starting all over again.  With limited English they moved into labouring jobs and had to learn many new skills.
After five years they started buying their own homes while people working beside them who had lived here their whole lives were still renting.  Another five years later, and many of them owned investment properties and businesses, and were paying cash for new furniture and cars.
I have just heard of a couple in Timaru who lost almost everything when their farm was seized by Robert Mugabe’s new land reforms in Zimbabwe.  In just five years, Harry and Sharon Newmarch have built up a portfolio which will soon number 19 dwellings.  They have taken what cash they arrived with and turned it into millions of dollars’ worth of assets.
Visitors and immigrants to New Zealand teach and remind us that in spite of how we may perceive this country and whatever we may say about hardship, the global financial crisis or a crowded marketplace, we also have freedom, resources and opportunity for those who seek it.
The share market keeps getting the wobbles, gold is the new band-wagon and property is at a low.
After we win the Rugby World Cup and everyone has pulled themselves out of the doldrums, what do you think they will be buying?  Hadn’t you better get in first?

With the Unit Titles Act 2010 coming into effect earlier this year, there have been a number of changes to how Body Corporates are run. This is the first of four articles exploring what these changes are, looking at  how they effect Body Corporates’ obligations and governance.

Chairpersons…..

There are better governance structures for bodies corporate under the new Act.  This is a good change as many bodies corporate existed without a Chairperson and without committees.  A body corporate does need leadership and support.  Leadership begins with the Chair and this appointment is more important than ever..

Let’s explore the procedural aspects of election of a Chairperson….

• Regulation 10 states That the body corporate must elect a Chairperson at every AGM.
• The Chairperson must be nominated and they must consent to the nomination.
• AGMs are now 2 part process – the voting papers go out in the first part called the Intention to Hold an AGM.
• The Chairperson cannot nominate themselves.
• Unless the Chairperson resigns or is removed by ordinary resolution, they hold office until the next held AGM.
• The Chairperson at the next AGM is able to be re-elected – so no need to take turns if your current Chairperson would like to do the job and is doing a good job.
• If the Chairperson resigns for any reason e.g. sells their unit, health issues etc, or  is removed by ordinary resolution, a general meeting must be held for election of a new Chairperson.  The old Chairperson cannot be re-elected at this meeting.

Committees….

Committees are the backbone of the body corporate.  They work closely with the Chair, baring in mind that the Chair of a committee can be different to the Chair of the body corporate.  S112 of the Act states  that a body corporate of 9 principal units or less may establish a Body Corporate Committee and a Body Corporate of 10 principal units or more must establish a Body Corporate Committee unless it decides not to by special resolution.

Let’s explore the procedural aspects of a Committee…,.

• Regulation 24 states that Bodies Corporate that have a committee, must decide now many members they want and elect them at each AGM.
• The committee member must be an owner of a principal unit and unlike the Chairman of the Body Corporate, they can nominate themselves.  However, they too must consent to the nomination.
• Regulation 25 tells us that a committee member can be removed by Ordinary Resolution of the Body Corporate at an EGM.
• A committee member may also give notice at any time in writing to the Body Corporate of their intention to resign.  They must do so if their unit becomes subject to an unconditional sale and purchase agreement. This is because at settlement, they will no longer be an owner.
• If this reduces the membership of the Body Corporate below the number required for a quorum, the Body Corporate must issue a Notice of Intention to hold an EGM for Purpose of Election.
• The resignation takes effect on the date in the notice unless the AGM or settlement date are earlier in which case the resignation takes effect on either of those dates.

Regulation 26 tells us that at the Committee’s first meeting, they must appoint a Committee Chairperson.

The Chairperson of the Committee can be different to the Chairperson of the Body Corporate.  If the Chairperson of the Body Corporate would like to attend a Committee Meeting but they are not a member of the body corporate – no problem to attend– but they do not have a vote.

Your investment is an important part of your livelihood and choosing the right property management company to work along-side you to maximize your return and help you focus on the big picture of growth is vital.  Here are some considerations when choosing a property management company…

1. Ensure your property management company holds a trust account that is dedicated for client funds and is audited.
2. Ensure that the property management company has proven systems including accounting functions for the collection and receipting of rent funds daily to allow the property manager to monitor any rent arrears and act accordingly.
3. Ensure that your property management company has robust systems in place that separates any accounting functions like the payment of rent to owners from the property manager doing the job.  There are plenty of one or two person property management companies operating in an unregulated market.  With a one or two person property management company, the business owner may be doing both functions (property management and accounting functions).  It is better business practice to have these two processes separated.
4. If your property management company has low commission fees, their service delivery may end up being the same. Property management is like any business where profit must be re-invested into the business to ensure good systems and software, hiring the best and experienced people and having an administration/financial team that is separated from the day to day property management work. If cheap fees are being paid, then the business may operate leanly and it may eventually lead to a collapse.
5. Ensure your property management company pays rent by the 1^st of every month.  If any payments are missed that cannot be attributed to a banking error or a genuine mistake, contact must be made immediately.  If you do not receive an adequate response and payment within 24 hours, be concerned.
6. Owners should receive financial statements every month for their properties.  A final annual income and expense statement is also good practice to provide to your accountant as it summarises all the income and expenditure for the year.
7. It is important to choose a company that has an experienced team where there are backups when your property management goes on holiday or is sick.  At Oxygen, we operate a buddy system so that two property managers are familiar with their clients, their properties and the tenants whom reside in the properties.  With a company that has a small property management team, this may be very difficult to achieve and it may mean that properties may not be managed by experienced property managers in times of absence. While everyone needs a holiday, it is important to have your property professionally managed 365 days a year.