Investor News

December 2011- A busy month.

Hello and I hope all your Christmas shopping is done, cellar and larder fully stocked?

December is our mad month and we will do more lets in this month than any other one- everyone wants to get in before Christmas day, but more annoying is the ones who have given their 21 days notice to vacate and want a final and bond refund on December 25th or 26th.

Now to get serious. We have just has two tenants die on us and its a very sad time for their families of course. The new legislation allows for the tenancy to end with a 21 day notice period as from the date of death. Neither of our landlords in theses two cases had specialist insurance cover, so although the bond covered the rent for that period there was not enough to pay for some clean up work which meant there will be a delay of a week or two before the property is rentable again.

So we are reminding everyone that we do recommend www.rlinz.co.nz and under their cover there is up to 6 weeks rent available. Please check their site out, and I can safely say that, in my opinion, it is the very best policy available for landlords to insure their investment.

The market-what can I say, one day we are desperately short of good stock and then we have an over supply a week later, but thats the market for you.

I have had several interesting conversations with fellow property managers around the country in recent weeks and they all have a similar tale of woe about low activity during the Rugby World Cup, followed by a pre general election shut down as people gave thought to that instead of moving house; The activity really only burst back into life a day or so after the election- we had, from our web site, 16 signed application forms on monday november 28th, when we typically get 20 or so in one week- and several were from high end tenants seeking executive style homes- before Christmas, so I don't know why folks don't plan ahead for important matters like house hunting- but thats people for you!

Can I remind owners about a tenant's right of peaceful enjoyment and if you are planning to visit the rental property this holiday time please make sure you get us to make an appointment; and its always good to see our owners, but we would like to know when you are coming, so we can be sure to be here.

The recession has produced great opportunities for property investors to add to the portfolio, and I have been very busy this year advising many of you about the realistic rent that can be achieved. I have been quite suprised at the number of times the seller or seller's agent have been very cavalier in their opinions as to a fair market rent and based it upon gossip and anecdotal evidence and guess work, usually designed to support an asking price, whereas I have to be able to produce a good tenant willing and able to pay the rent.

The reason I mention this is that I carried out an appraisal for an out of town buyer in May this year, who had been "told" by the agent that $300.00 a week was the norm for the area, and by October it was still vacant, which is when I was called in to bring them the sad news that $240 a week was more realistic. The salesperson has long since moved on of course, so there is nothing he can do, except bite the bullet!

So please don't believe everything you are told, and don't always hear what you want to hear- it might cost you money!

We will be doing our annual Christmas Ham draw for tenants who are up to date with their rent on Christmas day- actually five Hams will be given out and by pure luck they always seem to go to the most needy families, with lots of mouths to feed. Its one small thing we can do to combat the summer holidays cash flow problems some of our tenants have to contend with in the coming few weeks.

On behalf of all the team, Pauline and I wish you and your families a restful and safe Christmas and a Prosperous New Year.

Rugby World Cup and all that

Hello and thank you for accepting this newsletter, and I hope this finds you well, and prospering?

Now I have to admit that I am a fan of Sir Bob Jones; I like his directness, honesty and infinite common sense. He is not afraid to tilt at windmills like Don Quixote and, to him, sacred cows make the best burgers. ( Apologies to vegetarians).

I have just read his article in the latest NZ Property Investor magazine wher he takes pot shots at the capital gains tax policy being promoted by The Labour Party, and he wondered why so many jounalists and academics seemd to be in favour of it, and came up with the answer that none of them were likely to be affected as none of them had the qualities or characteristics to be Property Investors. They are in the main "side line critics" indulging in the politics of envy.

In the same magazine there is a most informative article by Mark Withers, an accountant himself, saying the a CGT would increase compliance costs and he can see accountants adding to their staff to cope with the extra work.He also makes the point that tax would only get paid when a property is sold, so as most investors are there for the long haul, it seems very doubtfull that much revenue would be produced anyway, but next to nothing in the short term- but we all knew that anyway!

The rental market is brisk and active, with vacancy levels at their lowest for a long time- more especially in the middle and top end of the market with demand outpacing supply by quite a margin.

We have always loved our work because it never stands still, and we meet and get to know so many positive and buzzy people who share so many core values with us- I came across a sad little poem recently about a man who never did anything, here it is;

There was a very cautious man,

who never laughed or cried.

He never risked, he never lost,

he never won nor tried.

And when one day he passed away,

his insurance was denied,

For since he never really lived,

they claimed he never died.

and most of our dealings are with people exactly the opposite of our poor cautious man,

and whilst we still have to deal with some unpleasant and erratic individuals, its never a

dull day.

So WRC and all that! I have been to one match only so far, Tonga v Namibia in Rotorua and it was the first time in years that I have been to an international game and I was struck by two features; Firstly that a huge % have no interest in Rugby and only go to show off their bodies, costumes and decorative body paint and drink as much beer as they can; and, secondly, the number of plain clothes police quietly going about their work, and trying not

to look too obvious. Interesting knowing that a crowd like that is likely to attract "people of interest".

My Australian friends have been very quiet since the defeat by Ireland and they are now optimistic that their game against the USA on Friday will cheer them up a bit- lets hope so, as we don't like the sight of sad Aussies, do we?

One curious feature of the RWC has been the boom in outgoing NZ travellers happy to escape the event.

Marketing your rental property.

We are now running videos of vacant rental houses and flats on You Tube with very promising results. Enquiries are much more positive as they can see almost everything and

tenants hunting for a home find the service very usefull.

We are still learning how best to do it so we would welcome any feedback.

Go to You Tube, click on video and then enter rotoruarentals in the url box.

www.LPMNZ.com our new association, is very exciting and every week we are exposed to fresh ideas- as a result our new web site( being upgraded as I write this) will include some new features that we think will add value to you and your tenant alike.

We will be running videos on our web site too, fairly soon- isn't technology exciting!

