Are you starting out in property investment? Here are five things to ask yourself before becoming a landlord.
1. Are you up-to-date on all regulations, legislation and laws related to rental property?
As a landlord, it's important to understand the often complex legislative changes regarding rental properties, and ensure that you are kept up-to-date on these. You will need to ensure that your rental property is up to code, and make sure your paperwork and processes are in line with the law.
How much experience do you have in property management?
The learning curve for property management can be steep, and if you are a new landlord just starting out, learning as you go can potentially be an expensive exercise. You’ll need to think about the not insignificant personal investment, time and effort in building your knowledge of property management, whether through books, courses, mentors, etc.
2. Do you have the time necessary for property management?
Keeping accurate records, carrying out maintenance, finding and managing tenants, performing inspections, being on-call for enquiries from tenants, and making potential trips to the Tenancy Tribunal are all activities that can potentially cut into your days, nights and weekends. You’ll also need to factor in arranging time off work if something needs to be dealt with during business hours.
Are you prepared to sacrifice your free time to ensure that your rental property is running smoothly, and is it worth the effort and cost to you (i.e. taking leave from your job, or time spent with family)?
3. Do you live near your rental property?
Consider how easy it is for you to get to the property from where you live, as living further away will involve more time, cost and hassle when carrying out maintenance, performing inspections, meeting with tenants and so on. As a landlord, you will be on call 24/7 to your tenants should they need to contact you, as well as neighbours who may have concerns about the tenants’ behaviour - is this something you are comfortable with and able to fit into your lifestyle?
It’s also important to remember that, if you are out of New Zealand for more than 21 consecutive days, you must appoint an agent to manage your rental property in your absence or risk a penalty of $1,000.
4. Will you be able to keep a professional distance from your tenants?
Property management is different from other types of investment that it has a face, with real implications for the people who are living in your property.
If you get too friendly with your tenants, it can make it difficult for you to be firm on what is expected of them - e.g. rent payments on time, rent increases in line with market rates, and the treatment of your property.
When issues arise, do you think you could be the “bad cop” who chases down rent, listens to excuses, and if necessary, evict a family or a person who has genuinely fallen on hard times? Many of our landlords choose to enlist our property management services because they value having a third party manage this aspect of their investment.
5. Know when to call in the experts
Whether you work full time, new to property investment, have a large portfolio, or simply wish to have someone else take care of things, enlisting the services of a professional property management company can help save you money, effort, stress, and most importantly, time, as well as give you peace of mind that your investment is in good hands.
By Kiri Barfoot
Kiri Barfoot joined Barfoot & Thompson in 1991 in the Accounts department whilst studying for a commerce degree. She represents the third generation of the Barfoot family within the company.
With Barfoot & Thompson, you can be confident that your property will be managed with the utmost care.
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