Innholdsfortegnelse for No 150 May 2016 i NZ Property Investor

I WAS BLOWN AWAY BY THE CONVERSATIONS I HAD WITH THESE INVESTORS AND HOW WILLING THEY WERE TO EXPOSE THE LESSONS THEY HAD LEARNED, OFTENTIMES THE HARD WAY. THIS MONTH WE CELEBRATE THE 150TH issue of NZ Property Investor magazine. Naturally, when you hit a milestone like this, you begin reflecting on the past dozen years of property investment (since our beginnings in 2004) and wonder what the investors who have been part of our magazine have been through. To get a feel for their collective experience I rang many subjects of our early profiles – those who were at the height of their game in 2004 – not knowing the Global Financial Crisis lurked just around the corner. I was blown away by the conversations I had with these…

1 When to worry about meth The most read story on the Landlords website was about meth contaminated properties. Our writer found that while the scale of the problem is unknown, those who end up owning a meth contaminated property face losses in several areas. These include a drop in value and sales price for a property with a history of meth contamination, rental losses while the property is decontaminated and, in extreme cases, the demolition of the property. But among the horror stories, there is some misinformation circulating. For example, there are widespread concerns the new health and safety legislation means landlords will need to do meth tests between tenants – or risk being accused of renting an unsafe property. But a WorkSafe NZ spokesperson says under the Health…

1 The rise and fall of the loss-attributing qualifying company regime. The LAQC was many a property investor’s best friend, allowing losses from a property to be offset against an individual income return. 2 The removal of the ability to depreciate residential buildings. The 2011 removal of building depreciation threw out a lot of cashflow calculations and altered buying criteria for many an investor. 3 LVR restrictions imposed by the Reserve Bank have had a significant impact across the property sector, particularly the re-write on the interpretation of tax residency. These are contributing to an investment shift away from Auckland. 4 The bright-line test, now in place to determine whether tax needs to be paid on the gains from the sale of a residential property. 5 Tax rates have changed.…

1 Choose to work with a well-regarded local agent who specialises in the market you are targeting. 2 If you are selling off-the-plan, get started on the sales and marketing campaign as early as possible in the project. 3 You don’t have to accept the terms in a contract offered by an agent, it is possible to negotiate on things like a 90 day listing term. 4 Incentivise your agent by offering them an above average commission if they secure you an above average sale price. 5 An agent’s commission can be negotiated down if you feel they are not delivering the results they promised. 6 Ensure your target price represents the value of the property and reflects retail costs in the local market. 7 Always get any legal information…

YOU WILL DO YOUR CHILD A GREAT SERVICE IF YOU CAN CHALLENGE THEM TO SAVE FUNDS AT THE SAME LEVEL AS THEY WILL NEED TO SERVICE THEIR FIRST MORTGAGE– MARK WITHERS WHEN DETERMINING HOW MUCH MONEY to lend your child for a property purchase, a good starting point is to take your child to a banker or broker and run through a loan application scenario, based on what their income level is and the size of their own deposit. A revelation at this point is that banks will often wish to see evidence the child has actually saved their own deposit. Having a deposit from mum and dad is all fine and well but if the child has shown no ability to save the sums needed to service the mortgage…

IT BAFFLES ME THAT SOMETHING SO IMPORTANT AS YOUR FINANCIAL FUTURE IS LEFT OUT OF THE BUDGET – SUE IRONS WE’RE ALL PRETTY FAMILIAR WITH the concept of a personal trainer, a piano teacher or a sports coach. But when I ask many people if they have heard of a ‘property coach’ or a ‘property mentor’ I am often met with a blank face. Well, it’s either that or they imagine a car salesman-like ‘spruiker’ looking to make a quick dollar off an unsuspecting victim! This is the first instalment of a new column, where I hope to demystify the concept of mentoring or coaching for property investors. I wish simply to share my thoughts and experience on what is required to successfully design and implement a property acquisition plan…

