Want to self-manage your own property?
So, you want to manage your own property? Did you know that a property management fee is a tax deductible expense? A property manager provides you with protection against legislative change, provides an independent third party to address damage and repairs, most insurance companies require proof of inspections that a property manager can provide.
A property manager arranges for repairs with experienced tradesmen ensuring you are not overcharged and the repairs are completed quickly and cost effectively However, If you are set on managing your own property, look into finding a letting service who can help with vetting the tenants before giving you a shortlist, the tenants would have undergone a full background, credit, media check and provide a Tenancy Application along with a tenancy Agreement.
Why is it important to find your best tenant?
This is important for a few reasons, one being they may have had a history of leaving other properties in poor conditions or they like to have parties? Did you know under the Resource Management Act 1991 you as the property owner can be issued with an abatement notice that is lodged against your property if your tenants continually breach noise regulations? Many Councils work on a 3-strike rule, where if your property receives 3 Excessive Noise Direction ‘ENDS’ issued within a two-year period, they may issue an abatement notice on your property. Which means, every time they have a party that is deemed excessive, the tenant at the time as well as the landowner will get a $500 infringement fee, in addition to being recorded on your property file potentially impacting future sales value.
When you’re receiving $200 a week in rent but are getting infringed weekly, you can do the math.
When you have a proper agreement, you can breech the tenant under the residential tenancy act 1986s.40.2.c Now you will not know about the parties until it is too late and the local council is looking at escalating the matter.
If you remove the tenant and explain to the council, you were not aware this was a problem and show you are trying to rectify the issue, you may be lucky. Not saying this will always happen but many councils use good faith in making their decision.
What if my tenant gets behind on rent?
We knew a lady that had a bad run on tenants, she would hear sob stories and let them have leeway. They would just get further and further behind, this results in a snowball effect of never being able to catch up as what is being paid only covers the arrears. This is when you need to lodge it with the tenancy tribunal. The first step is a meeting with a mediator over the phone so you and the tenant can try to come to an arrangement.
This usually results in a payment plan to get them up to date, this might mean they need to pay $300 a week when their rent is only $200. So, they will take eights weeks to catch up but if they are late, you can elevate the matter and seek and eviction order. If they do not agree to catching up at all, you will need to apply for an order of eviction. This all takes your time, resulting in further lost income and potential damage to your property. Therefore vetting your tenants is so important, not saying all the bad things will come up when vetting your tenants but usually will show the best potential tenant/s that have applied.
You are also required to be present for the tribunal as the landlord and attend the property with a bailiff and locksmith if required to get the locks changed, then you still need to provide the tenants with lawful access to claim there belonging, this is time away from home / work that often costs a lot more than what you would have paid to have a property manager to deal with it.
Depending on the letting service you go with, it can cost as little as one weeks rent for them to find your best tenant. Even using a letting service not near you, is possible, if you’re willing to do the photos and showings. The letting service will do the Tenancy application, advertise, take calls, arrange times, do a full check on your short list and get the tenancy agreement and lodge the bond insuring you are full compliance with the Residential Tenancy Act.