I woke up this morning to discover the lead story on the Herald app was full of lessons to be learned for residential property investors. This couple has made so many classic mistakes that have unfortunately left them $30,000 out of pocket. I feel certain if they had followed these steps they would not find themselves in this sad situation.
1. Always have a property manager in place.
Of course I’m going to say is as I am a property manager – but I wholeheartedly believe that in 99% of cases where things go wrong, they could have been prevented with a good property manager looking after things. There is a strong desire in NZ to DIY when it comes to property investing and managing – however you would rarely DIY fixing your car, installing your swimming pool or representing yourself in court…why then DIY looking after your (probably) biggest investment? Leave it to the experts! For just 6.5% management fee (which is also tax deductible) these landlords could have saved themselves thousands of dollars and a whole lot of stress.
2. Background checks should always be done – not just reference checks.
If you do insist on DIYing your property management then here is the list of checks that Aspire does on all inbound tenants. We find these work extremely well – the only tenant issues we have at the moment are with tenants that were already in place when we took over the management of the property – so if tenants pass all of these then you are off to a good start:
- Ministry of Justice fines search
- Tenancy Tribunal search
- District Court records search
- Social Media search
- Google search
- Sensible Sentencing Trust search
- Driver’s License Verification
- Multi-Bureau Credit Check (includes both Veda and Centrix credit systems)
3. Insist on an inspection when tenant communication dries up.
Tenants do not have to give you access – you can give notice of an inspection in accordance with the RTA and then attend the property as per the notice. If these landlords had done that they would have detected the damage being done a lot sooner. The landlord also does not have to serve notice to enter the grounds of the property and this would have given some good indications re the rubbish etc.
4. Get landlord’s insurance
If you believe for any reason that you have a risky tenancy in place then landlord’s insurance in a must – this would have helped the landlords recover some of their losses in this situation.
5. Always have regular rent reviews
It is surprising that these landlords hadn’t reviewed the rent in FIVE YEARS! The amount of lost rent here is significant…and this would have been prevented with a property manager in place and the additional rent received every year would have covered the 6.5% management fee 5 times over.
So there you have it. My 5 key lessons for everyone to take from that article. Let nothing like this happen again…and get yourself a property manager now!