Allen Realty property managers have experienced record low vacancies, currently sitting at 99% occupancy rates. Unlike rental agents throughout the rest of the country, most Auckland agents continue to report high demand and low vacancies throughout the first five months of the year.

Although current vacancy rates are low and rents are on the rise, many property managers have reported a slight decline in tenant enquiries over the last six weeks. Historically the winter months often slow down in the rental market as less tenants move, resulting in lower demand. Many commentators expected influences such as the Rugby World Cup and Christchurch earthquake to stimulate Auckland’s winter market during 2011. However it appears the traditional winter slow down has once again struck, especially in some areas such as Albany (58 3-4 bedroom properties available on Trade Me as at 14 June 1011). The market may not be as quiet as previous winters, but property owners may experience a slight decline over the next quarter.

The latest statistics released from the Department of Building and Housing show good increases in medium rents over the last year. According to these statistics the May 2011 average rent is up 4.7% compared to May 2010. They report the Central Auckland average was $442 (a rise of 6.9% from May 2010), North Auckland was $446 (a rise of 4.9% from May 2010) and South Auckland was $399 (a rise of 6.4% from May 2010). Property owners should note that these average rents do not provide a good basis to determine rent reviews as there are many variables over many suburbs. You can read a recent blog on The Art of The Rent Review for further information on rent reviews.

Between June 2010 and June 2011 most suburbs have seen strong demand and rising rents. For two bedroom homes, key areas showing increases have been Avondale 13%, Grey Lynn/Arch Hill 13%, Mission Bay/Orakei 12%, Mt Wellington 13%, Remuera South/Meadowbank 17%, St Heliers 13% and Western Springs 14%. Medium rents for three bedroom homes show some similar increases including Kingsland 11%, Kohimarama 18%, Royal Oak/One Tree Hill 10%, Western Springs/Morningside 11% and Titirangi 10%. You can view the latest market rent statistics on the Allen Realty website as well as variances between 2010 and 2011.

As winter sets in landlords should be aware of the traditional decline in demand and be proactive in marketing and presenting properties in order to attract tenants and compete with other landlords. Start marketing properties as early as possible and attend to any necessary maintenance prior to showing tenants. There are some issues that need particular focus during the winter months and our previous article A Landlord’s Preparation for Winter gives some good advice on these issues. Other articles of interest may be How to Rent Your Property Faster and The Tenant Selection Process.

You can register for future rental market updates at www.allenrealty.co.nz.

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There are a couple of pros and cons to renovating before you sell. Following is some food for thought, before you decide one way or another.

On the ‘for’ side of the renovation argument is the fact that it is better for you to add the value to the property, rather than leaving the potential profit for someone else to take advantage of. If your property is well renovated, you also minimise the amount you are likely to be beaten down on price.

A well renovated property (one that looks great but didn’t cost you a lot to achieve) will represent good value to potential buyers – and therefore be more likely to be considered over any others for sale in your suburb.

The last thing you want to do is spend too much money on your renovation and end up having to ask more for the property. If that were the case, you would have been better to leave it as it was and sell it un-renovated (and not have to go through the renovation process at all).

If you want to sell your renovated property asap, then you need to be realistic about your asking price and this is only possible when you have been smart with your renovation choices. A smart ‘sellers’ renovation is where the property:

• Looks and functions better than competing properties in the same price bracket
• Is renovated to meet to needs of the property’s target buyer audience
• Is attractive to 95% + of the buying population
• Offers excellent value in the eyes of the buyer

In many cases, a pre-sale reno with help you add huge value to your property. In other cases, your reno is simply a necessity to bring it up to standard to even be considered by potential buyers. Get your renovation right and it will be your property that draws buyers in as the best option for them at the time.

Buyers know they’re in a ‘buyers market’ at the moment and they will sniff out any reason to knock you down on price, so you need to offer them the sort of property they want to buy (see above bullet points). If you do this, then you will have more interest from more buyers and the price will become less and less of an issue. Research suggests that when purchasing anything, price actually comes about 5th or 6th on the list of what people consider. They are more interested in getting just what they want, than getting something cheaply.

If your property is located in an area likely to attract families and professionals, you may find that once renovated, it is more likely to sell. Professionals in particular are less inclined to want to worry about doing a renovation – and prefer to have it all done for them. This is the same with families – particularly those with younger children.

On the other hand; singles, empty nesters or families with older children may be happy to carry out a renovation of their own.