MARKET COMPOSITION The rental market in Napier/Hastings is made up of a small number of apartments and some flats, but mostly houses. Houses are the dominant property type in each area, with at least 60% of properties in each rental market made up of houses. Flaxmere and Rural Hastings exclusively so, while Havelock North (90%) and Taradale/ Awatoto (87%) also have a hugely significant proportion of houses. Hastings/Clive and Napier offer up the greatest percentage of flats at 34% and 29% respectively, while Napier is the only area with apartments – less than 10% of the rental market. Three bedroom houses are the most prevalent in the Napier/Hastings rental market, as they are across most of the country. Havelock North is the only area with less than half the rental…

NORTHLAND NEXT MEETING: Wednesday May 25, 7pm at the Distinction Whangarei, 7 Riverside Dr, Whangarei. TOPIC: Speaker, Barry Reiher, is the founder of Evo Holdings which focuses on creating a great sense of place by developing sustainable living environments that offer an enviable lifestyle for residents, with an emphasis on environmental care, practical local knowledge and outstanding land development experience. If considering subdividing, adding add a second dwelling or if you have other questions relating to boundary changes, combining lots and subdivision this is speaker is a must. MEMBERSHIP: $180 single or $210 couple; includes subscription to the NZ Property Investor and NZPIF discount card, plus local trade discounts. Please email npiacontact@gmail.com for more information. PO Box 1640, Whangarei AUCKLAND NEXT MEETING: Tuesday May 10, Dorothy Winstone Centre, Auckland Girls…

1 Housing affordability researcher Ian Mitchell says that for many frustrated renters the Kiwi dream of home ownership is already out of reach. We asked our readers for their thoughts. YOUR COMMENTS Shelley Begg: Buy outside the suburb that Mum and Dad live in, I bet that wasn't the first house they bought either. We all had to start somewhere and it wasn't in Parnell. Save a deposit instead of having a new phone, clothes and cars. Don't buy coffee and lunch... We all sacrificed nice things to get a house deposit together. Buy a house and put tenants in it in another area, and continue renting, at least you're on the ladder. Dan Timmins: Buying a first home in Auckland is ridiculous. Yes, there are better job opportunities and…

REINZ HOUSE SALES: UP Once seasonally adjusted, sales were up nationwide in March. This was driven by a large increase in Auckland’s sales volume. INTEREST RATES: DOWN Interest rates remain at historic lows. OCR: DOWN The Reserve Bank cut the OCR to a record low 2.25% in March. IMMIGRATION: UP Migrant numbers were down in March, but the annual net gain still hit a record high, according to Statistics NZ’s latest data. BUILDING CONSENTS: UP Driven by strong growth in Auckland, building consents were up nationwide in February, Statistics NZ says. MORTGAGE APPROVALS: UP Reserve Bank data shows that mortgage lending picked up in February, following several months when it was trending downwards. RENTS: NEUTRAL Rents continued to be largely static nationwide in March.…

Advertising the property (for rent). Finding and vetting tenants. Accepting applications – signing tenants to a lease, arranging the appropriate bond and deposit, lodging the bond with the appropriate authorities. Collecting rental payments – and following up any issues with nonpayment. Responding to enquiries and requests – both before and after rental. Conducting regular and thorough property inspections. Keeping comprehensive records (including photos). Conducting rental appraisals and setting rent increases. Overseeing repairs and maintenance. Understanding tenant rights, as well as landlord rights and responsibilities (which requires knowledge of the relevant tenancy legislation).…

PEOPLE TEND TO SEARCH FOR INFORMATION THAT CONFIRMS THEIR VIEW OF THE WORLD AND IGNORE WHAT DOESN’T FIT - MICHAEL YARDNEY DID YOU KNOW THAT AS PROPERTY investors we can sometimes be our own worst enemy? It’s not because of the decisions we make, the opportunities we consider or the investments we miss out on, but rather, it’s because of the way we think. That’s because we’re subject to cognitive biases — the way our brains sneakily convince us to make decisions that aren’t always in our best interests. Cognitive biases may convince us to spend more, save less, and feel more confident in our decisions than perhaps we should. And the scary thing is, for the most part, we’re powerless against them. Here’s a look at some of the…