Mind you I still find Jet travel a miracle so trying to fathom all this new stuff is a struggle, luckily we have brilliant staff here, generation Y types, who just love it!

I have even got another e mail for my i phone rotoruarentals@yahoo.co.nz if you need to get me direct, in a hurry.

Recession or not?

Most of us are probably thinking/hoping the recesssion is waning and we might be right, but reading the words of economists and financial commentators, we might not be out of the woods yet- largely because of the looming drama with the Euro and turmoil within the USA which looks set to go back into recession. Our high dollar is great for imports but hopeless for exporters- I have friends here who are in the export business and their sales are lower than ever and in some cases its costing them money to export goods, especially to the USA, so we are still in the grip I believe.

On a less gloomy note we have the rest of the RWC and a general election to look forward, so we are going to have to put up with a media bombardment; Leaders debates; frenetic arguments from all corners and lovely day on Sunday 27th November with NO POLITICAL ADVERTS, won't that be nice!

Christchurch.

Its becoming even more distressing for the folks who live there with the new threat of Insurance companies possibly not insuring any new buildings, which of course means there will be no new buildings.

There is increasing evidence of residents leaving and businesses moving elsewhere, and we are seeing a slight increase in enquiry now from Canterbury, possibly as a result of the doubt still hanging over their heads about rebuilding.

Pauline and I have close ties to Christchurch, and I'm sure many of you will have too.

From all the team at Rotorua Rentals enjoy the spring and Go The All Blacks.

Richard and PaulineEvans

Keen landlord looking for a buyer.

Hello and I hope this finds you well?

We all know about the "buyers market" and how much longer that will be with us is anyones guess- but my guess is that it'll be a long time yet before we see any change, so great buying time, rotten selling time!

One of my landlords need to get a sale on his property here so he has asked me to send this out to my data base in case it spins any wheels, so to speak.

His name is Lance Dews lancedews@orcon.net.nz

The house is a 3 bedroom with log fire and garage currently let at $220 a week. The tenant has given notice to vacate after 22 months there, and Lance is taking the opportunity of a vacant house to effect a sale.

He tells me he paid $147,000 for it 5 years ago and would sell it for the same figure.

The address is 12, Marae st, Koutu, on an elevated site, CV is $150,000, section size is 920m2.

We are not involved with the sale in any way, and we ask that you e mail Lance direct for negotiations, we are not getting a commission or any sort of fee.

I will happily show the house to anyone interested of course.

Spring is around the corenr folks, lovely!

All the best,

Richard and Pauline Evans

Mid winter 2011

The year 2011 has been an action packed time for us. Apart from the dreadful events in Christchurch, it has been a great year so far- for several reasons.

The growth in the rental market continues to take place, not just from frustrated home sellers but from tenants who have resolved to remain tenants.

The evidence is growing( been growing for 20 years ) that the home ownership dream of my youth has faded for more people than ever. I can see why, as being locked into a house that I can't sell due to the market or liquifaction, has profound financial implications for some home owners, and the relative freedom that a tenancy offers seems much more attractive.

I read last week an article in The NZ Property Investor magazine about a Christchurch landlord, Liz Harris,with 91 unrentable earthquake damaged properties in Christchurch, what a ghastly time for her, and lucky tenants who can move elsewhere.

But onto happier things.

We have also launched a new venture called The Leading Property Managers of New Zealand- www.lpmnz.com which has greatly increased our knowledge and sphere of contacts, so we have a very much wider range of contacts and ideas and business mentoring than ever before. The key now is to put in place some of those strategies so that we can offer a higher level of service and skill to our customer-you. We had the inaugural conference and launch here in Rotorua in May with over 80 delegates, a frantic time for us, but we are so lucky with our team here that we were able to devote 2 days away in the knowledge that things were continuing smoothly at home!

The only negative this year, from a commercial point of view, is the decision by police national HQ to end the ability of property managers to check whether a particular applicant is considered"suitable " or "unsuitable" by the Police. It was a very valuable and highly succesful facility for The police and us, but higher minds have pulled the plug on that.

It transpires that the local Maori party MP, Te Ururoa Flavell has climbed into several Govt departments and officials and forced this back down. What a shame!

We are still able to get free data from The Tenancy Tribunal web site, but it only goes back three years, so we have decided to join Tenancy Information NZ www.tinz.net.nz which goes back many more years and includes the old Baycorp and Veda advantage material as well as 10 years of tenant information, unfortunately they do charge for the service, but on balance, the protection it will afford landlords will be well worthy of the cost. We will need to replace the free police service with TINZ and there is a fee of $12.95 +gst which we will have to pass on to you-However we will only be doing that for the final choice tenant, and not for every applicant, so we expect on average that most owners will not be charged more than once or twice a year at the most- If you are unsure about this, please let me know, but we do think its VERY important to protect your investment.

On an exciting note we have started advertising videos on You Tube of rental property, I don't think anyone else is doing that in New Zealand -yet!

Its very crude at the moment as I'm still learning the ropes, so please check them out and please don't give me hard time about it, we are still learning how to use it.

go to You tube- videos- rotorua rentals and take a look.

Yes I know You tube is free, but the i pad is not,so once we have the system up and running we will be offering the service to you for a nominal fee.

We are putting scripts on the Trade Me advert linking to You Tube, so its very early days yet to judge the results. My good friend in Florida who uses this all the time tells me that potential customers just love it as it gives them far more useful information than a plain old photo! And its perfect for out of town and overseas tenant enquiry.

An added bonus for YOU will be our ability to email video to you of any issues at your property that are hard to describe in words.

Technology is a wonderful thing and probably out of date by the end of this week!

It has come to my attention that some owners have not been getting their monthly e mail statements, despite the fact that they have been sent- the point is that we don't know they haven't been received, and they are floating around in hyper space- so if you have not received yours please tell us.

From all the very busy team at 1215, Amohia street, thank you for allowing us to be your property manager and less than 90 days till The Rugby World Cup- Go the All Blacks!

