Auckland Property Investors Association

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Should you hire a property manager?

Thursday, April 24, 2014

Professional property management is a double-edged sword.  On the one hand it frees up investors from being bogged down with the day-to-day running of the property, on the other hand it costs a premium which many investors think they can do without.  Some property investors, held back by inexperience, are happy to pay for professional management services in exchange for minimum input.  Others, encourage by an incentive to save on expenses, prefer to self-manage their properties.  Hiring a property manager is a personal decision and below are some key considerations:

  1. Location - Where is your rental property in relation to your living circle (i.e. your home, your workplace and suburbs you frequent)?  Is it feasible to juggle a full time job, family commitments as well as being on call 24 hours a day for your tenants?  
  2. Expertise - What are your (investment) strengths?  Are you good a negotiating a great deal or preserving, or even adding, value to your existing rentals?  Are you a good communicator?  Do you have the mental strength to cope with rent arrears, property damages, sudden abandonments, and Tribunal hearings? 
  3. Time - What are your existing time commitments?  Do you have a full time job?  Do you have children and a busy home life?  Can you give your property and your tenant the time and attention they deserve?  
  4. Knowledge - Do you know, or care to know, your obligations under the tenancy agreement as well as the Residential Tenancies Act?  Are you intent on executing your legal duties and enforcing your rights?  Are you up to date with the market rent of your property?  Do you know how to increase rent legally and without increasing your vacancy rate?  
  5. Attention to Details - Are you detail-oriented or more of a big picture person?  Are you able to pick up early signs of water damages?  Can you sniff out a bad tenant from a mile off?  Do you have the patience and the organisation skills to keep your rent ledger updated?  
  6. Personality - Are you customer/service focussed?  Do you have a sunny attitude and patience to cope with tenants' demands?  Are you capable and willing to maintain a good working relationship with your tenants?  
  7. Network - Do you have a  network of trustworthy, cost-effective, and reliable tradesmen you can call on for all repair and maintenance work?  
  8. Control - Are you comfortable handing over control of your invested asset to someone else?  Do you have a habit of checking up on people you have delegated tasks to?  
  9. Budget - Is your property negatively or positively geared?  Can you afford to pay for professional management?  
If you are still unsure whether you should hire a property manager, take a look at the info-graphic below:  

How NOT to write to your tenants

Monday, April 21, 2014

Currently doing its rounds on the Internet is this landlord's email to his tenants.  Rather than showing off his Mensa prowess, which I am sure was the intention behind his vile email, he had outed himself as the president of Densa.  This is e-x-a-c-t-l-y how you should NOT write to your tenants:

In the famous words of the Who’s Roger Daltry I ask “Who are you?” 

Could you be Nigela Lawson the domestic goddess of 685 who cleans properly and on time. Or Cindy Monet? Cindy cleans on time but like her non de plume she has become legendary in 685 for her stylish brush strokes. You see, whenever our Cindy cleans every swipe she makes is visible? And last and in more ways least Miss H who when she can be asked cleans properly but rarely? 

For Nigela, you are without blame, for Cindy it is a gentle prod, but for Miss H it is your final warning. 3 days from me posting up the cleaning duties you have. 3 days to find 1 to 1 and half hours to clean properly. That includes all the surfaces in your designated area including light switches and doors. I threatened in the past to inspect but never really did. BUT FROM HERE ONWARDS I WILL BE.. MARK MY WORDS. Should I ask you to do it again, let not a dog move his tongue in protest. 

Special shout out to Miss H. Miss H, if you fail to do your clean within the 3 days, mark my words the next month will be the last you spend in my house. Try me at your peril. To Cindy, I say, just because you wipe something doesn’t make it clean especially when you wipe it and your wipe is visible. I try to lead by example when I clean I make sure I use the right product so no smears remain. If you don’t know what to use please ask. 

A general note to everyone. You make a cup of tea or a hot drink don’t leave behind the ring that the cup makes on the work surface. Clean the mess you made. Similarly you drop something on the floor pick it up. You cook on the cooker, wipe it down when your finished. You wash in the sink empty the strain. None of you came into my house followed by a retinue of maids and butlers, and there ain’t no mummy or daddy to pick up after you. IN THIS HOUSE YOU PICKUP AND CLEAN UP AFTER YOU. 

Washing up

You have one day to wash up your dirty plates left by the kitchen sink. Anything left longer than a day and I will start taking names and kicking ass. I could not care less if you pile them up in your room till they touch the ceiling, but eventually with the warm whether coming you will be flicking flies of your face like the current starving poster child of a UNICEF campaign. The population of flies increases with the weather warming,so. Its important that you clean up you mess and wash up your dishes and cutlery in timely fashion for hygiene sake. 

