Tony Brazier

www.braziers.co.nz

Tony Brazier

The Press - Wednesday 29 July 2009

Monitoring Your Property Investments

In many instances the problems that occur with rental properties are avoidable. With a few basic guidelines a landlord can mitigate a mass of opportunity for things to go wrong. The very act of managing properties itself gives rise to many and various small tasks which individually look non-threatening but if not done in a timely or adequate manner can turn to butter very quickly. In running a property management company the majority of problems come under the heading of communication. When running the properties yourself it is best to mitigate issues under the headings of Prevention, Practicality, Proof and Profitability.

The old adage ‘Prevention is better than cure’ is never more true than as a landlord. This starts, as mentioned in other articles with your selection process and ensuring you don’t rush your choice and regret it later. Also mentioned is assisting your tenant to settle in. It is worth teaching them, what you might consider to be basics, like how to use the auto switch on the oven and changing a fuse wire. If not, expect to be called at the most inconvenient time for the simplest of issues. Your in-going inspection is a must as this is the time both parties agree on the condition that the property is being offered and taken. This needs to be a thorough report written up and signed by both parties. It needs to have photos of every knock, scratch, mark and rip so that when memories fade over time the tenant is not being blamed for what they didn’t do. So too with periodic inspections. These are handy for gauging how the property is being looked after but more importantly highlight little issues that if unchecked become big issues, especially if they involve water. The last part of prevention is to set standards and stick to them. Expect your tenant to be timely in their responsibilities but make sure when you are required to do something for them you abide by your own standards.

Under the heading of Practicality are many instances of preventative maintenance. Have an annual date for spouting cleaning, chimney sweeping and tree pruning. As a landlord you must be practical in your expectations of the tenant to be able to look after a quarter acre section or a swimming pool. You may have to hire a lawn mowing contractor and/or gardener to do a monthly check just in case the place gets away on your tenant. This can be arranged at the outset. Be willing to provide practical chattels like heaters or dehumidifiers to assist in keeping your property healthy. This extends to other chattels like white ware etc in order to assist a favoured tenant into place. Obviously the rent should reflect these. Finally be practical in assessing the need for upgrades. Would you live in this place? Does it need insulating? Would draft stops help the occupants? These practical matters are the difference between empty and full properties in tough times.

Everything you do be willing and able to prove it was done. Give all instructions to workmen in writing and give copies of workmen arrangements to tenants so that no surprises occur e.g. entering flats while tenants are in bed. All notices to tenants should be in writing in case you need to prove timing in the tribunal later. Obviously all rent collection tracking is the same. At times it is necessary to send notices to the tenant’s “Address for Service” to ensure you can provide proof that a particular notice was served. Phone numbers can be blocked. Often a text, to say a notice has been served, will not be ignored out of habit.

Finally, Profitability. A landlord should keep track and justify any renovation by being able to work out what return he/she got on the money by doing the work e.g. an extra $40 per week on the rental after spending $10,000 on an upgrade can be justified when that work just achieved a 20% return on the money (i.e. $40pw x 50wks = $2,000 extra or 20% return on $10,000).

Also when setting rents a landlord may be better to offer enticements to take the flat rather than reduce the weekly rent which may be locked in for 12 months. Rent holidays, pizza vouchers, car washes and other enticements have worked in order to keep those rental standards rather than cheapening the product you are offering by undercutting the market. The landlord will find this a much more profitable avenue to take.

Take care to notice changes in the market by rubbing shoulders with other landlords. Many missed the “furnished” phase and also the more recent “room by room” phase. These come and go but are imperative for maximising one’s profit.

Keeping an eye on the four P’s will ensure you less stress and more profit whilst staying current in providing the best service to your tenants.