Pauline and Richard Evans

Christmas and New Year

Wow doesn't time fly by?

Its that time of year again, and we have all done our Christmas shopping and we haven't missed anyone on our christmas card list..Yeah right!

Every year we run a Christmas Ham competition for tenants who are up to date with the rent and we give away five hams- and by sheer luck they always go to the most needy families- and its one way of minimising the traditional Post Christmas cash flow issues which infect so many tenants.

Every year the number of Mediations and Tribunal cases skyrocket in January and February and we have our fair share of holiday time dramas, which is one of the reasons you employ us of course, so we are not complaining!

I have been telling anyone who will listen that we believe the recession is still here, house sales are limp as a wet rag and too many unsold houses are being dumped into the rental pool- However I need to qualify that a bit by clarifying which houses are easy to rent and which are very hard to rent.

The recession has been world wide so people arriving here from another town or country need to rent as they cannot sell their own home, and that has put pressure on demand for " better homes" especially more modern ones in the most favoured locations, and we have seen gradual rises in rents in that segment.

On the flip side we are seeing rent levels stall and sometimes back up a bit in the lower socio-economic streets- typically now, prospective tenants are making offers which are usually accepted.

Landlords and agents who have rosy coloured spectacles when it comes to rent levels have been worse hit- "last time we advertised it 3 years ago we were flooded with people wanting it..." and that was when there were 70 house on Trade me to rent in Rotorua, now its around 280, so do the maths.

What is also significant is the volume of lets- October '06 was 168, Oct '08 was 208 and Oct '10 was 188, so over the last 4 years the number of lets has remained static at the same time as supply has exploded by almost 400%.

The better news is the rent increase in the "favoured" sectors up from $220 in October 2006 to $262 in October 2010 and every month we see 50% of rentals are 3 bedroom homes in that price range. If you want to add to your portfolio please check with us first as to rent expectations and market demand BEFORE the agents sign you up!

As we are no longer Real Estate Agents I can point a bit of fun at them- I know how hard it is in this market to make a living, but overguessing rents to a buyer is very much a sin in my book, and that crime is less frequent these days with greater consumer protection than ever before.

We are able to identify our share of the market by comparing our bond lodgement numbers with the published numbers and we have been slowly climbing to the 25% mark which we have now achieved which we are very excited about.

On the commercial front we have taken a shareholding in The Leading Property Managers of New Zealand Ltd., and 2011 will see some strong branding and marketing for that company. If you are curious to see what that means please look at www.lpma.com.au for a comparison. The LPMA owners are our business partners in LPMNZ which is proving to be a highly valuable association and enlightening too.

Our team has remained steady and loyal- any company can only prosper with great people on board, so this is the team and this is what they do.

Nicole Aitu- Tenant selection, lettings and inspections.

Brenda-Lee Gunn- Tenant selection, lettings and inspections.

Patricia Druery- Tenant selection, lettings and inspections.

These three ladies work very closely together to make sure the right people get to see a vacant property and they don't rush in to sign up the first live body who wants it.

Darcy Sharplin- Arrears, Mediations and Tribunal; our ex bank manager who spent his life hounding customers about overdrafts!

Janelle Retemeyer- Repairs and maintenance- trademens quotes and work co-ordination-Part time

Andrew Davenport- Inspections co-ordination and reports to property owners and back up for Janelle. Andrew is new to the team so he is still settling in

Maree Passier- our brilliant IT expert and finance wizz-kid- Maree is the one who actually pays your rent to you. Maree has been with us since 1995.

Shiona Wenborn who holds the front line and deals with difficult customers and takes our messages, and bears the brunt of unreasonable tenants.

Janet Jones, part time and she does most of the advertising, and back up administration work- a very busy lady.

Somebody once asked the Pope "Your Holiness,how many people actually work in the Vatican?" to which he replied "about half of them" and that of course doesn't apply to our team.

Our system is called task management as opposed to portfolio management, and that means one of the team will handle one aspect and do it well. Some property owners are used to having just one person as a point of contact so either Pauline or Richard can be that person, although we might not have an immediate answer at our fingertips, but we are always glad to hear from you even if its only to have a chat about taxes, or governments or the Black cap cricketers- on second thoughts please don't ring me about the cricket!

Visiting Rotorua this summer? Thats great but please let us know so we can be sure to be here and free to talk- If you just turn up and we are out or away on leave we would hate to have missed you.

One of our plans for 2011 is to get into social networking with Twitter and Facebook- that will assisit with communicating with you and finding out your feelings on anything. At the moment I have very minimal knowledge about Twittering but I expect to catch up with one of my teenage grandchildren and they'll know for sure how to do it.

It was once said that "you should hire that teenager while he still knows everything" mind you we were probably like that too once upon a time?

TAXES and April 1st!

Every time a tenant gives us notice to leave we immediately revisit the rent in the hope we can squeeze another $5 or $10 a week, because we all know that little gst rises and removal of depreciation, higher council rates, all add up and every little bit helps.

Holidays

We all hope that you enjoy your Christmas break, and have a safe and peacefull time, and we'll be standing by the phones getting ready for noisy parties, blocked drains, blown over fences and any other diversion that always seems to happen about 4.00pm on December 25th, oh well thats our job!

All the very best for 2011 may we all get big Tax refunds!

Richard and Pauline and our team.

Investments flats for sale

Hello and this might be an oportunity to add to your portfolio.

I have been asked by one of our landlords to offer his 2 units for private sale.

WE are not involved in any way other than the fact that we manage the units.

If you are interested please e mail Per Nielsen at psn@xtra.co.nz

The address is 10a and b Trent Place, both 2 bed units with garage.

Rents are $195 and $200 a week, and we have never had difficulty finding a tenant.

They are nice units, fenced and well presented.

Per tells me the rates are about $4,000 pa and the RV is $464,000, but you would need to do your own research of course.

He is asking $320,000 for the pair.