On the Con’s side of the renovation argument is the fact that in this market, people are out to hunt down a bargain. The less you spend on your property to prepare it for sale, the less you need to sell it for to recoup your costs.

If you leave your property as is, you are more in a position to sell it cheaply which is what many people are looking for. They would rather buy cheaply and then recreate the home that they want from a blank canvas. However, is it what you want? Will you get out of the sale the amount of money you need doing it this way?

The other thing to think about is that if you were to renovate, your renovation tastes may differ to that of your potential buyers. If you renovate in the wrong way (using inappropriate colours, materials, fixtures and fittings), then your property may not be one that is attractive enough to have the offers flooding in. This is a big mistake and I see it often!

To decide whether you will renovate – or not – ask yourself the following questions:

• What do you want your property to sell for?
• Can you leave your property as it is to achieve this price (tip: ask 3-4 respected Real Estate agents their opinions of the expected selling price for your property)
• If you do need to upgrade your property to get the sale price you want, what do other properties around this asking price in your area look like (ie the traits of your competing properties)?
• What exactly do you need to do to your property and how much can you get away with spending to bring it on par with these other properties? (tip: Hotspace Consultants – www.hotspaceconsultants.com – can help you with this one).
• How much time have you got?
• Do you have the confidence and motivation to carry out a renovation yourself?

Beware of Real Estate agents who say NOT to renovate your property. In many cases, this is because they want your listing right now – not in a few months time. On the other hand, they may be quite right in advising that selling an un-renovated property is the better option in their area.

Do your own research about whether a renovation on your property is worthwhile for the result you want.

If you’ve decided to renovate before you sell, then knowing exactly what you are going to do – before you start – is essential. Extra confidence in knowing you are doing exactly the right things to add the most value without wasting a single cent is available through Hotspace Consultants’ Renovation Action Plan service (www.hotspaceconsultants.com).

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They are told by tradespeople “no, you don’t need a building consent to do this work”, only to find out later that they did. Or.. they were told to upgrade their building unnecessarily.

Then the trouble starts with Council.

This is not good enough. Wouldn’t you expect a professional designer or tradesperson to know the rules of the game (even if they don’t like them that much).

No one is pretending that building law is easy. There are some tricky bits. But that’s what we do at Building Networks.. We make the rules easy to understand. We translate bits of the law into easily understandable steps.

So my job is to tell property managers what I know and how to avoid these same pitfalls.

We run training targeted at your needs and I’ve even written a few books in that vein. The books you can read over a coffee or a glass of wine and all yours for just over $10.00

Please… sign up for our newsletter and get in the loop of some FREE info.

Or grab a copy of the Property Managers Guide to Building Law (written by me under my other pseu de nom). And no it’s not as boring as it sounds. I promise you will learn something and you will save $.

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Owners in this situation must now appoint a New Zealand based agent for the entire duration of the time that they will be out of the country. Failing to comply with this provision of the RTA by March 2011 could result in the awarding of costs to the tenant of up to $1000. The changes have been made to ensure that tenants are always able to contact a local agent working on behalf of the owner when they are out of the country.

Owners can choose either a professional management company or could elect to use someone such as a family member to manage their property whilst overseas. Prior to going overseas the tenant must be notified of the agent’s contact details and the bond centre must also be notified.

When deciding who will manage your property while you are overseas, remember that property management is simple when everything is going right, but ensure that whoever you choose is both prepared, and suitably experienced, to be able to deal with a tenancy emergency should one arise.

Refer Residential Tenancy Act – new section 16A

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1) Department of Building and Housing

The DBH website has a link to market rent statistics based on information from all bonds received within the last 6 months to provide an indication of the weekly rent charged in all areas throughout New Zealand. The information is updated every month and is available at:

http://dbh.govt.nz/market-rent

2) Rental Property Websites

Other properties listed on TradeMe and Realestate.co.nz can give a good indication of a likely market rent achievable. Properties listed can be filtered by suburb, number of bedrooms, and even ranked by price, so you can quickly determine where the market rent for your property may lie. Another great benefit of these sites is that the majority of properties also have photos which mean you can quickly look to see how another property stacks up in relation to yours. Have a look at:

trademe.co.nz/Houses-to-rent/index.htm
realestate.co.nz/rental

These sources can give you a good idea of a market rent figure which is likely to be achievable for a property. Make sure you are not under renting your property and you are getting the market rate that you deserve.

If you have a property management question you would like answered please feel free to get in touch!