To the individual who has suddenly become a not so secret hoarder, leaving there recycling by the bin for weeks on end. Best Stop now. I removed the last two piles seeing that you were too god damn lazy to do it yourself. The next time you do that I will be calling time on your stay here. Why because you go in and out of the front door every day. It takes 3 secs to put the recycling in the appropriate box. No one and I mean no one is allowed to store any of their recycling inside whether it be by the bin or by the door. Recycling goes straight outside. Furthermore Please ensure you put you recycling in the right box because I don’t have the time to correct your laziness. 

Fair Use or Abuse of Lights and Machines

What is fair use of lights and what is abuse. I find it quite galling that one of the main abusers recounted a story to me about the time she came home and found the heating on full blast and her flatmate in shorts and a vest, and how exorbitantly high the fuel bill was. I find it very interesting that you cannot draw similar parallels to turning lights off when your not in the room, because I come home most evenings and your bedroom lights are ablaze while your downstairs for a good few hours preparing and then consuming your dinner in the kitchen. I smell a tinge of hypocrisy. Newtons Conservation of Energy applies not only in science but to most households in England. 

Fair use – you take the same pinky you use to turn on the light when you enter a room, to turn off the light when you exit. If you don’t rectify this I have already prepped George to come in and install one pendant light in each room and a timer switches which will automatically turn off the lights every 5 minutes. The choice is yours ladies.
One individual believes its okay to turn the extractor on and then go to bed. Is this an example of fair use or a prime example of abuse. 

Another believes its okay to turn on the washing machine or dishwasher before going to bed. This is so abusive on two accounts White goods use up to a 3rd of their maximum power in standby and leaving machines on reduces the longevity of the machine. Secondly, I have been disturbed on more than one occasion by the sound of the dishwasher, dryer and washing machine beeping, signalling the end of a wash or warning the water needs emptying. You can imagine how pissed off I must feel knowing the person responsible is away with the Sand man. Knowing what you know now the next time I am disturbed by late night beeping I will be getting everyone up to curse out that individual . Mark my words. 

Ladies, continue to abuse the machines, and when these machines go I wont be in a rush to repair them and you will be dragging your dirty laundry to the nearest laundrette. My family home is five minutes from here so it wont affect me in the slightest. 

The Kitchen Table

Despite providing a sufficient number of table mats, the kitchen table is now marked by numerous rings from the bright sparks inside the house placing hot cups and plates directly on to it.I have neither the time nor the inclination to play Poirot up in here, so the good have to suffer for the bad. The table was £100 and I’m deducting the cost of the replacement across each and everyone of you. 

Furthermore. One of the first things I learned in infant school was to put my chair back underneath the desk before leaving the classroom. But if I was given a pound for every time I returned a chair back under the kitchen table in this house I could put a significant dent in the national debt. So when you decide to drag your cabose of the chair do me a favour and slide it back where you took it from. Thankyou. 

The Kitchen door

Please ensure the door leading into the kitchen is shut at all times especially at night and when leaving the property. Why.? Because a burglar standing in the back garden can see through the entire house. Secondly, health and safety. Doors act as fire traps giving you and the fire service precious time. 

Respect for All faiths

We have a devout Muslim living with us and an Israelite. Both of whom are quite tolerant when it comes to certain parts of their faith’s strict rules. Two of these rules have been an issue. The first is alcohol. Our dear Muslim cannot touch or consume any swine or alcohol and has to go through a purification process when this occurs. Similarly the Israelite can consume alcohol but can nether touch nor consume pork, lobster and shrimp amongst other things This is why we have separate fridges. So in the interest of compromise I ask you not to leave your alcohol on open display in communal areas (kitchen window cill for example) place it in your designated fridge. Or in your bedroom. 

When cooking pork based products ensure the kitchen door remains closed, use extraction, until smell dissipates. That does not mean put extractor on and go to work leaving it running all day. After cooking, clean down thoroughly the cooker removing traces of all said swine based product. I will also go as far as to offer our pork lovers a reduction in their rent to contribute to not cooking pork inside my house. There are several excellent greasy spoons near here I can recommend. But that choice is yours and I offer it to strike a compromise between your right to eat pork and mine and our devout muslims right to abstain. 