You could also ring him on 027 544 6945.

He also has plans to develop the site for six units an he would consider a joint venture, or swap for a smaller property- in other words he would like to shift them or work on a deal.

If you need a written rental appraisal for lending purposes then I'll be happy to oblige

Just for the record we are not selling agents and cannot be involved with any negotiations, and we will not be getting any fee.

Hope it works out for one of you?

Sad item in the Daily Post last night with the parent company of Harcourts Rotorua going into receivership (it is, or was, a branch of the Taupo office), so its a difficult time still for Real Estate agents.

Harcourts Rotorua continue to trade and they plan to create a new company, so we wish them well.

We are looking at a new version of the Tenancy Agreement created by the Auckland District Law Society, and I am involved with reviewing it at the moment.

Its a typical legal document drawn up by lawyers who never have actually filled out a tenancy agreement, so we are having a lot of fun making changes to suit front line property managers.

Well the windy weather has blown down more trees and fences- I thought summer was on the way!

All the best Richard, Pauline and all the team.

October 1st- A good date for Property Investors

Yes the Law has been changed and very pleased with it we are as well- actually I don't think it goes far enough, but not every Law will please everybody 100% of the time.

Opponents of the amendments think its far too harsh on tenants! Give me break- its nothing of the sort.

It certainly creates a better balance, with several new offences being liable for fines.

Of special note are the following new offences.

Tenant failing to vacate the property on termination without reasonable excuse $1,000.00

Harassing other tenants and neighbours $2,000.00.

Exceeding maximum number of tenants as written in the agreement $1,000.00.

Abandoning the tenancy without reasonable excuse $1,000.00

Using the premises for unlawful activities $1,000.00

Assigning or subletting without consent. $1,000.00.

We are pleased with these items- well overdue.

Landlord failing to meet obligations in respect of cleanliness, maintenance and safety requirements $3,000.00

Landlord interfering with supply of services to property $1,000.00

These two landlord items are of particular note for owners who refuse to carry out repairs or obey a work order from the Tenancy Tribunal following an action brought by a tenant. We will be watching to see any test cases which will surely happen. There is already enquiry from tenants seeking advice about how to go about this process, so the word has got out and someone is going to get dealt to- thankfully none of you will be made an example of.

There are several other changes; The 10 working day notice to remedy a default becomes a 14 day notice; Death of a tenant creates a 21 day notice to end the tenancy; new rules for Boarding house tenants; a fixed term tenancy becomes a periodic tenancy unless due notice (90 to 21 days)is given to a tenant that the fixed term will not be renewed; and some minor tidying up of Tenancy Tribunal administration.

The tenancy agreement supported by the Ministry( its the one we use) has had minor changes made to it, but its all in much smaller print- to fit it ontothe same size of paper-so that going to be a nuisance- its small enough as it is!

The GST rise and tax changes take effect today, and we are well aware that there is gst on our management fees. We have been, and continue to, examine all tenancies to see where we can realistically get another $5 a week of rent for the property, sometimes its simple and sometimes it isn't, for one reason or another.

One owner rang me some weeks back demanding a $5 a week rise to compensate for the GST rise despite the fact that the house had only just been let a few weeks earlier, and his maths had let him down as the extra gst on our fee was 41 cents a week and he had worked it out to be $4.10 a week, so panic over.

Council election results are not too far away now, so we are hoping for a more lenient regime for resource consents and reserve fund contributions. That will encourage development instead of hindering, get people back in work and get the town moving again.

There are far too many vacant shops, but I guess we are luckier than Christchurch.

Which brings me to YOUR insurance of your rental property, especially loss of rents when a house becomes too damaged to live in. My colleague in Christchurch tells me that about 39% of her landlords did not have adequate insurance in the Earthquake and 75% of tenants had none at all, so imagine the carnage those people have gone through- we do remind you that we recommend www.rlinz.co.nz for Landlord Insurance, so now might be good time to check the cover you have and compare it with RLINZ.

Great to see the sunshine again- thought it had got lost!

All the best from Richard and Pauline and all the team at Rotorua Rentals.

September 2010 newsletter.

Well the Act has been ammended - at last, and we think it will come into force on October 1st. There is an REINZ travelling workshop going around the country to teach property managers about the changes and how they will impact on our work for our owners and investors. We know pretty much whats in it, and some test cases will doubtless appear in the coming months to see if the changes are working.

I'm going to that workshop on September 22nd so I will precis that and let you all know the details.

The Council has declared war on houses with open fires and solid fuel fires to combat pollution. So far we have seen 3 fireplaces condemned and owner has had to replace or remove them and install a heatpump. The problem with heat pumps is that tenants have to pay for the power and they resent having to do so as many tenants get cheap or free firewood from their work in Forestry or timber processing.

So it was VERY good to see Enviroment BOP come up with a hot deal on clean heat.

Basically they are offering an interest free $4,000.00 loan over 10 years to replace a non compliant wood burner, best though if you check out their web site www.hotswap.co.nz or freephone 0800 468 792.

Unheated house are very hard to rent and with the current oversupply of houses the unheated ones are often sitting vacant longer. I read that the Green Party are trying to get legislation into the house setting minimum standards of heating and insulation for all rental property- probably at the landlord's cost, so that will be an interesting thing to watch.

South Canterbury Finance are now in receivership, but investors are covered by the Government guarantee scheme, which is all well and good, but cold comfort for Investors in Blue Chip, and all the other failed firms that cost investors millions of dollars and hundreds of broken dreams too. Am I glad to be a property investor, just like you. I can drive past it every day, its still there, the tenant is paying rent (most of the time anyway) and I can write off some expenses when I do my tax return and its fully insured- not a bad way to invest, despite the "hate property investors" mood of commentators and politicians!

Accounting news.