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It also makes you wonder how much longer we’ll be doing this only every 10 years… If its online, couldn’t we do it more often? SO much can change in 10 years it seems the data is only useful for a few years. If it helps people and businesses make smarter choices then lets do it!

If you can’t read it all here’s the summary: Apartment dwellers are growing in numbers, younger, more educated, earn more, have greater access to the internet and are more likely to rent.

This is what I learned from 23 pages of ‘stuff’ on apartment dwellers from Statistics NZ:

• In the 10 years between the 1996 and 2006 census the number of people living in inner city apartments in the three main centres has almost quadrupled. In Wellington the number more than tripled from 1,410 to 4,743.
• The increase above was more than the growth rate for the total population of those areas. i.e. Wellington’s population grew by 14% but the growth in apartment dwellers increased by more than 300%…
• In Wellington 30% of apartment dwellers were engaged in full or part time study.
• 49% of the nations apartment dwellers are aged between 20 and 29 years. A further 20% are aged between 30 and 39 years.
• Only 5% of apartment dwellers did not have a qualification, compared to 25% of all New Zealand adults as a whole.
• 49% of apartment dwellers walked or jogged to work on census day. Compared to non inner city apartment dwellers where 57% used a car, truck, van or motorbike.
• The most common occupation group was ‘Professionals’ at 32%
• On average inner city apartment dwellers worked longer hours. 44% working more than 50 hours a week compared with 36% for non inner-city apartment dwellers.
• Inner-city apartment dwellers had a higher labour force participation rate.
• The median income for apartment dwellers was higher then for New Zealand adults as a whole. With Wellington having the highest, followed by Christchurch then Auckland.
• 27% of apartment dwellers lived in an apartment they owned. Compared nationally to 67% living in a house that they owned.
• Wellington had the highest number of people paying more than $450 a week in rent, at 40%.
• 36% of inner city apartment dwellers lived in a household with no access to a car. This compared to 14% nationally.
• Apartment dwellers had a higher rate of access to the Internet than those outside the CBD. (70% compared to 60%).
• The size of inner city apartments has been reducing over the years.

If you are still reading this good job! Hope you got something useful from it.

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For some time and many renovated properties later it has always been my belief that Painting was the best method for property investment. Always when I would renovate a property the first thing I would do was go in and start stripping the wallpaper off.

You would get Hot water with dish washing detergent mix that in with the water spray all over the wallpaper soak that in and then start stripping off with a scraper. You would let that dry then you would sand down to a smooth surface then you would skim with a plaster solution. Let the plaster solution dry then lightly sand and add more compound if needed and get ready to paint. Once the skimming solution had dried and ready for paint you would add the undercoat or primer and add another one if needed. Finally adding the overall coat and I would use Spanish white on nearly all occasions.

Why did I do that? I believed that paint was more durable and could be quite easily fixed if damaged by tenants you could just paint over quite easily. Turn around for getting back onto the rental market would be quite easy and profitable for the landlord.

Wallpaper in my opinion would take you longer to fix and would chew up more of your money in holding costs while you renovated it. This process I repeated many times over and believed that this was the best method for any Property Investor.

How times have changed. I believe now that Wallpaper suits certain methods for Property Investment and Painting suits another strategy no a one suits all. Let me explain I believe wallpaper suits a strategy of if you are renovating to on sell it just makes the property look that much better. Finishing with wallpaper in my belief gives you a better look and would make it more attractive to a first home buyer. Painting I believe is more durable and should be used on a strategy of buy and hold. Repainting is quite easy and can be done many times over before you have to go back to the original process of sanding adding plaster compound and re painting.

The price difference between the two is not that much difference and so negates each other out. So whether you are a fan of paint or wallpaper I suggest look at what strategy you use before you decide what method you will use.

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• tenant packs up and leaves
• communication between the tenant and landlord breaks down
• the tenant takes the landlord to the tenancy tribunal

The best way to operate your rental properties is to treat it like a business. By acting ethically and in a professional manner, you can attempt to provide a hassle free tenancy for your tenant. This will result in rent being paid on time, the property being well maintained, and maintenance issues being reported as they occur.

Once communication is lost between the tenant and the landlord, it becomes difficult to re-establish that level of trust that was once there. The tenant needs to be made aware at the beginning that if they do have any issues they need to communicate them to the landlord. By having open two way dialogue, the tenant feels that the landlord is there to listen and provide guidance when needed.

