Property management 101
Question from John updated on 21st November 2016:
We are Auckland based and have an offer in on our first investment property on the Kapiti coast. What good advice can you give us in terms of our preparing for our first rental property - e.g: legal stuff, finding tenants asap after settlement, property management? Property manager/self management pros/cons?
Also, I believe water rates are included in owners rates rather than billed to the tenant - should we allow in the rent? What about excessive water usage?
Our expert Bernard Parker responded:
The first point I pick up from your question is that you are based in Auckland. For that reason you are not in a position to oversee your new investment in Kapiti. You would do very well to align yourself with a local property manager. Once the tenancy starts, ongoing monitoring through regular inspections and, informally, while driving past your property, all adds to the security that you will be looking for. When you do your pre-purchase inspection (or have your property manager do it for you) make sure that the power outlets are all working and that the alarm system (if any) is in working order.
Also, make sure that you receive all the keys upon settlement. It is amazing how many houses change hands, with only one copy of the front and back door keys handed over! Some vendors are happy to give a property manager a couple of viewing appointments prior to settlement, but it depends on the circumstances. In any case, advertising for a tenant should start immediately upon settlement (or earlier if possible).
Water charges are operative in the Kapiti Coast. The property owner is liable for paying all water charges to the local authority. Then, under the Residential Tenancies Act, the tenant is liable for the volumetric (metered) charges for the water they consume. That means that water meter readings should be taken at the start and end of tenancy and matched against the invoiced meter readings to get actual usage. The tenant is then invoiced by the property manager for their actual consumption, at the designated rate charged by the Kapiti Coast District Council.
This “user pays” mechanism encourages tenants and owner-occupiers alike to be economic with their water usage, and to report leaks where they see their metered usage is higher than expected. It’s a system that has been running for two years, and so far it has been a success.Bernard is principal of Quinovic – Kapiti-Mana. Quinovic's outstanding people and systems provide the most professional, effective and reliable residential property management service in the NZ market for over 30 years.