First time landlord? David Kneebone, General Manager of Lodge City Rentals, shares his advice on stepping onto the property investment ladder.
At a final summer BBQ in the neighbourhood the other week, a fellow guest announced he and his family are moving across the ditch. I can see the attraction. I used to work in travel so know full well the lure of overseas experiences.
The family are excited, but the prospect of a new adventure is overshadowed slightly by their impending ‘to do’ list in the coming months. And the first question I got asked was how should they go about renting their house out?
Theirs is a family home in desirable Hamilton East so it would make for a great rental. My answer was naturally – hand it over to one of our property managers. They’ll sort it all out for you. But understandably, they wanted a little more information than that (though I still stand by my initial answer!).
Hamilton is a great city for landlords, so if you’re about to join the club here are seven things to consider as you prepare to turn your home into a rental:
1. Should we go it alone or use a property manager?
If you’re currently living in your home and want to turn it into a rental, the first step is thinking of your property differently. That can be hard given the emotional attachment you’ll have to your house, but you need to view it as an investment, and one that needs to be protected.
Our property managers are experienced in the rental market. They look at properties from a rental point of view, know what makes a good rental, and what type of rental income you could expect to get from it.
Get that expert guidance, because a property manager’s services don’t just stop there. They will find tenants, collect bond and rent, take care of maintenance, and make sure your property is returning the right rent.
Place your investment in the hands of a property manager and there’s nothing left for you to do – or worry about!
2. Should we get a meth test on the house?
It may seem an odd question. After all, you’ve been living in your home so you know there’s no sign of meth contamination. But we do recommend carrying out a test on your property before it becomes tenanted to give you a baseline report you can compare against future tests in between tenancies.
3. Should we leave a lawnmower and some garden tools in the shed?
At Lodge City Rentals, we require our tenants to keep properties neat and tidy, and this includes mowing the lawns. As a landlord, you aren’t required to supply a lawnmower, but if you have a spare one, you might consider leaving this behind to encourage tenants to regularly mow the lawns. After all, who can resist tackling the lawns on a Saturday morning?
If you use a property manager, they’ll carry out regular inspections to make sure the grounds are well maintained. And if they’re not, they’ll tell your tenants exactly what needs to be done to get the property up to standard.
4. Should we apply a fresh coat of paint in the house?
Many homes can be spruced up with a lick of paint or a bit of a tidy-up. After all, it’s unlikely you’ve let your family home go to complete rack and ruin.
Tidying up your property before it becomes a rental can help you attract the right tenants and the right rent. It might cost you a bit of time and money, but it is likely to pay off in the long run. Our property managers can advise you on whether a fresh coat of paint is required.
5. How long should we sign tenants up for?
Our standard tenancy agreements are for one year. If you require the tenants to vacate the property before the agreement is up (for example, if you sold the property), you need to give 90 days’ notice.
If you choose to manage your own property, you can download a residential tenancy agreement from the tenancy services website <https://www.tenancy.govt.nz/assets/Forms-templates/Residential-tenancy-agreement.pdf>. Otherwise, a property management company will take care of all the paperwork.
6. Do we need to insulate the house?
With the introduction of the Healthy Homes Bill, any new tenancy from 1 July 2019 must be either properly insulated or contain a modern heating source that can make the home warm and dry. As of 1 July 2024, all tenanted properties must meet these standards. Exactly what ‘properly insulated’ and ‘modern heating source’ means, we don’t know yet – the Government has yet to release the details.
So no, you aren’t legally obligated to insulate the house yet, but it’s not far away, so we recommend you start putting plans in place. Besides, providing warm, healthy, homes is the right thing to do. You can read more about the Healthy Homes Bill in our recent blog.
7. How do we know how much rent to charge?
Start with some market research. Look at other similar-sized properties in your neighbourhood to see what they rent for to get an idea of where your property might sit. The magic number needs to cover mortgage payments and costs, attract the right tenants, and be realistic for your market.
At Lodge City Rentals we advise our landlords on rental rates based on market research and stats. We also carry out regular rent reviews to make sure properties are returning the right rent.
Making your landlord role easy
I love being a landlord, particularly here in Hamilton. I’ve travelled the world – for work and pleasure – but truly believe there’s no better place to be then here on the banks of the Waikato River.
Hamilton is a great city to be a landlord in. It attracts a great range of tenants so I’m always encouraging people to join the club. And being a landlord is made so much easier with the help of a property manager.
If you’re thinking about becoming a landlord we can provide you with a free rent appraisal on your property and some advice along the way of how best to rent out your home.