Hello,
Welcome
to the sixteenth edition of the West Auckland monthly Residential Landlords
Newsletter.
I am a
landlord myself and have been for over 30 years. I have recently brought more rental
investments in West Auckland and another in Millwater, Silverdale. I currently
own rental properties in South Auckland, the North Shore and West Auckland.
Being a high preforming Real Estate Agent (top 1% in New Zealand) for over 26
years and always working in West Auckland I know the real estate market and the
rental market very well.
In this
and future newsletters I hope to provide ongoing up to date information
relevant to landlords who own rental properties in West Auckland.
Regular
features will include:
·
Current
sale prices
·
Current
mortgage rates
·
Current
rents
·
A
monthly suburb spotlight review
·
A
relevant feature article each month
I hope
you will find it useful. I am available for free advice and opinion on any
residential or lifestyle real estate matter.
Sale Prices
|
|||
Suburb
|
Median selling price Nov 2015
|
No sold
|
Days to sell
|
Titirangi
|
$800,000
|
29
|
33
|
Green Bay
|
$807,000
|
4
|
31
|
West Harbour
|
$1,060,000
|
17
|
34
|
Glendene
|
$600,200
|
9
|
40
|
Henderson
|
$713,000
|
61
|
30
|
Hobsonville
|
$832,500
|
8
|
51
|
Massey
|
$642,500
|
26
|
28
|
Ranui
|
$640,000
|
21
|
35
|
Sunnyvale
|
$611,250
|
4
|
31
|
Swanson
|
$700,000
|
11
|
34
|
Te Atatu Peninsula
|
$751,000
|
25
|
26
|
Te Atatu South
|
$720,000
|
19
|
28
|
Glen Eden
|
$730,000
|
39
|
25
|
New Lynn
|
$650,000
|
32
|
27
|
Kelston
|
$690,000
|
11
|
22
|
Oratia
|
$1,029,000
|
4
|
33
|
Source REINZ
Current Mortgage Rates (18/12/2015)
|
|||||
Float
|
1 yr fixed
|
2 yr fixed
|
3 yr fixed
|
5 yr fixed
|
|
ANZ
|
5.74%
|
4.35%
|
4.49%
|
5.10%
|
5.35%
|
ASB
|
5.75%
|
4.39%
|
4.49%
|
4.49%
|
5.09%
|
BNZ
|
5.79%
|
4.35%
|
4.39%
|
5.19%
|
5.35%
|
Westpac
|
5.85%
|
4.39%
|
4.24%
|
4.65%
|
5.35%
|
Kiwi Bank
|
5.65%
|
4.49%
|
4.49%
|
4.85%
|
5.35%
|
Best of other lenders
|
5.59%
|
3.99%
|
4.24%
|
4.49%
|
5.09%
|
Source
– J Goodrum – Internet search
|
Current Rents
|
|||||
1st June - 30th Nov
15
|
|||||
Glen Eden
|
Average Rent
|
Bonds Paid
|
Royal Heights/Massey
|
||
2 brm apartment
|
$286.00
|
5
|
1 brm flat
|
$285.00
|
10
|
2 brm flat
|
$350.00
|
15
|
2 brm flat
|
$360.00
|
13
|
2 brm house
|
$365.00
|
25
|
2 brm house
|
$390.00
|
22
|
3 brm house
|
$450.00
|
128
|
3 brm house
|
$450.00
|
155
|
4 brm house
|
$550.00
|
21
|
4 brm house
|
$550.00
|
44
|
5+ brm house
|
$495.00
|
5
|
5+ brm house
|
$610.00
|
21
|
Glendene
|
Te Atatu South
|
||||
1 brm flat
|
$295.00
|
8
|
1 brm flat
|
$260.00
|
6
|
2 brm flat
|
$370.00
|
19
|
