I've been managing properties for over seventeen years (do I need to try something different....?) and I meet lots of private landlords and people who look after their own rentals. Some of them do a damn fine job, and look after their tenants and their rental properties in a professional and efficient way.
There are however many popular misconceptions about being a Landlord and what you can and cannot do. Here's a few of the more frequent suspects:
Property Management is "money for jam"!
That can be true, if nothing goes wrong, your tenants stay for ten years and never miss a beat with the rent payments OR complain when a rent increase is suggested, there's no late night callouts, Police raids or domestic incidents involving the neighbours.
Do you really want your summer barbecue interrupted by a leaky washing machine on the other side of town? Do you really think you can get an electrician out at 11am on a Sunday morning to fix a blown main fuse? Are you looking forward to showing prospective tenants through your vacant rental property on a midweek evening after a full day's work?
You can do your own repairs and maintenance
Yes you can, and if you're not qualified to do trade work like plumbing, wiring, roofing, glass installation, etc. then you can get into some grief if something happens and your insurance company claim goes south because of some half-baked DIY repairs.
It remains a popular misconception that doing your own maintenance will save you money. I know - I've tried to save money this way myself, and found that a professional trades supplier will do a better job quicker, and in real terms save me money. So why would I do it myself?
You can manage your rental from overseas
Simple, no you can't. Under the Residential Tenancies Act, any landlord who's absent from New Zealand for more than 21 consecutive days must appoint a local agent. That agent then has all the rights and obligations of the landlord. Failure to appoint an agent in these circumstances is an unlawful act.
You can appoint your brother, or your neighbour, or your granny if you want, but they have to be named on the Tenancy Agreement as the Landlord, and they also have to be the signatory on the Bond Lodgement Form.
You can visit and enter your rental any time you want to
Nope. No. Not even a property manager can do this without the consent of the tenant and the appropriate 48 hour notice. Not unless it's an emergency. So just turning up on Labour weekend at 7am to waterblast the roof and install a new toilet bowl is a definite no-no and can land you with a big bill through Tenancy Tribunal if your tenant gets all in a snit about your constant visitations.
I know this because I've seen it happen - the last property owner I met who had this issue ended up paying over $10,000 as compensation, and you do not want that to happen!
You can kick your tenants out any time you want to
Also a big NO. The Residential Tenancies Act specifies notice periods to move tenants on, and it's more than two weeks! You also can't just rock on up and kick them out while throwing their clothes and record collection out on the front lawn. That way lies disaster and can lead to you getting an expensive fine from the Tenancy Tribunal.
You can keep the bond in your own bank account
After all, your tenants know you're good for it. You own a rental, so you're not exactly broke or anything, right?
Well, this is illegal too, and yet many private landlords still think it's ok to hang on to their tenant's Bond because they can afford to pay it back to them anytime they want. It's illegal - you've got 23 working days to lodge that bond, and many tenants know when it's not been lodged and will let you know they're not happy about it.
Managing the place yourself saves you money
That might be true if you're reviewing your rents regularly and getting the best rent possible. It might also be the case that you have no repairs to do, and you never have to use your own time showing your property when it's vacant, vetting applicants, completing inspections, and generally taking care of the place. All that and the stress it involves can make Jack a dull boy.
Save yourself! Get a property manager to do it for you. After all, it will cost you about 31cents an hour including GST and you will be free to use your time much more wisely and profitably.
You can store all your own stuff in the garage/basement/attic of your rental
Can if you want. Cram all your life's memorabilia, antique furniture, African fertility artifacts, and that extensive and incalculably valuable collection of books on Bell Ringing and Morris Dancing into your attic space while you rent your house out. Think of the money you'll save not paying for a storage unit for all your valuables!
Except.... you'll find that your insurance company will be reluctant, and even completely unlikely, to pay out a dime in compensation to you if things go wrong. Why? Because you have tenants in the property, and that means they "could" have access to your stuff, or through their actions your stuff could be removed, damaged or destroyed in a fire.
Your insurance may not actually cover that stored stuff and you could lose a lifetime's furniture, family photographs and artwork because you stored them all in the basement and allowed a tenant to move in.
managemyproperty is an independent Property Management company based in Wellington, NZ
Richard Horne remains a tireless and energetic investor and commentator, running an experienced eye over the property market and trying his best to explain the eternal vagaries of it all!
Visit the website at managemyproperty.co.nz to find out what they can do for you.
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