SMART LANDLORDS WILL CONTINUE TO SEE THESE [PROPERTY] CYCLES AS AN OPPORTUNITY WHILST OTHERS WILL BE BURNT BY THEM – SARAH DAWSON THE NEW ZEALAND PROPERTY INVESTMENT market is never easy to predict. But certain trends are likely to emerge based on the current market climate. Here are my top predictions for the coming years: Rooms to rent: With stock deceasing, rents rising and a property market that is increasingly challenging for first time buyers, the reality is more and more young people and young professionals will be renting rooms for longer, which is ideal for investors! The market for shared housing with rooms let on an individual basis is steadily increasing, and will only continue over the course of 2016. Airbnb provides another option for returns: Airbnb will not…

BAY VIEW A charming village atmosphere - easy to tenant. Handy to the Napier-Taupo road for commuters, and particularly sought-after by young families. NAPIER HILL Position on the hill is important. Older houses in spots that lack sun may suffer from problems with damp. Investors should look for off street parking. PANDORA/AHURIRI A lovely seaside area with beautiful views and good amenities. Popular for its village atmosphere, this is where most of Napier's apartments are located. TARADALE A fantastic area with good schools, shopping centre, supermarket, parks, and access to freeway. Very attractive to families. Low vacancy rates. MARAENUI A low socio-economic area dominated by state housing but affordable with good yields. Tenancies will need to be carefully managed. FRIMLEY Good mix of quality new homes and established older homes,…

WITH SUBDIVISIONS AND DEVELOPMENT SITES OPENING UP ALL OVER, I’M A BIG FAN OF GOING NEW. WITH THE CHRISTMAS HANGOVER well and truly gone the housing market is heating back up. Despite this, agents’ listing numbers are down and recent figures show sales across Auckland are down 23% on this time last year, fuelling the supply and demand issue. The chances of winning auctions are reducing with migration still through the roof – a record of 67,000 net migrating into New Zealand in February alone. Second-hand properties are continuing to rise in value and of course the 30% deposit required for funding is getting harder to put together. So what other options are there? Perhaps it’s time to look into ways to increase your portfolio without having to be in…

KRIS PEDERSEN Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. Phone 09 486 4719, www.krispedersenmortgages.co.nz MARK WITHERS Mark and his team specialise in advising on property-related transactions, valuation and restructure services, and tax planning. Withers Tsang & Co Phone 09 376 8860, www.wt.co.nz RON HOY FONG As a successful property investor and mentor, Ron has built an impressive portfolio and a wealth of investment strategies and experience. Contact Ron today on 021 888 298 or ronhoyfong@gmail.com BERNARD PARKER Bernard is principal of Quinovic – Kapiti-Mana. Quinovic’s outstanding people and systems provide the most professional, effective and reliable residential property management service in the NZ market for over 26 years.www.quinovic.co.nz KRISTER SAMUEL Krister specialises in selling high yielding apartments for…

1 800,000 people in New Zealand will need to move into aged care facilities or live in appropriately designed homes in the next 10 years. 21 in 5 people will be aged over 65 by 2030. 3 59% of people in New Zealand aged over 65 have a disability. 4 11% yearly increase of households in New Zealand. 52.14m homes in New Zealand by 2038. 6 14% of the population currently 65+. By 2032 21-22%. By 2063 25 – 32%. 7 In the last year over 350,000 people were injured by falls, slips or burns in their own homes – costing ACC over $395m.…

Require them to fill out a detailed application form. Get both professional and personal references and thoroughly verify them. Use a credit referencing service. Ask them to show evidence of assets (eg: a car). Try to speak to some previous landlords to establish their rental history. Talk to their employer to establish their employment record. Ask for a copy of their passport and/ or driver’s license. Check the Tenancy Tribunal database. Always meet them in person to assess them and get a feel for who they are. Have a look on social media – online presence can reveal a lot about a person.…

