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Welcome to APIA

We are Auckland's only non-profit incorporated society that provides property investors and landlords with support, education and networking opportunities.  Join us at our next property event.

Property Investment Blog

APIA Property Blog

Hot-bedding: What landlords need to know

Tuesday, January 19, 2016

You are undoubtedly aware of the media's latest interest in hot-bedding being a way for tenants to meet accommodation costs.  While there is no reliable data on how prevalent it is, hot-bedding in rentals does happen and here are some important information for landlords to be well aware of. 

 

What is hot-bedding?

Hot-bedding is a practice, often in rental accommodations, whereby multiple tenants share bed(room)s in shifts.  The agreement to hot-bed is usually made between tenants and often without the landlord's knowledge that appear on the surface to be very similar to an ordinary sub-letting agreement.  More often than not, hot-bedding arrangements will involve more occupants than that is intended for a property.

 

Is it illegal?
It may be.  The Residential Tenancies Act is silent on the maximum number of people that can occupy a rental property.  However, landlords do have the option of specifying a maximum number of occupants on the property in the tenancy agreement*.  And many do as part of their risk management practice.  Additionally the practice of hot-bedding can potentially breach fire and safety regulations especially in apartment complexes.  

 

Why should landlords care?
You should care.  Hot-bedding can lead to consequences that are detrimental to the landlord including:

 

  • Health and hygiene of tenants such as infectious diseases and bed-mites; 
  • Safety and security of tenants, property and the neighbourhood;
  • Potential breach of body corporate rules and fire and safety regulations;
  • Wear and tear of property due to an excessive number of occupants; and
  • Potential impediment to cost recovery for damages to property.
What types of property/tenant are more likely to hot-bed? 

While hot-bedding is a risk for all landlords and to name specific tenant groups or types of property would be a gross generalisation that will serve no purpose other than downplaying this risk, there are a few driving factors worth being mindful of: 

  • Shift workers;
  • Students;
  • Inner city apartments; and
  • Residential properties near industrial areas.
What can landlords do to mitigate the risk of hot-bedding? 

Plenty:

  • Thoroughly reference check your tenant applicants and only rent to the best applicant on merit*; 
  • Specify the maximum number of residents in your tenancy agreement*; 
  • Regularly inspect your property and look out for signs of overcrowding such as belongings in bedrooms that seem out of place and excessive wear and tear; 
  • Introduce yourself to the neighbours as the landlord of your property and exchange contact details so you can be told when things appear out of the ordinary.  Similarly in apartment complexes, build a rapport with the building manager; and
  • For modern high-tech apartment complexes that have swipe card facilities and entry/exit logs, keep an eye on these logs and investigate when records appear to be out of the ordinary.

To put it all very simply: be present, be involved and be aware.

In a market where rents are (quite expectedly) on the rise, the pressure to meet costs can conceivably lead some tenants to hot-bed.  As an organisation we are not in favour of this practice as we hold dear the virtue that as landlords we have an interest in the health and wellbeing of our tenants as well as the business performance of our portfolios.  We believe that accommodation costs is a real issue facing Aucklanders and look forward to taking part in constructive dialogues with key stakeholders to bring about change. 

 

* APIA hosts regular workshops on landlording including how to properly reference check a tenant applicant and what to include in a tenancy agreement.  Keep an eye on our events page for upcoming workshops.  

 

Start counting... Now?

Wednesday, December 09, 2015

So you are well versed in serving 14 day notice to remedy a breach and 90 day notice to terminate but when do you start counting down the 14 or 90 days?  S136 of the Residential Tenancies Act is instructive but getting your head around each of the wordy sub-sections is quite another matter. Follow this quick and easy guide so that you can continue managing your tenancies without unnecessary delays*. 


Rule of thumb: The countdown of the notice period starts the day after the notice is legally considered as received

Note s136 prescribes delivery periods (i.e. service times) for each types of service.  Unless the receiver of the notice can prove otherwise, the law will presume that the notice is received at the expiry of the delivery period.   

So, when do you start counting?  Well it all depends on how the notice is served.  Here are the four main ones:  

Personal service (i.e. hand delivery to your tenant)  Start counting 1 working day after 
Delivery to a physical address for service (i.e. affixed to the front door or left in the on-site letterbox)  Start counting 2 working days after  
By ordinary mail to letterbox (before 5pm on a working day)  Start counting 4 working days after 
Fax or email (before 5pm on a working day)  Start counting 1 working day after 

 

Avoid the calendar day vs working day slip! 

