We all know that there is a recession. Its on the news, in the papers, in every second conversation at the office, everyone KNOWS there is a recession. But how is it effecting you? Really?
The recession is like a large stone thrown in the centre of a really big pond. The big splash is what you’ve seen on the news - Freddie Mac and Fannie Mae for example. But New Zealand is really on the very far edge of the pond. We have only experienced a few ripples, some minor inconveniences. Some have sufferred job losses, some are finding the rising costs of food, transport and every day living are making life tough. But for the average kiwi its life as normal.
Its not until you try to do something a little out of the ordinary - like sell or buy a property - that you realise that things aren’t normal. Or if your rental property suddenly isn’t making as much as it used to. The rental market is seeing its lowest point in a number of years, and many are panicking. Vacancies are taking longer to fill, rent increases aren’t as easy to get, and the number of tenants defaulting on rent payments is on the rise.
But this won’t last forever. Now is the time to hang on to our investments and ride the ripples. When the pond settles again it will be the resilient investors who’ve kept their heads above water.
Pam
Pamela Wilson
Lambton Property Management
Pam's blog
So now we know tenants are moving out, we need to contact them to arrange to show prospective tenants through the property and start advertising. It is really important to keep your current tenants informed throughout this process, as even though they are moving out soon, you don’t want them to leave feeling disgruntled and unhappy.
Once there are applicants for the property we always conduct credit checks and reference checks. This eliminates some bad eggs from the beginning. Those with negative backgrounds may not even bother applying once they are handed an application form to complete. Others with payment defaults and/or past tenancy tribunal cases are easily eliminated. We always get identification too! You never know when someone will try and use a false name to avoid the credit checks.
Demand this summer is not as heavy as in previous years and there is still a lot for tenants to look at and choose from. So don’t forget to tell your new tenant as soon as possible that their application has been successful – before they find something else!
On a different topic, yesterday morning’s two hour power cut was cause for some amusement. We had more than one tenant phone to say that there was something wrong with their flat as they had no power…
Pam
Pamela Wilson
Lambton Property Management
Pam's blog
About six weeks from the end of a tenancy we contact our tenants to find out whether they wish to renew their leases. Some will move out (for a myriad of reasons) and some will want to stay on. For the latter, there will be a decision as to whether changes are to be made to the conditions of the new lease, mainly: will there be an increase in rent?
When deciding this, don’t automatically assume that the rent will increase. The market, especially at the moment, is tenuous. If the rent is increased too much, tenants will simply leave to find cheaper accommodation. There are some ideal tenants who look after the property and therefore the maintenance cost is lower – keeping them happy with stable rent is a good long term plan.
Today (Sunday) I’m taking a break, and taking the chance to reflect on the past week’s fortunes and mishaps and plan for the coming week. Not that property management is a job that you can easily plan for!
Pam
Pamela Wilson
Lambton Property Management
Pam's blog
We’re in a busy time of year now – re-letting properties at the end of their fixed term leases.
There are three things I’d like to talk (or rant!) about on this:
1) When to end fixed term leases
2) Tenants who wish to stay on
3) Finding new tenants
I’m not going to try and do it all in one go, so will spread it out a bit – hopefully having you all hanging on my every word until I finish!
We always try to end our fixed term tenancies in January to February of each year. Why? Because this is the single best time of year to find new tenants so minimizing vacancy times. Winter is terrible – no one wants to move homes in the wet, cold, windy season. September to December isn’t great – people start to think about holidays and Christmas and not about moving. March to April is okay, but is just the run on from February’s rush.
It is also very nice to know that your chances of spending your Saturday afternoons standing outside flats in the cold rain, for prospects who don’t bother to turn up, are greatly reduced. So, if you have properties to rent out now get out there and enjoy the sunshine!
Pam
Pamela Wilson
Lambton Property Management
Pam's blog
A recent conversation with a mediator of the DBH confirmed my view that the economic downturn is hitting tenants hard. The number of tenants not being able to keep up with rent payments looks to be on the increase.
So, how do we, as landlords, cope with this? Talk to your tenants regularly. Stay on good terms with them and let them know that they can talk to you about any problems they may face. If they are finding that they can’t quite make the next rent payment you want them to be able to discuss it with you and work out a resolution. It may be that they can pay it off, or they may need to find cheaper accommodation. Even if they are in a fixed term lease, this isn’t a big dilemma – you can work with them to find replacement tenants.
If tenants feel they can’t communicate with their landlord about financial problems, they may decide to just leave without notice leaving you with an abandoned property and no rental income.
Happy tenants pay rent. Look after them and they’ll look after your investment.
Pam
Pamela Wilson
Lambton Property Management
Pam's blog
Happy New Year! You are hopefully all recovering from last nights frivolities.
As any landlord will know, Christmas and New Year is a difficult time to follow up with tenant’s rent payments. The banks are closed from 25th December to 28th December, open again on 29th December, but of course you won’t get any online banking updates until Tuesday 30th December. Things don’t return to normal until Tuesday 6th January.
During this time all sorts of things can go wrong. Automatic Payments from tenants can fail to go through, tenants away on holiday can forget to pay and tenants spend too much on presents and food so their payments don’t clear.
So we’ll be working a few extra hours to bring tenants rent back on track before the summer renting rush begins. Hopefully the weather stays great for the open homes!
Pam's blog
Hope you all had a peaceful Christmas and are enjoying the festive season. It’s a strange time of year in the rental market – generally quiet but not exempt from the characteristic silly season behaviour. There are the people who’ve waited until two days before Christmas to start looking for a rental and the tenants who want to end their tenancies early to go home for Christmas.
And now all that’s past we’re waiting to see what changes to the rental market the new year will bring. Will the recession take a back seat to the usual summer demand with rental prices climbing again? Or will the record Boxing Day spending mean that people have less to spend on rent in 2009?
The NZ Herald reported “New Zealand’s largest Eftpos company, Paymark, processed $96 million worth of transactions on Friday, a record amount for December 26, and 8 per cent up on last year. The total number of transactions - 1.69m - was up 9.3 per cent.”
So, we shall wait and see what 2009 brings, and hope for a great start to the year.
Pam's blog
So, I had to start with something right? I had a few clever clichés ready to go, but once my fingers hit the keyboard I thought better of them. So “property management is like a box of chocolates” thoughts aside, the plan is to give anyone (who has a few minutes spare every now and then) some small insights into my full on life as a property manager.
Watch this space, and feel free to comment anytime!
Pam's blog
