With investors in Auckland now requiring a 30% deposit (or equivalent equity in another property) to purchase a rental, many Auckland investors are looking in other parts of New Zealand for properties with better cash-flow, and a lower deposit requirement.
As the hubby and I are accidental out-of-town investors (thanks Mother Nature!), we have almost 5 years’ experience in this field.
The novelty of living in Auckland and flying to Christchurch for property inspections and tenant changeovers is wearing thin. At first I thought that traveling for business would be fun, but now the 4am starts on a Saturday morning are becoming a bit more gruelling. Perhaps I’m just getting old?
We recently had a short and sharp attempt at selling a property because the remote management of older houses was starting to feel a bit daunting. Since reviewing our goals, we have decided to keep the house and streamline our systems to better cope with being remote landlords.
Things that we have learnt:
- Make sure you have clear goals and that any investment property you purchase (or keep) is moving you closer to those goals.
- Develop an end-game strategy so that you know what you have to do to get there – even when obstacles appear.
- Think about how you will manage the property remotely – or how you will choose a property manager to do this for you.
- Gather a team of reliable tradespeople that you can call on to deal with any issues without you needing to be physically present.
Our team includes a good renovation company who can do everything from small maintenance jobs to electrical, plumbing, asbestos removal, painting, and total overhauls; a good old-fashioned plumber who won’t install anything nastier than Methven fittings; a quality carpet cleaner who has a machine that can suck up most of the moisture after the carpets have been cleaned; gardeners; arborists; window glass replacement company; heat pump servicing company; appliance repair/replacement company. We are currently on the lookout for some really good cleaners to give places a spruce-up in between tenancies.
- Gathering up all of these tradespeople in an area where you haven’t lived and don’t have any recommendations will not be easy. We had a ghastly experience with some painters that we got through the Builders Crack website. You really must have recommendations, or have at least used the company for a previous job before giving them a bigger job to do!
- Have a trustworthy ‘agent’ (a friend or relative) who can keep a spare set of keys in case access to the house is required in between tenancies – or your tenant locks themselves out!
- Out of sight really is out of mind and when it comes to maintenance this is not good.
- Have a plan for regular maintenance, such as tile roof moss treatments, house washing, gutter clearing, tree trimming, ventilation system filter changing, and heat pump servicing.
- Get the smoke alarms with the 10-year battery so at least that doesn’t need changing every 6 months.
- Tenant selection is vital – getting the wrong tenant is going to cause you major grief if you don’t live nearby. Make sure you choose carefully, always check references and credit history.
- Use fixed-term tenancy agreements so that your tenant can’t give you 21 days notice and move on. We only have one house with a periodic tenancy and our excellent tenants have lived in the house for more than 6 years. We have reason to believe that they’ll stay a few more years, so at least we don’t need to worry quite so much about that property.
- The key to remote landlording is to have good long-term reliable tenants. That applies to any rental property, but it is so much more important when you have to hop on a plane to get to the property.
- Book your routine inspections (every 3 to 4 months – check what your insurance company is happy with) well in advance so that you can get cheap flights. Having to go down and sort out a vacancy can be a costly exercise as flights are often booked only a couple of weeks before departure. Be organised, set inspection weekends at the beginning of the year and book the flights when they are on sale.
It’s really important that you thoroughly research the area that you are looking to invest in. If you are only looking at property on the internet and crunching the numbers, then you won’t have the knowledge needed to make a sensible investment decision outside of your home town. Make sure you physically visit the town/city you are interested in and learn as much as you can about good/bad locations and any upcoming changes that might be in the pipeline.