I like offending people with the truth and absolutely abhor political correctness. Why do I like causing offense, because a persons response to the truth is a measure of that persons character (if they have any) If you don’t love the truth and are offended by it, what does that make you. Does it not make you a liar and a lover of lies. If anything I have said is not of the truth then I apologize. But if nothing I have said is of a lie then don’t come to me with an excuse, reason or an apology. Just fix it.

Pretty shocking stuff right?  Untidy tenants who cause damages to the property are a nightmare and should be dealt with productively.  But being a condescending horse's ar$e will not get you anywhere anytime fast.  Here are some tips to help you strike the right tone: 
  1. Tenants are customers - Being a landlord does not make you the lord of the land.  You are running an accommodation service to which your tenant are customers.  They are not inferior nor are you superior.  Speak to them as equals.
  2. Stick to the facts - Put emotions aside and list the behaviours you disagree with.  Clearly set out why they are not in line with the tenancy agreement and/or the Residential Tenancies Act ("RTA"). 
  3. Do not set out to cause offence - Landlords often forget our own vulnerability.  Our investments are in the exclusive possession of tenants.  Do no unnecessarily provoke your tenants into causing wilful damages to your property.  
  4. Use a 14-day notice - If you believe a breach of the RTA or the tenancy agreement has been committed, communication through a 14-day notice.
  5. Focus on the law rather than yourself - Should you wish to remind your tenant what the consequences of his/her actions are, focus on your legal rights under the RTA (e.g. take the dispute to the Tribunal, apply for a money order etc) rather than what you would do to them.  
What are some of the tips you have picked up over the years to maintain a working relationship with tenants?  Share them with your fellow APIA landlords below!  

CGT - Lunacy much?

Tuesday, April 15, 2014

Just this Sunday, Labour's David Cunliffe was on Q+A lambasting a tax regime that hands out tax free capital gains to property speculators as nothing but pure lunacy.  And he would not be wrong. 

Problem is, he is wrong.  In a press release issued yesterday, the New Zealand Property Investors' Federation Executive Officer, Andrew King, rightly pointed out, 'Those who buy and sell property are already taxed on the income from this activity,' whereas the majority of rental property owners are investors not speculators - a distinction that Mr Cunliffe's Labour Party seems to have failed to grasp if their leader's frequent interchange of the two labels is anything to go by.

Property speculators are those who derive a living (i.e. an income) out of selling appreciated assets (i.e. properties) which had increased in capital value.  They are driven by capital gains which are already captured by our income tax regime each time they are made.  In essence, New Zealand already has a capital gains tax in all but name.  

Property investors are driven by reasons that are far more diverse:

  • Providing a passive income stream to supplement our retirement;

  • To have total control over the value of our investments (rather than investing in shares, currencies or finance companies the value of which investors cannot affect); 

  • To invest in an industry (accommodation supply) that continues to have strong demand (housing); 

While any incidental capital gains made throughout would not be un-welcomed, they are only illusionary (because they will be exhausted the moment investors buy back into the market).  

'So,' you wonder, 'where does a CGT leave investors?'  But perhaps more pressingly for me, 'Where does a CGT leave tenants?'  With or without a CGT, demands on the Auckland housing market will always make properties a realistic prospect for investors.  A tax raising scheme designed to dis-incentivise investors will only result in the increased costs be passed on to the tenants who, ironically, are the ordinary Kiwis Mr Cunliffe set out to protect.  

Back to basics - Warren Buffett's 5 Investment Fundamentals For Property Investors

Friday, February 28, 2014

Arguably the most successful investor of our age whose name is synonymous with the very act of investing, Warren Buffett is known the world over for his staggering successes as well as folksy demeanour.  In his eagerly anticipated annual shareholder letter, the Berkshire Hathaway chairman this week shares some sage but startlingly simple investment advice.  

Stripping out all the high-browed jargons and toning down on financial rhetorics, Warren Buffett reflected on two small parcels of real estate investment he made to "... illustrate certain fundamentals of investing:

  • You don’t need to be an expert in order to achieve satisfactory investment returns. But if you aren’t, you must recognise [sic] your limitations and follow a course certain to work reasonably well. Keep things simple and don’t swing for the fences. When promised quick profits, respond with a quick “no.”
  • Focus on the future productivity of the asset you are considering. If you don’t feel comfortable making a rough estimate of the asset’s future earnings, just forget it and move on. No one has the ability to evaluate every investment possibility. But omniscience isn’t necessary; you only need to understand the actions you undertake.
  • If you instead focus on the prospective price change of a contemplated purchase, you are speculating. There is nothing improper about that. I know, however, that I am unable to speculate successfully, and I am skeptical of those who claim sustained success at doing so. Half of all coin-flippers will win their first toss; none of those winners has an expectation of profit if he continues to play the game. And the fact that a given asset has appreciated in the recent past is never a reason to buy it
  • With my two small investments, I thought only of what the properties would produce and cared not at all about their daily valuations. Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays. 
  • Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important. (When I hear TV commentators glibly opine on what the market will do next, I am reminded of Mickey Mantle’s scathing comment: “You don’t know how easy this game is until you get into that broadcasting booth.”) "
To read the entirety of the 2013 annual Berkshire Hathaway shareholder letter, click here.  