2 brm flat
|
$350.00
|
15
|
2 brm house
|
$390.00
|
19
|
2 brm house
|
$395.00
|
23
|
3 brm house
|
$460.00
|
60
|
3 brm house
|
$465.00
|
47
|
4 brm house
|
$545.00
|
14
|
4 brm house
|
$550.00
|
15
|
Henderson
|
5+ brm house
|
$690.00
|
5
|
||
1 brm apartment
|
$300.00
|
5
|
Te Atatu Peninsula
|
||
2 brm apartment
|
$380.00
|
7
|
2 brm apartment
|
$455.00
|
6
|
1 brm flat
|
$295.00
|
15
|
1 brm flat
|
$320.00
|
5
|
2 brm flat
|
$370.00
|
48
|
2 brm flat
|
$370.00
|
12
|
3 brm flat
|
$387.00
|
8
|
2 brm house
|
$402.00
|
16
|
1 brm house
|
$330.00
|
11
|
3 brm house
|
$485.00
|
81
|
2 brm house
|
$392.00
|
56
|
4 brm house
|
$585.00
|
18
|
3 brm house
|
$450.00
|
236
|
Titirangi
|
||
4 brm house
|
$560.00
|
75
|
1 brm flat
|
$295.00
|
23
|
5+ brm house
|
$630.00
|
19
|
2 brm flat
|
$370.00
|
10
|
Kelston
|
1 brm house
|
$312.00
|
6
|
||
1 brm apartment
|
$290.00
|
24
|
2 brm house
|
$400.00
|
31
|
1 brm flat
|
$275.00
|
12
|
3 brm house
|
$500.00
|
63
|
2 brm flat
|
$330.00
|
14
|
4 brm house
|
$580.00
|
26
|
1 brm house
|
$292.00
|
6
|
5+ brm house
|
$650.00
|
5
|
2 brm house
|
$375.00
|
11
|
West Harbour
|
||
3 brm house
|
$450.00
|
80
|
1 brm flat
|
$300.00
|
11
|
4 brm house
|
$510.00
|
16
|
2 brm house
|
$397.00
|
20
|
New Lynn
|
3 brm house
|
$492.00
|
96
|
||
1 brm apartment
|
$320.00
|
19
|
4 brm house
|
$590.00
|
37
|
2 brm apartment
|
$400.00
|
11
|
5+ brm house
|
$730.00
|
12
|
1 brm flat
|
$300.00
|
16
|
Western Beaches/Rural
|
||
2 brm flat
|
$380.00
|
64
|
1 brm flat
|
$287.00
|
10
|
3 brm flat
|
$445.00
|
10
|
1 brm house
|
$345.00
|
6
|
1 brm house
|
$315.00
|
8
|
2 brm house
|
$380.00
|
48
|
2 brm house
|
$400.00
|
40
|
3 brm house
|
$472.00
|
56
|
3 brm house
|
$470.00
|
99
|
4 brm house
|
$500.00
|
17
|
4 brm house
|
$535.00
|
14
|
5+ brm house
|
$572.00
|
6
|
Ranui
|
|||||
2 brm flat
|
$330.00
|
6
|
|||
2 brm house
|
$365.00
|
8
|
|||
3 brm house
|
$440.00
|
92
|
|||
4 brm house
|
$477.00
|
12
|
|||
|
|||
West Harbour
|
|||
Date
|
Median selling price
|
5 year gain %
|
|
Nov 1995
|
$148,000.00
|
-
|
|
Nov 2000
|
$267,000.00
|
80.4%
|
|
Nov 2005
|
$440,000.00
|
64.8%
|
|
Nov 2010
|
$509,965.00
|
15.9%
|
|
Nov 2015
|
$1,060,000.00
|
107.9%
|
|
Over 20 years
|
616.2%
|
||
|
|||
Sunnyvales
|
|||
Date
|
Median selling price
|
5 year gain %
|
|
Nov 1995
|
$155,000.00
|
-
|
|
Nov 2000
|
$142,525.00
|
- 8.1%
|
|
Nov 2005
|
$418,000.00
|
193.3%
|
|
Nov 2010
|
$343,250.00
|
- 17.9%
|
|
Nov 2015
|
$611,250.00
|
78.1%
|
|
Over 20 years
|
294.4%
|
||
Source
NZ department of statistics
Selling your Rental
Property
When
selling your rental property, there are a lot of do and don’ts involved.
