As an apartment owner looking to sell, concerns if your tenants will move out or make it difficult for buyers to come around and view the apartment might be bubbling up. And you don’t want them to move out and leave you high and dry, either! That’s costly for you. Apartment Specialists knows this bit of the process needs to be as smooth as possible.
One of the biggest fears for an owner is that selling or thinking about selling will scare away their tenant.
While this is a valid concern it should need be.
The key to looking after tenants is the relationship. Not just so they co-operate during the sale process but to ensure they are happy and your income (rent) isn’t affected.
Tenants want to feel like they are respected and are looked after during the process of selling.
This is a must from an agents point of view as they are also the gate keepers. If they are not happy access is often restricted and so we have a very strict process to ensure this doesn’t occur….it often involves a bottle of wine or two.
The key take away here is to ensure your communication is open and frequent, ensuring they know exactly what is happening throughout out the process and that they are educated on their legal rights.
Remember just like owners they are scared too and so must be looked after.
A landlord or rental agent by law has to give 60 days notice for a rental increase and can only do so if:
It has been 180 days or 3 months from the date of the tenancy agreement if a periodic tenancy and can only do so with a fixed term tenancy if in the tenancy agreement there are clauses or provisions saying it can occur.
Mostly, you have the ability to raise the rent within market rates or after 6 months of the fixed term tenancy the rent can be reviewed.
Below is how a form should be laid out as notice has to be given in physical format.
60 DAY NOTICE TO INCREASE RENT
Part 2, Section 24, Residential Tenancies Act l986
Re: Tenancy at ……………………………………………………………
In line with current market rents I am hereby giving you 60 days notice that the rent will increase to $…………… on ….…/….…/………
Please make provision for this increase.
If you wish to discuss the matter, please phone me on…………………
Landlord / Agent* …………………………………………..
Delivered by mail / by hand into letterbox / by hand to tenant.*
* Cross out that which doesn’t apply.
Good day, Andrew Murray here from Apartment Specialists talking about how much notice you need to give to increase the rent for your tenant. Now, very quickly, it’s 60 days notice, and that’s for a rental increase. It has to be given in a written format, or it’s given to them in a physical format. Which is typed or hand-written and delivered to them.
You can not increase the rent any earlier than the 180 days before a periodic tenancy is signed. it’s 180 days from when a fixed term tenancy is signed. You can only do it in a fixed term tenancy if in that fixed term tenancy are clauses or provisions saying that you can. Update the rent with the market rent or put it up after a certain period. The most common in a fixed term tenancy is six months and after six months in a fixed terms tenancy, a rent review can take place.
Now, I hope that that helps and provides the information for you to see what you have to give to the tenant to notify them of a rental increase.
Andrew Murray, Apartment Specialists.
If you have any questions, flick me an email at firstname.lastname@example.org or call +6421 424 892 and I’ll be happy to answer your queries.
It is very important that you rent out your property at the right time of the year. If not you’re are going to get lower rent and may have time when your property is vacant.
The worst time to rent out your apartment is from the end of October through to around mid January. This is due to may university students leaving for the end of the year and may overseas tenets go home for this period. Another factor to consider is that many people make change at the end of a year in New Zealand and the start with their new venture at the beginning of the year. This shift often means there is a lot on the market and many apartments are vacant.
April through to September months are okay, this means the rent you will receive will not be peak but will be fair. The key consideration to take into signing a rental agreement in this time, is when will it finish.
To try and get your renters to take vacancy is the green period is to use your tenancy signing period to your advantage.
You may put your tenants in November into a three-month tenancy. If it is in July, then put them into a one, two, three, four, five, six-month tenancy. This means it is coming up in this peak period. That way you can raise the rent, or if they decide to leave, you can put it on the market in the peak period.
If you rent your apartment in February and the tenant only wants a six-month period or a nine-month period? If it is nine months, then you must refuse it. If it is six months, then they should take it. In July, you may want to get another six-month period so it comes back into February. It is really important that you try to align your tenancies in this crucial time where you are going to get maximum rent because there is maximum demand.
Good day, Andrew Murray here from the apartment specialists talking about when is it the best time of the year to rent your apartment? If your apartment is out of sync, or your tenancy is coming up at a time, then it is not the best time of the year. How do you get it to come up at that time?
Let us start where you have got over 20,000 apartments in the Auckland CBD, where at least 50% of them are tenanted. That is 50% of these apartments are owned by investors and are rented out to people. It is very important to rent out your apartment at the right time. If not, you are going to get lower rent. You are going to have vacancies and you are not going to get the good return. You are looking for the most income and it is going to make it difficult.
First of all you can see that there is a circle in front of you with the months of the year. I am going to go through explaining why this is the best times and the not so good times to be renting your apartment. I am also going to talk about explaining how to get your apartment to come up in that time and what you should be doing.
As you can see in front of us, we have got January, February, March through to December. Let us start with the worst time. Okay? I will put that in red from October through until early January, or probably towards mid-January. Basically, from about October, all of the university students go home. A lot of English speaking students from overseas or foreign students start going home, and their courses start finishing.