I have been getting some very sound advice from an accountant called Guy Gardiner who owns a company web site www.accountingnow.co.nz and he has given me some thoughts on LAQCs and R&M issues- too lengthy to print here, but very practical ideas so he has a free phone number too 0800 322 265. Could add to the pool of knowledge that we need!

Smart Bonds. Launched a few weeks ago with TV advertising you might have seen, but they really had not spent enough time asking Property managers-they did so, but not till after the launch- so they have had to re-think the concept, and at the moment we dont have any plans to run with it. Hate to be a damp squib on a new idea, but there is no real "upside" for owners that I can see at the moment.

The rental market here is hectic at one end and weak at the other end. What that means is there is a chronic oversupply of houses in the $170 to $220 a week range and a shortage in "nice family homes" in the $250 a week and upwards range.

Sadly the sales market continues to implode forcing some owners to seek a cash flow from a tenant, so thats where the oversupply comes from, and tenants are not blind, they can now pick and choose- a rare thing indeed-so they usually choose the one with heating, fencing and garaging and who can blame them?

Of the 60 houses we have let in the last 40 days only 18 were under $220 a week, or 30% and I note that 3 years ago it would have been more like 50%. I also look at adverts for houses to rent and increasingly the photos are of vacant houses which indicates a longer vacancy period between tenancies.

Ministry of Justice. The tenancy tribunal decsions are now becoming increasingly usefull since they went on line last year, as more and more cases build up, and we have had some delightful victories against potential tenants who deny their past until we show them a print out out of their tribunal decision. It all helps to reduce the risk for owners and recidivist bad tenants are getting their come uppance at last.

On behalf of all of the team at Rotorua Rentals, welcome to spring, and thank you for the priviledge of working for you.

A new product to be considered

Hello and I hope this finds you well?

Rotorua is in the grip of winter frosts and bright sunny days- do we envy the folks in Queensland?

There is a new bond system being promoted very heavily across the country so you might wish to check it out at www.smartbond.co.nz

Its run by very respectable local Rotorua business people and is a based upon a similar UK model.

Its actually an Insurance policy and it designed to allow tenants to not have to pay a bond but pay an increased rent(to cover the monthly premium) which gives a landlord( alledgedly) a "bond type" cover instead of the traditional bond.

Its being closely looked at by The Department of Building and Housing and The REINZ and I have had 3 meetings with them to iron out some detail- IE rubbish removal and cleaning which doesn't seem to be included in their policy and reducing the minimum contract from 6 months to one month in the event of an eviction or abandonment within the 6 month period shown in their policy. So they have some answers to respond to.

They think it will be very popular with Gen Y tenants, and they may be right, and we can see advantages and disadvantages too.

We plan to join anyway and run a few test cases to see how it works in practice.

So the second reason for this communique is to see who amongst you would like to give this a try, because it would be done in an owner's name. Rent would be increased by the size of the premium and paid monthly by us from rent received, and we can't and never would, involve you with something like this without your consent.

I would appreciate any comments too.

Curiously we have been told by The Bond centre that bond lodgements for the first 5 months are 2.2% DOWN, which is almost unheard of. Its a head scratcher for sure, and no one seems to have any theories about why, but its a sign that letting volumes have fallen a bit in 2010, maybe its a sign of lower immigration or people moving in together to reduce living costs during the recession- who knows.

The shortest day is past, summer is just over the horizon!

All the best

New Sales Data for Rotorua

The Daily Post has just published sales data from Quotable Value New Zealand for the 3 months to 31/03/2010, together with comparisons for the same periods in 2009, 2008, and 2007 so for those of you who have not seen that data you might find this interesting.

The data is for the north island but I am only quoting the Rotorua numbers. This information might be on their web site if you want to check? Its www.qv.co.nz

The reason we are so interested is that so many owners have been tempted to sell, unbelieving or unaware of the current market, only to lose 2 or 3 months rent, and eventually come back to the rental pool.

In 2007 the number of sales for the 3 months to 31st March was 427.

In 2008 the number was 181; 2009 down to 172 sales and in 2010 it was down again to 169. So certainly a levelling out has happened.

Suburbs like Ngongotaha saw a fall from 42 sales in the 3 months to 31st March 2007 to 9 in the same period in 2010 and Pukehangi is down from 63 sales to 22.

Median price changes are not unexpected, but the 3 months to 31/3/10 compared to the same period to 2008 show quite dramatic price falls in % terms;Glenholme down 8.6%;Ngongotaha down 12.1%;Pukehangi down 11.6%; Western Heights down 7.8%;Springfield down 6.9%; Utuhina down 5.6%; Lynmore down 1.1%;

The sale prices compared to the 2008 Capital Valuation are all down for the first 3 months of 2010, with the sole exception of Pukehangi( up 0.4%), but the range is not too great; varying from -10.5% in Fordlands;-8% in Springfield;-9.8% in Western heights;-10.9% in Mangakakahi;-8.6% in Glenholme and -5.1% in Lynmore.

Parts of the Bay of Plenty and Hamilton have, however, seen dramatic increases in median prices in the 3 years to 31st March 2010; Huntingdon in Hamilton up 133.3%; Ohauiti in Tauranga up 42%; Pyes Pa in Tauranga up 86.7%.

Of course there are sometimes wide varieties caused by factors having nothing to do with "the market" so its not an exact science, but the 60% drop in volume in the 3 years to 31st March 2010 is quite startling- 4 real estate firms have shut up shop in that period too.

Sales volumes are down all over the place, so we are not alone. Ohauiti sales were down from 45 in the 3 months to 31/3/07 to 10 in the 2010 period. Pyes Pa down from 110 sales to 24, Hamilton Huntingdon down from 122 sales to 29, so you can see how many people will be hurting.

The demand for high quality family homes to rent continues unabated, and there is no doubt that cashed up investors are getting some very good purchases and mortgagee sales are well up.

So our message is simply that if you can afford to be beaten up by the market, and cannot afford to hold on, then this market is for you, otherwise hold on- the next boom is on its way- if I knew when I would tell you for sure!