3 things you need start doing right now to make your life easier

Monday, February 10, 2014

If you think being a landlord is more hassle than it is worth then I challenge you to think again.  

The life of a landlord does not need to be a drag.  True, there are always extra obligations and risks you take on when you become a property investor.  But then the same thing could be said of all business endeavours.  By being clever with your time and more selective with (superfluous) tasks, you will be well on your way to keeping the extra stress under control.

  1. Stop checking your (rental) bank account everyday - No no, I am not saying to let your tenant get away with not paying on time.  That said, most people do not get their jollies on at the prospect of doing accounts and administration.  If you have multiple tenancies, streamline your accounting practice by aligning all your tenancies so that all rents are due on the same day.  Pick a day of the week when you do not have many other commitments so that you can spend an hour or so to go through your rent arrears protocol should you need to.  

  2. Stop calling your property manager all the time - Don't (over-) manage your property manager.  Good property managers have systems in place to keep you in the loop.  Most will furnish you with a monthly report on the state of the property as well as the rent account.  If you feel the need to keep constant tabs on your property manager, you should start asking yourself whether you should be trusting them with your investment properties.

  3. Stop scatter-gunning your maintenance/repair routine - Regular maintenance and occasional repairs are part-and-parcel to being a landlord.  Instead of going into a blind panic each time your tenant rings about a leaking pipe, have a protocol in place so that you know exactly what you should be doing.  A typical maintenance and repair protocol includes a contact list of trustworthy tradesmen, pre-existing email template for you to give adequate notice to your tenant, as well as an amount of buffer money sitting in your account ready to pay for the job.

What are some of your stress-less tips for your fellow landlords?  Sound out and share below!

Your notice is served

Thursday, December 19, 2013

From time to time, you will find yourself having to communicate with your tenant formally during a tenancy.  This is done by way of serving your tenant a notice/document (which is really legal talk for someone to legally receive your communication and be notified of its contents).  

Be it a 14-day notice to remedy, a rent increase letter, or even a notice to terminate, sections 136 and 136A of the Residential Tenancies Act set out the legal parameters within which notices can be served on a tenant.  

Here is a break-down of rules and timeframes:

Types of service Methods  The day on which notice takes effect* If served on a Monday, notice is deemed to legally commence on
In person Physically handing the notice to the tenant. If the recipient refuses to accept, than dropping it at their feet.   The following day Tuesday 
By post  Posting the document to the address for service provided (best to retain tracking details). 4 working days after the date of posting  Friday
By delivery To the address of the tenancy:
  • placing the notice in the mailbox;
  • attaching notice to the door in a prominent position; 
  • handing it to a person who appears to be over 16 and who resides at the premises.
To any other place of residence of the tenant by:
  • handing it to a person who appears to be over 16, resides at the premises and who confirms that the tenant also resides at the premises.
To the tenant's address for service (if the above do not apply) by: 
  • handing it to a person who appears to be over 16 and who resides at the premises.
To a solicitor or an agent of the tenant who is duly authorised by the tenant to receive legal notices.
2nd working day after delivery Wednesday 
By facsimile  Transmitting the notice by fax if the fax number was specified as an address for service no later than 5pm on a given day (best to retain a copy of transmission confirmation).   Next working day after it was deemed sent (before 5pm)  Tuesday (if sent before 5pm)
Wednesday (if sent after 5pm)
By email Emailing the notice to the email address specified as an address for service no later than 5pm on a given day (best to retain a copy of email) Next working day after it was deemed sent (before 5pm) Tuesday (if sent before 5pm)
Wednesday (if sent after 5pm)

*unless the tenant can produce evidence to prove that delivery was delayed or did not occur

If time is of the essence and you want your notice to take effect as soon as possible, we recommend you to serve it by facsimile or email (make sure you collect these information at the start of the tenancy as addresses for service for this exact purpose).  

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