You asked, we answered: A look back at some of our most popular advice
Now that we’re halfway through the year, it seems like the perfect time to sit back and take stock of what’s been a busy year (or three) in the rental and real estate industries.Here’s a look back at some of our most popular tips and nuggets of wisdom from the months and years gone by…Think of this as your all-in-one cheat sheet to wise property investment.
How can I quickly increase the value of my rental, and get good tenants?
As we’ve said many times before, renting a house out isn’t what it was 20 or 30 years ago. There wasn’t a lot of government regulation, and renters were typically short-term tenants often slugging it out through university or dossing in a share flat before buying a home of their own.
The typical renter has changed, with many wanting safe and secure long-term housing they can create a home in. And quite rightly too. So, we’re often asked, “How can I ensure my rental is up to scratch and attractive to quality renters?”
Basic renovations and upgrading of the most used spaces in houses is a good idea. Think a well-designed, open-plan kitchen with low maintenance materials and hard-wearing floors and countertops. A water-tight bathroom with good ventilation and mould-resistant paint, as well an effective source of heating will set you apart from other rentals on the market.
The outside matters too – consider some basic landscaping such as gravel and pavers to create a tidy outdoors area, and a bit of heat and drought-resistant grass. Low maintenance planting is best so your rental looks the part all through summer.
How can I best set myself up financially with investment property?
Know your loan-to-value ratio (LVR). The LVR is a critical part of a property investor’s toolkit, and it’s essential to “know your figure” if you’re looking to buy an investment property. The LVR is the amount of your loan compared to the value of your property, and most lenders like to set a borrowing limit of 65% (therefore requiring a 35% deposit or equity on an investment property). So, you’re in safe waters if, across your investment portfolio, you have at least 35% equity.
Get clued up on tax. In November 2015 the New Zealand property tax laws were updated to include the bright-line test on any residential properties bought and sold on within two years. It was originally intended to stop property speculators from flipping houses for profit and to take some of the heat out of the housing market. In early 2018, this rule was extended from two to five years. Similarly, if you purchased a property with the intention to sell it off for profit, then you’ll need to pay tax on that too.
The good news is that the current Labour led government have promised that they will not be introducing Capital Gains Tax in the foreseeable future.
Is the Government trying to control what I do with my rental property?
Not at all! There has been a lot of negative comment in the media on the government’s plans for tenancy law. We’ve always maintained that the Government is listening to both sides of the fence, and it’s worth remembering a lot of their initiatives reflect the changing face of renting in society – not everyone fancies living like a Dunedin student.
Tenants deserve warm, healthy homes. And better homes attract better tenants. The Healthy Homes Bill set out to ensure all homes, rental or otherwise, are fit for people to live in. This means that from 1 July this year, all rental homes need to be properly insulated (minimum of ceiling and floor) and have an effective, modern heating source. This has minimal effect on our valued owners as the vast majority of our homes under management meet these new standards anyway. Particularly now that we have virtually all the required insulations signed off.
An enhanced Residential Tenancies Act(RTA) actually benefits us all. Phil Twyford’s Residential Tenancies Amendment Bill is proposing a few things that might, on the face of it, seem like an attack on property owners – such as limiting landlords to one rent increase a year and abolishing letting fees. The reality is, most landlords increase rents annually anyway, often between tenancies to minimise disruption, and letting fees go on recouping some of the costs involved in securing great tenants – a cost that appears to have been absorbed in increased rents anyway.
And the meth contamination debacle… Well, let’s just say it was great to finally put an end to the hysteria out there, with the Government finally putting a line in the sand to say we should no longer be doing composite meth testing in rental properties and putting an end to the wasted dollars spent cleaning up “contaminated” homes.
What do I need to remember if selling a rental property?
Communication is key. If you wish to market the property without tenants , ensure you give 90 days’ written notice . If marketed with tenants in residence keep the lines of communication open during the sales process and respect the tenant’s right to restrict viewing access. An experience sales agent working conjunction with our property managers can make the process smooth and stress free for all parties.
Before you plan on selling, consider any taxes you might owe to calculate your bottom-line result. Remember the bright-line test: you’ll likely owe capital gains if you buy and sell within five years. However, there are exemptions, so understand what those are so you have the full picture.