A simple mistake that can easily be overlooked is to confuse calendar days with working days.  A calendar day is any day of the year whereas a working day is any day that is not a Saturday, Sunday or statutory holiday.  Depending on the type of notice you will be countdown in either calendar days or working days.  Here are the common ones you need to know about:   

Service time for notices  Countdown in working days 
Notice to remedy a breach  Countdown in calendar days 
Notification of change of address or other landlord details  Countdown in working days 
Notice for rent increase  Countdown in calendar days 
Notice to terminate  Countdown in calendar days 

 

* This guide relates to service of notices captured by s136 of the Residential Tenancies Act and does not cover services relating to Tenancy Tribunal Application.    

Paint or stain?

Monday, December 07, 2015

Don't leave it bare! 

Exterior timber coating is something long term property investors simply cannot afford to ignore.  Not only does a topcoat treatment preserve the longevity of your deck and fence, the improvement it gives to the exterior aesthetics of your property will also increase its drive-by appeal and rental interest.

The purpose of top-coating your exterior timber is simply to water- and weather-proof it.  It protects the wood, stops it from warping and preserves its life. From a usability point of view, top coating also minimises splitting and cracking that can lead to splinters on decks.  The best thing about top-coating is that it is a simple job that seldom require a skilled tradesperson.  So rolls your sleeves up and lets get started.

 

Paint or stain?

There are two types of topcoat treatments for exterior timbers - painting and staining.

The choice you make will depend a number of factors including cost considerations, maintenance schedule and the look you want to achieve.  Take a look at this quick comparison chart to help you get started:

 Don't forget to take into account the plane of your surface.  For horizontal surfaces such as a deck that experiences more wear and tear through heavy foot traffic, painting will prove to be extremely cost ineffective overtime.  The same issue however will not affect vertical surfaces such as decking posts and fences.

 

Scrimp or splurge? 

Whatever choice you make, always make sure you always go for speciality paint or stain products that are designed to withstand the weather extremities of New Zealand.  Inferior products that have not been purpose designed tend to be more inexpensive but will prove to be costly overtime.  Don't forget that as an APIA member you are entitled to trade level pricing with both Wattyl (through Wattyl trade stores) and Dulux (through Guthrie Bowron stores) as well as competitive retail discounts with both Mitre10 and Bunnings.  Click here for more details.

Now that you have chosen your purpose designed paint product, it is time to think creatively about how to avoid budget-creep.  After all we are gunning for a simply DIY job that will increase your property worth and rental return!

When you buy your paint product, talk to the store about coverage and whether there is any possibility to thin out the paint or stain so that they go further.  Respect their product knowledge and follow their instructions.    

Depending on the state of your deck,you will be surprised at how much you can do with a bit of vinegar and baking soda.  Bye bye industrial strength cleaner and water blaster!  

   

When you head to your hardware store, you will be faced with a great array of brush and mop products to choose from.  Make sure you select the applicator that is designed for the paint or stain that you have chosen for the project.  For small one off jobs, you don't always need the top of the range brush.  However for bigger and more repetitive jobs, a good quality brush will deliver a better finish with less paint.  Talk to speciality staff members at the store to help find the best applicator for the job.

 

Overall process

Whether you paint or stain, there is an overall process to follow when you topcoat any exterior timber.  Follow these steps to achieve a quality finish that will protect your wooden surfaces for years to come!

  1.  Clean surfaces thoroughly before painting. Stripe away any existing finishes.  Remove dirt, dust, mildew, and loose wood fibres to improve product adhesion and achieve a more consistent finish.
  2. Set nails and screws flush or below the surface.  If below, fill the holes with an exterior-grade wood filler to give you a flat finished look and keep moisture out.
  3. Apply a paintable water-repellent preservative before priming to inhibit mildew and rot.  To skip this step when you are staining, make sure you choose a product that contains the preservative.
  4. Take the time to prime all surfaces, it will improve product adhesion, moisture protection and give a longer longevity to the life of the finish - well worth the effort!
  5. Make sure you paint or stain all surfaces including those that are not directly exposed to the elements.  Take care to coat the end grain. 
  6. Repeat coating as directed by the manufacturer's instructions. 
 
Staining

Staining is a popular choice these days because it delivers a more natural finished look that is favoured by the modern Zeitgeist.  With minimal preparation and faster application, it is also the type of weekend project that can easily fit into the schedule of a part time investor.  

   

   

Here is an example project tool kit and some tips to help you get started: 



| 1. Timber prep | 2. Hard synthetic bristle brush | 3. Deck oil/stain | 4. Deck stain mop |  5. Paint brush | 

 

  1.  Keep an eye on the forecast and only stain if you are sure it will not rain in the next couple of days;  
  2.  To avoid visible seams coat section by section, timber length by timber length; 
  3.  Give new decks one whole season before staining for better penetration; 
  4.  Use a paint brush at the house edge for more precision staining but a speciality staining mop to speed up the job; 
  5.  Over applying the product can cause filming and peeling over time, make sure you follow the manufacture's instructions and apply the right amount of stain.
 