Selling
your rental property is also quite different to selling the home you are living
in. Some years ago I wrote an article “The nine costly mistakes house sellers
make and how to avoid them”. I will reproduce that article here and then add to
it some of the extra considerations needed when selling your rental property.
The
Nine Costly Mistakes
House
Sellers Make and
How to
Avoid Them
Costly
Mistake 1 – Not preparing and presenting the house and garden properly for sale
First
impressions are very important. A potential buyer can be put off by a property
that is not clean and tidy with a tidy garden. Remove clutter. No dirty washing
up in the kitchen, no tea towels hanging on the oven door. Take all the clutter
off the fridge door, which is held on by magnets. Do any minor repairs before
presenting it for sale. Fix sticking doors, loose door handles, dripping
gutters, etc. They either put buyers off or reduce the value of the house in
their eyes.
If the
house tends to be dark (shadowed by trees etc.) trim back the branches of
trees, open curtains as wide as possible to maximise daylight, leave bathroom
and WC doors open so light from their windows can help lighten up the passage
ways. Fresh flowers in a vase on the dining room table always look good. Have
the exterior of the house washed down if it is at all dull. The cost of around
$100-$150 is money well spent if you don’t want to do it yourself. Keep
flowerbeds and lawns as tidy as you can.
If there
is not much parking on the property, move your vehicle away into the garage or
off the property altogether. This allows the buyer/real estate agents car to
drive onto the property, not highlighting that parking with more than one
vehicle on the property may be a problem.
Smoking
and pet can introduce odours, which the smoker and pet owner don’t notice but
potential buyers will. It may be inconvenient but worth thousands of dollars,
so keep pets out of the house when buyers/agents come to inspect. Have a good
air freshener plugged in or spray before inspections. Don’t try to mask odours
with strong smelling fresheners, as it is a dead giveaway you are hiding a bad
odour. Smoke outside (if you can put up with it) until you are sold.
Costly
Mistake 2 – Pricing the house too low
It
seems obvious, but does happen. When the market is moving quickly and prices
are rising, it’s all too easy to sell below what could, and should have been
achieved. In 2003 and 2004, prices rose by more than 12% per year in many
cities in New Zealand. 2013 in Auckland, showed an average rise of 10% with
some suburbs even higher than that. That’s a 1% rise per month. Suppose you
determined the value of your home based on all the recent sales over the last
3-6 months in your area. If on average, most of those sales were 3 or more
months ago, then yours should be worth an extra 3% or more today. 3% doesn’t
sound like much until you work it out:
On a:
|
$300,000
house
|
x 3%
|
=
$9,000
|
$400,000
house
|
x 3%
|
=
$12,000
|
|
$500,000
house
|
x 3%
|
=
$15,000
|
|
$1,000,000
house
|
x 3%
|
=
$30,000
|
Costly
Mistake 3 – Choosing the wrong Real Estate Agent or too many agents
There
is strength in numbers! Two is a crowd! Which one is it? Well, choosing a
well-known real estate agency over a little known one makes good sense. Most of
the well-known brands have offices throughout the country and that’s a bonus
because buyers may be transferring to your town from another part of the
country. Two is a crowd. If you employ more than one agent to sell your home,
neither will be motivated just as strongly as one. Only one is going to get a
commission, the other will get nothing. A 50% chance of getting nothing does
not motivate an agent too much.
All
sales people are not equal. In every agency, there are agents who are selling
lots of houses and others looking for another job because they can’t make a
living. Since you will be paying the same commission at any given agency, make
sure you choose the sales person who is selling lots of property. Make sure
they prove they are highly successful at selling and getting top market prices.
Talk is cheap, a proven record of success is what you want.