Richard and Pauline and all the team.

June 23rd 2010

June 2010, Winter has arrived.

The budget has been and gone, the ammendment to the Residential Tenancies Act is before the House now, property sales have slumped again, and people still need somewhere to live. News about a big event for us- scroll down.

Well the attack on property investors was all that was expected, and everyone has different version of the truth as it will affect things after April 1st 2011.

Certainly commercial property will be hardest hit. Bill English was in Rotorua on May 26th and I asked him why he didn't differentiate between Commercial and Residential investment property, and his answer was to the effect that they were unable to find a model anywhere to use- which was a very wishy washy comment in my view.

One landlord has calculated that an extra $5 a week rent rise would compensate him, and another thought $20 a week was more realistic- we'll see. At least the depreciation that would have been claimed will not have to be repaid when sold, so its a bit of a no brainer from that point of view.

The rise in GST was well leaked weeks before the budget, so I suspect retailers will have a hectic September, and a much quieter October

The Amendments to the 1986 RTA are progressing through the house, 2nd reading has been done and local experts reckon September will see it pass into Law, lets hope so.

We are not aware yet of any major changes, but we do know the 10 working day rule has been changed to 14 days. However I will be sending you all information when I get some.

The pressure to increase residential rents is always there, but as at June 1st there were 245 properties to rent on Trade Me, a 300% increase over 2 years ago.

One of our major competitors had 90 houses to let in their saturday adverting in the To Let column of the Daily Post. This has been the situation for 2 years now with very flabby sales pushing owners into becoming reluctant landlords. Almost every day we are getting owners taking down For Sale signs and giving us the keys, having lost 90 days rent whilst its been vacant-thats $3,200.00 for a $250 a week house, and the lawns have gone to pot in the meantime. Many agents we deal with are being very honest with owners and telling them thats it a better time to buy than sell. And the number of houses being let has remained very stable at around 250 a month- much the same as five years ago, so its not hard to see why rents have not gone up or why there are so many vacant houses around and gaps between tenancies seem to be getting longer.

The International Visitor Survey done for the year end April 2010 shows visitor Spending and Arrivals; only visitors from Australia were up,12.6%, and their spending was up 9.4%, most other arrivals were slightly lower than the previous year and overall spending was down 2.2%. As our economy is so reliant on overseas visitor numbers the impact of even such a small change has spread to destinations like Rotorua more rapidly and with greater impact than with centres not so reliant on the tourist $$.

Three Motels have shut down and two have been converted into rental flats and the third looks like a bomb site. Most Hotels are hiring fewer staff and being highly competitive and pro-active with functions and events, so thats good for the consumer, but fewer staff means fewer people looking to rent, especially for flats in the central areas- but its not all gloomy as people coming here from out of town have to rent here as they can't sell there, if you see what I mean?

Our big news is that we have been admitted to an elite group of property management companies called The Leading Property Managers of Australia- LPMA. This is a very exciting event for us as we now have extraordinary access to all the latest and best in business practice, property management ideas, planning and training on a scale we have never seen in New Zealand. Many Kiwi firms, like us, have been regular visitors to the LPMA conferences in Australia and being exposed to such a wealth of knowledge is really inspiring, so we are rather chuffed being admitted to this group.

They have a web site, if you are interested, www.lpma.com.au and soon we will be bringing news about The Leading Property Managers of New Zealand.

We welcomed a new team member this month, Brenda-Lee Gunn, an experienced local property manager, so she has settled in well and we welcome her into our team.

Pauline's year as president of her Rotary Club is about to end and Richard has been elected Chairman of the Rotorua Community Charitable Trust and re-elected Chairman of the REINZ Residential Property Management group for New Zealand.

We are very lucky to have a great team working alongside us, I know they enjoy working for you in a busy and effervescent enviroment.

Keep warm and dry!

2010 a year of change???

Well who would have thought that a National Government would put its name to an attack on many of its own supporters?

Suggesting that investors in Residential rental property are "rorting "the system is a bit rich- after all the rules were not set by investors, but by politicians.

And if you want to drive investors out of property, fair enough, but if you want them to invest in the stockmarket, the lenders will want property as security and not the shares being bought. Looks like a no brainer to me.

And where are tenants supposed to live and is the government going to run a massive house building programme-a la Soviet Union- to house them all?

Investment adviser Martin Hawes suggests that house values will fall if investors stop buying, and he may be right as we are seeing, even now, landlords trying to sell

their rental property, but the market is so oversupplied with unsold houses that many bargains are there for the taking, so it might become a self fulfilling prophecy.

And if a landtax- widely reported as likely to be $500 a year- is slapped on investors then a quick $10 a week rent rise will fix that adding more misery to beneficiaries who might soon be looking at 15% gst, Ah, but thats ok because Social Welfare will increase the various housing and accommodation supplements, so they will need more taxes for that.............. sounds a bit wobbly to me, but what would I know?

Personally I do think a special tax needs to be created for property speculators, but my philosophy is much like yours, I think, and that is to never sell, but refinance every 5 to 10 years and take that "profit" to another investment property.

While all that is going on I want to share some "facts" with you.

I have looked at rental data for the last 4 years- significant as that straddles the boom time and the recession.

I have taken October as a typical month and based it on the bond lodgements made, and yes I know there are late lodgements and non- lodgements, but over time that levels out and patterns emerge.

Rotorua rental properties.

October '06. 173 bonds lodged, 52% for houses under $250 a week.

October '07. 148 bonds lodged, 46% for houses under $250 a week.

October '08. 208 bonds lodged, 50% for houses under $250 a week.

October '09 185 bonds lodged, 51% for houses under $250 a week.

Take what you like from that data but it fails to show the crucial supply and demand situation.