INSURANCE COMPANIES MAY NOT PAY OUT THE FULL COST OF REMEDIAL ACTIONS REQUIRED TO FIX OR DESTROY A CONTAMINATED PROPERTY – SANDY RICHARDSON THE TERM DUE DILIGENCE IS A CONCEPT with which property investors should be well familiar. Once a property deal is in the offing, it becomes essential to uncover all fishhooks before purchasing. A starting point is the Land Information Memorandum (LIM) issued by the local authority, but this document won’t necessarily disclose everything the intending investor needs to know. Because their industry is becoming more regulated, real estate agents are more proactive in looking to understand any known or potential issues with listings and should disclose problems with properties to avoid any possibility of formal complaints to their regulating body. Nonetheless, the prudent investor would not leave…

THE HUMAN ELEMENT HERE IS THE BODY CORP: IF IT’S NOT WORKING, DON’T BUY IN THE BUILDING, EVEN IF THE RETURNS LOOK GOOD AARON TUNSTALL BODY CORPORATE COMMITTEES (BCCs) are not glamorous, but they can make a big difference to the success of your apartment investment. Every block of units (more than four) must elect a body corporate committee to administer levies, settle disputes and generally ensure the units meet their legislative requirements. This committee, usually known as ‘the body corp’, can have a significant impact on the units, the tenants and the owners. At Impression, one of our roles as property managers for apartment buildings is to represent our owners at meetings. We spend a lot of time doing this and we’ve seen a wide range of types of…

What makes Hawke's Bay attractive: Sunny climate, cheaper housing, abundant fresh fruit and vegetables, excellent schools. What suburbs are most in demand: Flaxmere, Greenmeadows, Marewa, Napier South. How the housing market has been tracking and what influences it: The market has picked up considerably in the last six months, driven by higher demand, low interest rates and low supply. Housing types: Hawkes Bay has a variety of housing, from the 3-bedroom renovated villas of Napier South to the apartments of Ahuriri. The median sales price of housing was $330,000 in February 2016, up 14% from February 2015. compared to the national average of 24.7%.…

REDUCING OVERCROWDING IN RENTAL PROPERTIES NEEDS MORE ATTENTION THAN IMPROVING AFFORDABILITY FOR HOME BUYERS ANDREW KING RENTAL PROPERTY INVESTORS ARE AGAIN in the spotlight as 44% of Auckland sales in March were rental properties. We were seen as the reason for house price rises because we were pushing up demand. Rental properties, however, account for more than 40% of the housing market in Auckland, so it isn't surprising investors normally make up this percentage of property buyers. The real reason for increased demand is not the proportion of different buyers, it is the fact that our population is increasing at record levels. Latest Department of Statistics records for February show the annual increase in net migration for the year had reached over 67,000. Auckland property prices started to soften around…

NATIONAL RENTAL PRICE MOVEMENT This map represents change in the average rental price between the months of March 2015 and March 2016, based on figures from the Ministry of Business, Innovation & Employment. RENTAL SNAPSHOT Median house rents of the dominant dwelling type for the area AUCKLAND - CITY WELLINGTON - CITY CANTERBURY - CHRISTCHURCH NEW ZEALAND EXPLANATION OF STATISTICAL TERMS No. of Properties: Total number of residential properties No of Bonds: Total number of bonds lodged in last three months Median Rent: Weekly rent based on the bonds lodged in the latest three months Rent Quartile Range: Inter-quartile range of weekly rent based on the bonds lodged in the latest three months Median value: The median value of properties in the group based on estimating the current market value…

IF I CAN GIVE NEW INVESTORS ANY ADVICE IT IS THAT PROPERTY INVESTMENT SHOULD BE TREATED AS A BUSINESS, WITH AN UNDERSTANDING OF ALL THE RISKS ASSOCIATED WITH ANY BUSINESS Nicolette Connors has been on a hell of a ride over the past 25 years. She’s worked as a top advertising creative, worked in film, television, publishing and more recently property finding. In her just-released autobiography, A Fabulous Failure, she takes the reader through a whirlwind of high-flying careers, mega riches, business success and exposes the flipside of this coin – bankruptcy, domestic violence and depression. Her strong creative bent lead her to start up several highly innovative companies – the much lauded Citron Press being one of them (a game-changer in the world of publishing) – but it was…