Make
them show you the proof. Oh – and don’t fall into the trap of listing with an
agent because they
tell you the highest price – this is one of the most common ploys of some agents, called “buying the listing”. Once you have listed, they soon begin telling you its too high and you need to reduce the price. You may now be stuck with a dishonest agent or at least a poor ability agent not able to get you the best possible price.
tell you the highest price – this is one of the most common ploys of some agents, called “buying the listing”. Once you have listed, they soon begin telling you its too high and you need to reduce the price. You may now be stuck with a dishonest agent or at least a poor ability agent not able to get you the best possible price.
Costly
Mistake 4 – Pricing too high at the start
We can
always come down in price later can’t we? Yes, but the best possible
opportunity to sell for the best price is when a house first comes onto the
market. At this very time, there is a pool of buyers out looking for their next
home. This pool consists of people who have perhaps just arrived from overseas
with the money to buy, people who have sold their home and need to buy before
they move out and renters who have saved the deposit and don’t want to pay any
more rent. They are all keen and want to buy NOW.
If
they see your house or is shown it by an agent and the price is too high
(compared with others they have seen at a better price) they will reject yours
and buy another. This pool of buyers will dry up in a couple of weeks (they
will have bought) and all that is left is the trickle of buyers new to the
market. The longer a house is on the market, the harder it is to get the best
price. Buyers will ask (or think), why has it been on the market so long?
What’s wrong with it? Are the sellers getting desperate? For those reasons,
offers are usually low offers. Don’t under price, but don’t overprice it at the
start.
Costly
Mistake 5 – Trying to sell it yourself
No
one wants to pay a commission. The money is better in your bank account than
the agents. Very True. The why do over 90% of people sell through agents? It’s
not just because it takes time, money and effort, but because it often saves
money – Yes, saves money despite the commission. Most average Kiwi’s don’t want
the embarrassment of “negotiating” with an owner, so unless they are keen to
pay the asking price (Yeah Right!), they don’t negotiate – in other words,
don’t make an offer at all.
So
it’s the non-average Kiwi, the salesman, the wheeler-dealers who negotiate with
private sellers. These are the very people who have no intention of paying asking
price and are not in the least bit embarrassed by making really low offers –
deducting the real estate commission they know you are not paying of course –
and a lot more besides. No it’s the average Kiwi who only buys a house every 7
– 10 years who will pay the best price and they would rather deal through an
agent. On top of that, buyers are mostly aware that they have no
protection from the Fair Trading Act with a private sale – the private seller is not a trader. With a real estate agency, they are covered.
protection from the Fair Trading Act with a private sale – the private seller is not a trader. With a real estate agency, they are covered.
Many
of those who sold privately THINK they did well, saving a real estate
commission. In many cases, selling privately instead of through an agent meant
they missed many of the best buyers who would have paid far more than the saved
commission. Perhaps the vast majority who sell through an agent know something
private sellers don’t. Oh, by the way, paying PRIVATE SALE COMPANIES to provide
private sellers with For Sale signs and Open Home signs, flyers and the likes,
only adds to the costly mistake. You still mostly get to negotiate with the
wheeler-dealers.
Costly
Mistake 6 – Not having all Council requirements and permits in place
Buyers
today are a lot more careful than 10 years ago. It’s not unusual today for a
buyer to want a LIM report (Land Information Memorandum) and a builder’s
inspection report. With local authorities getting tougher on
un-permitted building work and the leaky building horror stories, it’s not surprising is it? Imagine you have sold your house but the contract has a condition in it, wanting a LIM report. You have negotiated (through an agent) a good price. If the buyer, through a LIM report, finds that some work has not been council permitted, the sale may be lost. The buyer may still want to buy the property, but may want to re-negotiate a lower price and the seller is then in a very weak negotiating position.
un-permitted building work and the leaky building horror stories, it’s not surprising is it? Imagine you have sold your house but the contract has a condition in it, wanting a LIM report. You have negotiated (through an agent) a good price. If the buyer, through a LIM report, finds that some work has not been council permitted, the sale may be lost. The buyer may still want to buy the property, but may want to re-negotiate a lower price and the seller is then in a very weak negotiating position.
