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John Priest: Being a successful landlord, my way

Friday, July 13, 2018

Firstly, be careful who you accept as a tenant. Sorry property managers, but I insist on managing my own properties and I consider the most important aspect of this to be tenant selection. I want to meet prospective tenants and see if I have a good feeling about them. Whatever your instinct tells you it must be backed up with research. Once when I had had a shortage of suitable applicants for a property in Northland the “dream” tenant turned up. I signed her up on the spot without a reference check or credit check. My gut feeling about her was dead wrong; it turned out much of what she said was untrue and she did not always pay the rent. She did no damage to the property but left owing $1600 in rent arrears. I took her to the tenancy tribunal, actually via a telephone conference call, and she agreed to repay the debt at $50 per week. She paid this some weeks and not others but eventually we did get all the rent she owed. The lesson for me was, no matter how well someone presents, always do the credit check (I use TINZ) and always do reference checks. Beware also of the company prospective tenants keep. I have had a promising applicant, with a good credit record, but I was warned by a previous landlord that “while she is lovely if Dennis* is moving in with her he will be trouble”. When I declined their application, this couple offered $30 a week more for the house but I stuck with my decision.

I use a very simple one-page application form, asking for full name, date of birth, occupation, contact details, previous addresses, referees, photo ID (license or passport) and permission to do a credit check. When I advertise on Trade Me I make it clear that applicants must provide referees and have a clean credit record. Once I have identified a suitable candidate I do the credit check and reference checks and then offer them the property, subject to them paying the bond and one week’s rent up front.

Secondly, keep up with maintenance. Always respond quickly when your tenant advises of a maintenance issue. I will ring a tradesman as soon as a tenant advises me of an issue: a stove not working, a leaky tap, a broken gutter, whatever it is. I also try to do preventative maintenance, so I keep our properties looking good and being nice to live in. My advice is to get it painted regularly, replace the drapes, put in a new fence, repair the driveway before these things become an issue.

Thirdly, review rents annually. To estimate the “market rent” I use two information sources. Number one is the Tenancy Services website while I also look on Trade Me at rent for similar properties. In my rent review letters to tenants, I enclose a copy of the Tenancy Services market rent information for their area. I favour rent reviews at the lower end of what I could achieve, that is around the lower quartile because this encourages stable tenancies. However, when I do have a vacancy I tend to test the market, by the pitching the rent somewhere between the median and the upper quartile. I consider I have been successful if I get good numbers viewing the property while getting only one or two serious applicants. Very occasionally I have had no takers at my advertised rent level and have had to lower my expectations. It would be unusual for me to have a property vacant for more than two weeks between tenancies unless I am redecorating or improving it.

Finally, be flexible and reasonable about collecting the rent. I have had occasions when tenants who I believe are good people have had difficulty paying the rent. Maybe one of them has lost their job. Or they work on contract and at Christmas, their income gets very skinny. In these real situations, I let the couple who went down to one income fall behind with their rent to the tune of about $1000, but I was confident they would make it up and within six months they did. Another tenant who worked as a contract cleaner warned me that around Christmas she might have difficulty with the rent. I suggested that she could miss one week and then increase her weekly payments by $20 for the next several weeks until she caught up, which she did.

The philosophy my wife and I have when someone becomes our tenant is that we treat them decently in the expectation that they will reciprocate. We always respond quickly to maintenance issues. We do not seek the maximum rent possible but aim to be a little under the market rate. We act with humanity if they are facing genuine hardship and we will assist where we can. To say thank you to our residential tenants we provide each of them with a generous hamper every Christmas. The upside to this philosophy is that after being residential landlords for 26 years we have had very low tenant turnover, we have never lost money from rent arrears and we have never had a tenant damage any of our rentals.

* Name changed

This is a guest blog contribution from APIA board member John Priest. Guest blogs are a way for APIA members to share their views and experiences with each other and do not necessarily reflect the views and position of the APIA. Matters covered in this article are intended as general information only. We recommend you to seek professional advice to navigate various tenancy issues when appropriate. 


ABOUT THE AUTHOR

John Priest 

John is a full-time landlord across both the residential and commercial markets. He sits on the board of the APIA and has been a vocal contributor to our various lobbying efforts.

 

 

 

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