Painting

Compared to staining, painting can at first come across as arduous but delivers a longer lasting finish which means you do not have to revisit the project for a few years.  As the coating is thinker, painting also delivers a more comprehensive protection for your exterior timber.  Thankfully with tools such as paint sprayers you will be able to complete your project within a more realistic timeframe.  Here is a quick step by step guide to take you through the painting process: 

   

Here is an example project tool kit and some tips to help you get started:


| 1. Paint sprayer | 2. Timber paint | 3. Drop sheet | 4. Gloves | 5. Masking tape | 6. Paint roller & tray |  

  1.   To avoid paint blistering, do not paint in direct sun-light;
  2.   For brush application, take the time to work the paint into the brush before applying to avoid drip marks; 
  3.   Never second coat over a wet undercoat; 
  4.   If you are using a paint sprayer, choose a paint that is designed to be applied by a sprayer; 
  5.   Trim surrounding trees and shrubs before painting or shield them from your project with a piece of plywood inserted vertically between your fence and the vegetation; 
  6.   For left over paint that you intend to discard, use a waste paint hardener so that you can dispose of the paint with your normal rubbish.   

So here you have it!  A nice and easy summer project to transform the street appeal of your rental property.  If you do go ahead to spruce up your exterior timber this summer, make sure you save some before and after photos and share them on our Facebook page.  Good luck!   

   

Simple steps to successful real estate investment in New Zealand

Wednesday, November 25, 2015


Rahul and Alika Rai moved to New Zealand in 1990 with little experience in property investment and a dream of early financial freedom.  Fast forward 25 years later, the Rais are proud owners of a robust portfolio that spans over four countries making them the masters of their own destiny.  Having experienced first-hand how enriching property investment can be for the ordinary people, Rahul and Alika distilled their extensive knowledge into Buy & Hold - Simple steps to successful real estate investment in New Zealand published this April 2015.  This quick read volume contains structured advice designed to orientate investors throughout the key steps of property investment.  It is a road-map guide for new investors and a portfolio health check list for the experienced.  We caught up with Rahul to talk about the book and his thoughts on investment.   

APIA: Firstly,why did you get into property investment in the first place and how did you get started?

RR: We got into it quite by accident.  We bought our first home within an year of coming in to NZ in 1990.  It wasn’t easy we had to get 3 mortgages.  One from the bank one from Housing NZ who used to do some kind of back up loan towards a mortgage and finally $4000 of vendor finance to reach the required figure.  I remember the panic when the solicitor sent us an invoice for an extra $200 for drawing up the vendor finance document.  We were at our final bits of money.  And lets not forget the interest rates were around 14%

When we moved to Wellington with the job after about 4 years luckily we kept our house as a rental.  That was the start to our property investment journey.  Then we bought our home in Wellington and kept this when we moved to Christchurch.  Once in Christchurch we started to buy rental houses as we could see the benefit of holding on to houses for the long term

APIA: What made you write this book?

RR: In our years of working in our careers we realised that many people have difficulty saving money and almost lived pay cheque to pay cheque.  We could see that owning a house is an excellent way of making compulsory savings.  And then soon after, one can buy the second and then third rental and so on.  We wanted to tell people our story so that we could inspire a few people to do that same.  We are absolutely convinced that this a very good path to financial independence and we wanted to try and make a difference and spread the word.  Once you achieve certain milestones you had set for yourself you can help others during your own life time and also for a long time afterwards with perpetual philanthropy.  That is a wonderful legacy to leave behind. 

APIA: You were very clear from the off that this book is for the everyday run-of-the-mill ma-and-pa investors rather than the real estate moguls. Why is it important for you to speak to this audience?

RR: We wanted to help spread the message that this can be achieved by anyone who has a job or a small business to start off slowly on the side and keep growing it as a business.  It is very liberating to think of your pay day as leverage day as I have often tell our kids.  It is leverage day because you are using part of your pay cheque to leverage with the bank to grow your real assets.  We want to try and help everyday mums and dads in accelerating their journeys towards financial independence.

APIA: In the property investment circle, the prevailing rhetoric is very much to use property to generate enough passive income as to free the investor from the 9-5 shackle. Yet you encourage investors to keep our day jobs and invest on the side. How do you see the day job add to the investors’ experience?