I have said this before, so forgive the repeat;

House sales here and especially overseas have been, and still are, very low- no dispute, so "we'll rent it out for a couple of years until things improve" and thats ok except the volume of rentals for Rotorua on Trade Me has exploded from an average of about 80 three years ago to around 300 today, and probably 200 of those have been taken off the sales market- and a very high % are places likely to rent below $250.00 a week and often in less desirable locations.

Look at the % below $250 a week, there has been no explosion in new tenancies, so that segment of our rental market is seriously oversupplied. Yes I know "we've never had delays in the past", "always got a new tenant from just one advert" but that was then, this is now.

So owners who are able to add value to a vacant rental property are going to get the quickest results- heating, fencing, garaging, new carpets, tidy up the bathroom and kitchen, and settle for a more modest rent- By the way " a weeks free rent" and "no letting fee" produces no real difference in enquiry.

Now consider the dilemma of an overseas family, arriving here, unable to sell their UK, Canada, South Africa, or Aussie home, wanting a high quality home to rent here- or any where in NZ, see rents of $400 a week as not exceptional, and with a favourable exchange rate to boot, they are soaking up the high end homes at an astonishing rate.

The reports I am getting from all over the country are all about the rapid sign up rate for high value homes. We get so much enquiry for Executive homes over $400 a week, that we could easily let 10 a week, if we had them, and usually we have several couples at viewings on the first day, so there are lots of disappointed people out there.

Where will it all end?

I expect your guess is as good as mine.

And finally a nice little quote which caught my eye.

"Ambition never gets anywhere until it forms a partnership with work"

From all the team at Rotorua Rentals we thank you for the opportunity to work for you and wish that all your plans for your future come to pass.

September 2009

Greetings from Team Rotorua Rentals.

The property business continues to fascinate and engulf all of us who work in and around it, and as usual there are dozens of experts happily giving advice- ranging from the most cynical pessimist to the gushingly optimistic- its been like that ever since I can recall ( I started in 1963!)

In July it was reported that there was a 300% increase in Mortgagee Sales over July 2008, nationally, with Hawkes Bay reporting an 800% increase, which is a terrifying figure, and likely to be pounced on by the Pessimist. The Optimist will focus on the increased sales volumes that have started to appear- however they will also ignore the heavily reduced prices that are being realised.

It is the Property Investors who are driving the increase in sale volumes, taking advantage of some very real bargains to be had out there. There is also evidence of Trades being done or "property swaps" as we call it, and that is often a good device to reduce or increase a portfolio without too much pain.

The Rental Market in Rotorua has been flattish this winter, with vacancy levels at the lower end much higher than usual, and even the good middle range family home has been harder to let than in the past, but that has started to change in recent weeks, so we expect vacancies to reduce in September- the green shoots of a recovery! Looking at the statistics for rental volumes from The Dept of B&H (they administer the Tenancy Bond centre) for June there were 179 bonds lodged in Rotorua which is about 50 down on the 2008 number.

NZ Property Investor magazine reports a comment from First National Real Estate that rents have dropped 3.5% nationally in the past 3 months, and older, colder homes struggling to find a tenant. They went on to also report that Ashburton vacancies were at 18% and Whangamata at 14%, both very high figures, and we would put our vacancies at about 5%. New Plymouth property managers tell me their vacancy levels are less than 1%!

So if you are an investor looking at different markets, the awareness of vacancy levels are crucial items in your business planning model.

For those with a bigger section and are thinking about building a 2nd unit- or maybe planning to build a garage for your tenant- we suggest trying Totalspan Rotorua.

They have done a couple of projects now and it all went so smoothly, but they also do easy payments- a typical 6x4 garage cost about $8,000.00 and repayments were $42.00 a week. They also do sleepouts and sheds of course, but give them a call, Tony Young is the local owner 027 448 0068.

Team news. Many of you will have had dealings with Nadia about repairs and maintenance issues, well she has delivered a baby girl into the world and mother and baby are doing just fine.

We also farewell our inspections man, James Johnstone who leaves us to join the family firm of Grant Johnstone Nissan and Suzuki, and we welcome on board his replacement Richard Marshall. Richard is an former National Bank man so he has good credentials and is a leading light in local amateur Theatre circles. So with 2 Richards here now be carefull who you ask for when you ring!

So with Peonies finally popping up we can say spring has sprung at last, which means lawn mowing, spraying roses, weeding flower beds- now I see why people live in apartments!

Pauline and Richard Evans and the team.

RTA Part Two

Residential Property Management-The impact of proposed law changes.

Recently I set out some of the features of the Residential Tenancies Amendment Bill that we think are important, and having read ALL the stuff now I can add some other bits and pieces.

New clause 24 amends section 40(4) requires the tenant to prove damage was not caused intentionally or negligently. This is a much tidier way of putting it and is based upon lots of frustrated owners and property managers facing unfair decisions coming from Tribunal, who, quite correctly, can only apply the law as its written.

New fines for new unlawful acts have been introduced and increases are proposed for several existing fines that the tenancy tribunal may impose.

Here are the new fines and their limits;

Landlord failing to appoint an agent if out of NZ for more than 21 days- Fine $1,000.00

Landlord requiring unauthorized form of security Fine $1,000.00

Landlord failure to meet obligations in respect of cleanliness, maintenance, or building and health and safety issues-Fine $3,000.00

Landlord interfering with supply of services-Fine $1,000.00

Tenant failing to vacate on termination without reasonable excuse- Fine $1,000.00

Tenant using or permitting premises to be used for unlawful purpose-Fine $1,000.00

Tenant harassing other tenants or neighbours –Fine $2,000.00.

Tenant failing to ensure number of residents does not exceed maximum allowed- Fine $1,000.00

Tenant assigning or subletting without landlords consent-Fine $1,000.00

Tenant abandonment without reasonable excuse –Fine $1,000.00

Some landlords require a tenant to have a guarantor, but under the 1986 Act the Tribunal cannot make an order against that guarantor and this Bill is looking at changing that so a guarantor can be held accountable.