Check
all permits are in place before you go to market. If they are not, have the
council inspect and issue a Safe and Sanitary Certificate, which will overcome
the problem. Most lawyers will advise their purchasers not to proceed with a
sale that has un-permitted work done on a house. Get your “HOUSE IN ORDER” at
the start, it will save you money in the long run.
Costly
Mistake 7 – Not marketing and promoting your home adequately
It
is vital that as many prospective purchasers as possible are aware that your
house is for sale. A sign at the gate, a newspaper ad and a listing on TradeMe,
alongside 15,000 others in Auckland is not enough when your competitors are
doing much more.
Make
Make
sure your agent is fully promoting your house by:
Internet
advertising For Sale Sign
Open
Home Open Homes Brochures
Flyers
in letterboxes Mail outs to buyer database
Magazine
advertising Newsletter
advertising
Networking
with other agents Telemarketing
Real
Estate office window advertising
And
so on and so on. The days of “we don’t want a sign outside and no open homes
because we don’t want the neighbours to know we are selling” will cost you
money on the sale. There should be no half measures if you want to sell for the
best possible price. Have your house marketed and promoted to the max.
Costly
Mistake 8 – Being too restrictive on inspections
We
live in a busy world and even for an important task such as finding a new
house, some purchasers have very limited time. It is important therefore to be
as flexible as possible when making your home available for inspections. The
most qualified buyers are of course working and at work during the week. These
people can usually only view houses after work in the evening. If a seller
doesn’t allow inspections after 6:00pm for example, and others do, guess which
house will attract more buyers and therefore, potentially a better price.
Again,
it may be somewhat inconvenient at times, but being flexible (and often at
short notice too) can pay handsomely.
Costly
Mistake 9 – Turning down good early offers
The
best opportunity to get the highest price is when the property in new to the
market. The big pool of buyers are out there, and the buyers are searching for
a possibly suitable property that they have not seen. An early offer which is a
good offer (close to asking price, but perhaps not full asking price) is often
turned down by a vendor on the basis “we have only just put it up for sale, so
let’s wait a little longer because if we can a good offer like this almost
immediately we should be able to get more still by waiting for others to see
it”.
The
problem is, the early offer is often from the keenest buyer and if their offer
is turned down, they become even keener on the next suitable property they find
– and buy it. There are numerous stories of people who turned down a very good
offer and despite waiting and marketing, and waiting and marketing, would never
get as much again.
Remember,
the value of a property is not determined by how much the seller needs to get,
or how much the seller wants, or how much the agent or valuer say’s its
worth. The market determines the price
but the price can be influenced by the marketing and negotiating abilities of a
skilful real estate salesperson.
As well
as these nine major factors, a rental property sale has other factors to
consider.
1.
The
Tenant
2. Rental Income
3.
Legal
Obligations
1. The Tenant
Co-operation
is essential if the process is to go smoothly so that efficient marketing is
possible. There are a lot of do’s and don’ts here. Perhaps too many to explain
in this article.
Suffice
to say that without the genuine co-operation of the tenant, access to show the
property to buyers, sometimes at inconvenient (to the tenant) times, the best
sale price is going to be difficult to achieve.
2. Rental Income
If a
satisfactory arrangement can be made with the tenant, then loss of rental due
to the tenant leaving before the sale can be avoided. There are many techniques
that an experienced agent can use to avoid loss of rent.
3. Legal Obligations
You may
be the owner of the property but if you don’t abide by your legal obligations
to the tenant it can cause you a lot of trouble and expense. There are many
examples of landlords being made to pay thousands of dollars for breaching
their tenants’ rights.
The
Residential Tenancy Act 1986 is weighted on the side of the tenant.- For
example if sold, the landlord has to give 42 days’ notice to the tenant, but
the tenant only needs to give 21 days’ notice top the landlord and so on.
Unless
you are very knowledgeable and experienced. Selling a rental property is best
left to the professional agent and will probably get you a better return anyway
than selling yourself.
Until
next time,
Best
wishes,
John Goodrum
Licensee
Agent REAA 2008
021945140, 09 838 8895
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