You have a lot of people starting to change careers towards the end of the year. People start making changes at this time, and the reason why is because Auckland has its summer during December, January, February, and March period. And this is when you have your huge holiday. If you are going to make a change, then you are going to be doing it in this period. Simply because a lot of people move out.
This is the worst time to have your apartment come up for rent, because you have got a lot of people moving out. People are not looking for apartments especially in November/December. You are likely to have vacancy periods where there are just more apartments on the market than needed.
Now, here we move into the complete opposite. When is it the best time? And it is simply the opposite reason.
As most of January, February, and March this is where people come into Auckland. This is when people are starting new jobs. This is where the university year starts. So this is where it is very hot. There are not enough apartments in Auckland and this is where the rents get driven up extremely high. So it is really important that your apartment is coming up for either renewal of a tenancy or coming up to be rented during this period.
As you can see the rest of the year for April through September, I have put in an orange or a tan color. This is because it is okay and it is not bad to be renting your apartment in this period. You are not going to get your peak rent, but it is not going to have that huge vacancy periods. You will get a good, solid rent. So, the key thing here is what people need to understand is if you have got a tenancy that is coming up in May. If you have got a tenancy that is finishing in November.
How do you get it to be coming up in this crucial green period? You use your tenancy, and you may put your tenants in November into a three month tenancy. If it is in July, then put them into a one, two, three, four, five, six month tenancy. This means it is coming up in this peak period. That way you can raise the rent, or if they decide to leave, you can put it on the market in the peak period.
Also, if you rent your apartment in February, what if the tenant only wants a six month period or a nine month period? If it is nine months, then you must refuse it. If it is six months then they should take it. In July, you may want to get another six month period so it comes back into February. It is really important that you try to align your tenancies in this crucial time where you are going to get maximum rent because there is maximum demand.
Now I hope that helps. Feel free to fire me an email if you want to ask any more questions. Anyway, Andrew Murray from the apartment specialists and talk to you soon.
An income investor’s main priority is to gain neon from their purchase. If this is your aim, you are often looking at smaller apartments that are generally smaller than 50sqm. And ideally you are trying to find something that is 40sqm, this is due to bank lending. The smaller the apartment you purchase as an investment, the higher the return. Having several investment apartments can allow you more freedom to free up cash without having all your eggs in one basket. When looking at what criteria is necessary for these apartments, size is key and carparks and extra amenities within the building are not.
Buyer type number one. An investor. You are an investor and your main focus is income. When I mean income, it is income minus expenses. Your major concerns are the rent you are receiving and the body corporate fees, the rates and any other outgoings. Now, if this is what your aim is then capital gain is not as must of a focus. Generally, you are looking at smaller apartments and you are going to be looking, in most cases, below 50 square metres.
Yes, there are some odd cases where you will have a large apartment with lots of rooms in them. But it is often harder to find tenants because you are going to have to have multi-tenancies or find a group of tenants that all want to live together. Generally speaking, you can say your criteria is below 50 square metres and ideally; the highest return is below 40 square metres.
The reason for this is because of bank lending. There are two major banks that will lend at 80 percent on apartments of 40 square metres and above. All the rest are a lot higher. So, if you are below 40 square metres, that takes out all your other occupiers. That lower demographic who are buying to live and cannot afford it. This means most of the owners of those apartments are investors.
The apartments have not risen emotionally, if you know what I mean. An emotional purchaser is what pushes the prices up and so you will be looking at stock below 40 square metres. But you will be looking at doing it on a 50 percent deposit.
I will give you a bit of a story, this is what I did for my parents. My parents had a house, one of their houses that was $700,000, approximately. Dad was renting it out per room and getting a reasonable income about $1000 a week rent. Yet, the return was horrible. I said, “Dad, what are you doing? Sell, you are not concerned.”
He is not concerned about capital gain and the only person that is going to benefit from capital gain is me. And I am not looking for that. He is as fit as a fiddle, anyway. And, so I said, “Dad, sell them. We will go and buy some apartments. We will get three apartments and we will rent them all out, and I guarantee I will double your income, or your net return.” That’s what we did.
We went and bought three apartments for about 200 odd thousand dollars, furnished them all and rented it and now he is getting double the income. The great thing now is he has got six that are freehold, just for income and that is his retirement paid for. Every time he wants an injection of cash, he just sells one of them because all his eggs are not in one basket.
In a commercial type arrangement where you have got one large property, with a great return, but you have got to find a tenant. That is one type of buyer.
Just to recap on that, you should start that small. Reasonably large body corporate fees, you should be looking into long-term maintenance plan and location. Car parks are something that are not necessary, because if you are looking generally in the middle of the CBD.
What a car park does is lower your return legally, because you pay a higher body corporate fee and you do not get a very good return for the added cost of the car park and that narrows your criteria.
Now, the next one we are talking about is, you are an investor but you are probably a bit younger. In most cases and your main concern is capital gain with income being secondary.