If you use an independent property management firm, make sure they belong to IPMA (Independent property managers association). They follow a set code of conduct that they are bound to which ensures all property managers under the IPMA umbrella are acting in an ethical and professional manner.

Without your tenants, you have no income. They can always pack up and leave and go elsewhere, where as you will be left with a vacant property that you will now need to advertise and get tenanted which will cost you money.

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Whether you are buying a property to live in or to rent to someone else, there are two factors to consider. The first is the extra income you will have if you buy, either because you are no longer paying rent or because you renting to someone else.

The second is the capital gain you can expect from owning the property. Property prices are not expected to increase significantly over the next 3-5 years. At the same time, rents are still low in comparison with property prices. If you can rent a property for an annual rent of 5% of its market value, why would you borrow money to buy when the interest rate is around 7% and there is little prospect of capital gain?

In the short term, with no expectation of property prices increasing, renting makes sense unless you can buy a property well below market value. For first home buyers, this allows more time to save a bigger house deposit and for others who have sold, it is an opportunity to temporarily live more cheaply in the kind of house that might previously have been out of reach to buy.

In the long term, it makes sense to buy a property for security and peace of mind and to ensure you don’t get left behind when prices inevitably rise again.

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What are the current legal requirements?

The Residential Tenancies Act 1986 does not have specific sections that apply to the requirement of landlords to provide smoke alarms. However, section 45C specifies a landlord must “comply with all requirements in respect of buildings, health, and safety under any enactment so far as they apply to the premises.” This means that all houses must comply with the Building Act 2004.

The current Building Act 2004 requires that all new houses and consented alterations provide “means of detection and warning” in the event of fire. Like the Review of the Residential Tenancies Act, the Department of Building and Housing is currently preparing a Building Act Review, so changes may occur. Although the current regulation does not apply to existing properties, the requirement for alarms will usually be triggered if you are carrying out any building works that require an application for building consent from your local council.

What is the best type of smoke alarm?

The two main types of fire alarms available are Ionisation and Photoelectric alarms. Consumer.org.nz have carried out research on various alarms and report the following:

Ionisation alarms sense the volatile combustion products from hot flaming fires, but don’t do as good a job sensing the smoke from cooler smouldering fires because fewer combustion products are present.

Photoelectric alarms shine a light beam across a chamber and detect if the air in the chamber becomes partially obscured, detecting smoke from both types of fires.

The NZ Fire Service also provides some good recommendations on the types of alarms that are available. The best type will usually depend on the type of property, your budget and personal preference.

What other options are there?

Alarms can be powered from different sources. Battery Operated (DC) smoke alarms can provide detection if there is a power failure, provided they are installed correctly and the batteries are charged. This is often the most cost effective. AC powered smoke alarms are powered by mains and will only provide detection if power doesn’t fail. These can be slightly more expensive and must be installed by a certified electrician. AC with battery back up is generally the most comprehensive and will provide detection even when there is power failure – as long as batteries are fresh and correctly installed. Many smoke alarms now have long life batteries that can last up to 10 years.

Where should I install fire alarms?

All properties will generally have different requirements depending on the location, size, number of levels and exits. Generally alarms should be installed in hallways as close to the bedrooms as possible, as the alarms must be audible to people sleeping on the other side of closed doors. The bigger the home the more alarms are required and most alarms will come with instructions on where to install them. The NZ Fire Service provides some good guidelines and The Building Act 2004 provides information on the specific types of smoke alarms that are required and some guidelines on where to install them. All alarms should be installed in conjunction with the manufacturers’ instructions. There are also guidelines on where not to install them, such as kitchens.

Other important issues to consider

Smoke alarms may be ineffective if covered in dust/dirt or obstructed in any other way. This is likely to occur if tenants smoke in properties (usually flats and apartments) and cover the alarms. Many building managers will tell stories of tenants obstructing smoke detectors and some body corp rules/building regulations now prohibit this obstruction and issue fines to tenants who do this. The fire service may also charge tenants or landlords for false callouts.

Educating tenants in utilising the effectiveness of the alarms is also the key, including the potential outcomes if they obstruct alarms or fail to check them regularly. Smoke alarms will also be ineffective if they are not installed in the correct locations in the home.

Smoke alarms are also available for people with hearing impairments. These special purpose alarms provide additional warnings such as visual alarms and when one is activated, generally all activate to provide a more comprehensive warning system.

In closure smoke alarms are a single warning device and should not be relied on as a complete fire detection system. A comprehensive system would also include the use of sprinkler systems, fire-resistant materials and fire exits.

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