There are several items offering options on things like Clandestine Laboratories, Tenancy Tribunal procedures, and several Acts are involved like The Retirement Villages Act 2003, The Unit Titles Act 1972, and, for the first time, a whole section on boarding houses.

The submission process has now begun and they have to be in by July 3^rd, so if you are reading this after that date then you are too late.

Some of the changes we are still keen to see included are: Changing the 10 working day notice to remedy to 5 days; Requiring tenants who miss a rent payment to compensate an owner who might have to pay a penalty to the bank for a late or missed mortgage payment; and including Text messaging as a legal form of communication.

I have no idea how likely it is that those points might be accepted, but at least we’ll try.

Richard Evans

NEW IT and Changes to the RTA

Hello again, as winter takes a hold, and houses without heating are much harder to let, but I'm sure you're sick to death hearing about that!

New IT We have taken a new software programme called Soundsreal which allows us to do a voice over commentary on a house to rent advert on our web site.

As a very UN nerdy person I am proving a hopelessly slow pupil but from what I have seen its going to be good.

We have a free trial over the next 6 months, so we will be featuring a few selected homes to monitor results- free trial is a free trial so no cost to owners- but if we continue past Jan 2st 2010 there will be a cost for owners who choose to have it, probably about $50 or so.

Currently we don't charge you for any advertising and plan to keep that policy in place except for this Soundsreal.com, and only if it gets good resuts.

Finally we have a copy of the planned ammendments to the 1986 Residential Tenancies Act. In the first dozen or pages there are enough changes to believe that this will be a good piece of legislation.

It seems to redress the perception that owners had little or no rights and tenants could get away with murder- Now I know thats not true, but try telling that to an owner who feels they have had a rough deal from a Tenancy Tribunal decision.

If anyone wants the link for the full 140 page version please e mail me and I'll send it on.

Some major points of note are the creation of unlawful acts by tenants- actions which were not unlawful in the 1986 Act, such as subletting, and in section 40 a new clause- (3a)which creates 4 new types of unlawful acts by tenants- so the general theme of this bill seems to be moving the playing field to a more level site!

Here are some highlights from the first few pages.

Death of a tenant situation has been well tidied up.

Owners going overseas for more than 21 days must appoint an agent.

Deleted the 4 weeks rent tenant's liabilty plan.

Deleted tenant advocates at Tribunal.

42 days notice to tenant for owners occupation is stricter- must be for principal place of residence and for inmmediate family only.

Tenants still to pay letting fees to agents.

Fixtures installed by the tenant and not removed at the end of the tenancy become the property of the landlord. Clause 25 amends section 42 of the current Act.

Landlord can claim for costs incurred in debt collection- Clause 21 amends Section 32 of the current Act.

So if this gets through the lawmakers we certainly will have a brighter future for property investors and property managers.

We have also joined Skype, which I have never heard of a month ago, but its a great system- if you are on Skype we are using the handle rotorua rentals, so please give me a call.

Rental housing stock. Still high with 230 on Trade me this morning- May 25th.

We are letting out 2 houses a day, but still getting unsold places coming into the rental pool.

Some pundits are saying the housing"crisis" is easing, but that is not very obvious to our eyes. Lets see whay happens in the spring when sales usually pick up.

Thats all for now from Pauline and Richard Evans and all our team.

May 25th 2009.

March 2009 newsletter

Hello and welcome to my first e mail newsletter.

In the old days we used to send a monthly one by snail mail but that became too much of a burden, now with new software its a whole lot easier.

There is a lot to share so let me talk about the market- some of you will be more than a little annoyed with long vacancy periods, and those are properties in a very particular part of the market, often the cheaper end. The cause is oversupply and nothing more than that. The mammoth fall off in sales in the last 18 months has seen rental vacancies rise in almost direct proportion to the fall in sales as many unsold houses have come flooding onto the rental market.

There has been a 300% rise in vacant rentals in Rotorua on Trade Me in that period and some of that has been taken up by people arriving here and having to rent as they cannot sell where they have come from, whether from Vancouver, Cape Town, London or Hamilton, and those people are generally renting the higher value homes, so that end has been in high demand, but demand at the lower end remains weak. With an increasing number of tenants being made redundant or being put on shorter hours we are seeing an increase in arrears and vacate notices and that is the symptom of the recession that the world is wallowing in.

Rotorua is not unique- reports I get from REINZ friends around NZ and in Australia tell much the same tale- 400 vacancies in Dunedin, a massive glut of vacant apartments in Auckland are 2 of the most recent reports I have been told about.

Even so it is taking longer than ever before to place good tenants and increasingly they are making offers below the asking price and often having it accepted- thats a revolution in property management I can tell you!

In December 2008 we bought the property management business of Harcourts in Rotorua which gave us a new property manager, Nicole Aitu, and another parcel of properties, so we have seen a dramatic rise in our business and that has allowed us to make some big changes in our office and add new software- many of you now download your own statements direct from our website, so I hope that helps?

We have added a Property Inspector, James Johnstone, who co-ordinates and carries out the inspections which frees up time for Senior property manager Sandy Jennings and Nicole Aitu to focus on our core activity of renting houses.

Pauline and I have been very busy with a quick trip to a property management conference in Brisbane wher they do amazingly big numbers- had dinner with a man whose company manages 19,000 houses in NSW and Victoria and if his Property managers don't meet monthly targets they don't get paid- pretty tough!

I have been putting in a lot of time trying to persuade the new government that a Property Managers Bill is vitally important, because property managers have been deliberately excluded form the Real Estate Agents Act which is due to come into force in November this year. We see that as a scandal and immediately puts at risk all landlords and tenants as there would be NO governace of the property management industry- who you're gonna call when things go wrong?

We should know by late May if we have been listened to.

Pauline will be appointed as President of her Rotary club in June, so she'll be one of the youngest club Presidents in the country- quite an achievement.

If you don't want to receive these newsletters please let me know as I have no desire to annoy you.

With very good wishes to you,