RR: We believe in growing a property investment like a real business so that you work towards a number of properties.  Having just one or two is more like a hobby.  We are talking about gradually having a number of houses, as many as you are comfortable with.  But the process should be handled cautiously so that you don't over extend yourself at any time.  To grow the portfolio your other stream of income is very important.  It is a safety net.  Lets not forget also that the net yields are quite low so just by having a few houses there will not be enough income to live comfortably.  Moreover the banks want to see serviceability and you get that with your day job.  It dosent mean that you have to work forever but you certainly should for as long as you can.

APIA: You seem to take a team-orientated approach to your investment strategy where you bring in a team of professional service providers such as property managers, valuers, accountants, financial planners and so on.  In this competitive market how do you evaluate each service provider and determine the value they can add to your portfolio?

RR: We do take a team approach since we treat our property investment like a true business.  We have been in the corporate world for a long time and have seen first hand how the best results are achieved in a team environment.  I guess evaluation of each of those providers is based on your experience of the results you are getting from them.  If they have saved you time which you can spend on something else more fruitful then it was worthwhile.  Moreover there are a number of areas where one has to get professional advice and the cost of not getting it is too expensive.

APIA: How companionable has your property investment journey been? As a couple in life and in investment, do you recommend other investors to also invest with their partners?

RR: It is always great if you can work together and be on a similar wavelength. There will be sparks (like we have) but if you can complement the skills it has got to be useful. Plus you face the ups and downs of investing together without one blaming the other totally!

APIA: You invest in New Zealand as well as abroad. What are the biggest risks facing an absentee investor and how do you mitigate that risk?

RR: The important thing is to work on the business and not in the business.  So micro-management is not an option.  We talk a lot about property managers and their value to investors.  Once you are comfortable with them managing your houses in your own town or country it is just a question of getting the right manager in the other country.  But you have to do a fair amount of research as the tax laws would be different and the property cycle would be different.  Investing abroad is achievable but do tread with caution. 

Rahul and Alika Rai are the authors of "Buy & Hold - Simple steps to successful real estate investment in New Zealand" click here to find out how you can obtain a complimentary copy of this book.  The Rais will guest speak at the November APIA Westgate meeting as part of #TheExpertsAmongstUs series sharing their investment ups and downs and key lessons learnt.     

Tuesday Catch Up: 7 things we are keeping an eye on this week

Tuesday, June 02, 2015

... cos we simply had to take Monday off to recover from the latest Reserve Bank blow... 

1. Before we unleashed the doom-and-gloom, can we please take a moment to marvel at the awesomeness that is Brandon Lipman?  

2. Ok so back to business, late Friday afternoon the Reserve Bank served up another wham-bang at the investors community by hiking the cost of borrowing for non-occupying property owners.  Is it a knee-jerk reaction to how unfazed and financial and investment communities are towards the 30% deposit rule?  Only Graeme knows.  Sneaky sneaky.  Yes, a blow to investor no doubt but the ultimate losers are still the tenants.  

3. Aucklands disproportionate growth is once again in the spotlight.  Economist Ganesh Nana paints a grim picture of the future awaiting us. 

4. Hey, looks like Nick has found some land in Auckland!

5. The oracles at the NZIER have spoken.  Looks like rates are going to hold for as long as 2017.  

6. Is there a housing bubble?  You be the judge.  

7. A light hearted wrap up to this week's list: entry level?  My foot!

What have you been keeping an eye on?  Comment and share below! 




Monday catch up: 7 things we are keeping an eye on this week

Monday, May 25, 2015

After what can only be described as an action-packed two weeks for property investors, this week's calming respite has been much welcomed.  Much needed, some may even say as we start getting introspective on the coming changes.  

1. Not entirely unexpected, but Bill English just threw a bucket of cold water over CGT.    

2. Uh oh!  Looks like more people are expected to flock into New Zealand in June.  Great for APIA members if they are renters, not so flash if they are here to buy...

3. Meanwhile, Shamubeel Eaqub has dubbed the new term 'Generation Rent' to describe the 30-somethings who are increasingly stuck in the rental cycle.  Not that you will hear him complaining anytime soon.  

4. More pressure still for Gen Rent, Trademe just reported an increase of $25 a week over a year to April in rent.  By the way, are you charging market rent?  

5. What do you think of the Budget?  Bernard Hickey shares his thoughts.

6. Now that the Kiwi dollar has calmed down a little, looks like interest rates may take a tumble shortly.  

7. The CE of the NZ Council Of Infrastructure Development is publicly supporting the release of public land to address the supply side of the housing crisis.  Finally!  

What have you been keeping an eye on?  Comment and share below! 




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