Well, as you might have noticed, I’ve been neglecting the blog a bit of late and this is due to all the things I’ve had running around in my head, and the ‘to-do’ list that was as long as my arm.
A couple of weeks ago I flew down to Christchurch for routine property inspections. These trips always result in a list of repairs and maintenance to attend to. This time was no different, although thankfully they were all small things.
Having just had the end of the financial year (31 March), it is always interesting to see in black and white just how much maintenance and repairs actually costs. This past year we have spent over $10,000 in maintenance.
The list of things we have had to attend to during the year includes..
Replacement clothesline, kitchen taps, letterbox, filters for ventilation system, stove, various electrical and plumbing, curtains, a ridiculously expensive doorknob (to almost match others in the house), TV aerial, entrance lock, shelving, replace slats above bay window, paint exterior window frames, and rivet a gate back together.
I thought this a good mix of a typical year of maintenance to give people an idea of how ‘passive’, or not, property investment really is. It’s not all bad, because at least being in a different city, we don’t have to actually do the work ourselves anymore – although it would be cheaper if we could do some of it ourselves.
A couple of days after getting back from the Christchurch inspections, our Auckland tenant gave us notice. It’s not a big deal, but it can be a time-consuming exercise with advertising, showing, vetting, and signing up a new tenant. And, with each new tenant comes the risk that you might have chosen the wrong one. You won’t know if you got it right until they’ve been in the house for a while.
So, now that I’ve arranged all the maintenance, and the new tenant, things are pretty ‘passive’ again for a while.
What I hope people will take away from this post is that property investment is a business and there are many more costs (repairs, vacancies, advertising, credit checks) to take into account than people realise.
Having been a property investor for more than 11 years, I’d definitely do it again, knowing what I know, but it’s not a ‘get rich quick’ scheme. I still take the red-eye Jetstar flights to Christchurch (when they don’t cancel them on me), and I don’t have Koru lounge membership! It’s quite well known that property investors are asset rich, and cash poor. Yes, the assets are increasing in value, and rents do go up in time, but the income from rents is not going to make you wealthy when you deduct all the expenses from that rent.
The property investment courses and seminars are advertising furiously at the moment and I want you all to know that what they tell you is not necessarily the reality. These companies are in the market to sell you either their courses, or the property that their finders have sourced. The last property boom was the same, but Rich Mastery no longer exist…