How can I pay off my investment property sooner? Here are some tips to help you boost your investment property equity quickly:
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The following advice is of a general nature only and intended as a broad guide. The advice should not be regarded as legal, financial or real estate advice. You should make your own inquiries and obtain independent professional advice tailored to your specific circumstances before making any legal, financial or real estate decisions. Click here for full Terms of Use.

Who manages a commercial property?

Commercial real estate requires ongoing maintenance and management. Some landlords choose to manage their own property.  Other owners engage the services of a commercial real estate agent or property manager to take care of their investment. Investors who choose to manage their own commercial property must be prepared to take on all responsibilities involved, such as organising and overseeing maintenance and repairs, regular cleaning, property inspections and rent collection.

While standard commercial property lease agreements are used in New Zealand (such as one prepared by the Auckland District Law Society), variations to these leases are also common. The lease agreement will set out the obligations of the tenant and the landlord for rental payments and frequencies, and items such as maintenance and repairs. Typically, a landlord does not have to repair anything unless it is specifically stated in the lease agreement. Tenants are not usually liable for standard wear and tear, but they may be liable for certain regular maintenance expenses (such as redecorating).  

It is vital that all landlords who manage their own commercial real estate are completely familiar with the legislation governing commercial real estate lease tenancies. Contact your local First National Commercial real estate agent for independent advice, or to engage one of our commercial property managers.

How should I choose a real estate agent to lease my holiday home?

The difference between having an empty holiday home and an occupied one will often come down to having an experienced, professional property management team working on your behalf.  When selecting a real estate agent or property manager to look after your holiday home investment, look for a strong track record of experience in holiday letting, combined with an extensive knowledge of the local rental market. 

First National Real Estate property managers are highly experienced experts.  Once engaged, your agent will draw up a written Property Management agreement with you.  This Agreement will outline everything the agent will be responsible for, what they will need to get in touch with you about, and anything else related to your overall relationship. Items that should be specifically included in the Agreement are:
  • The Property Manager’s fees or commission.
  • Reporting frequency and what needs to be included in each report.
  • Inspection frequency - e.g. how often they will inspect the property.
  • Details of how the property will be marketed (and allowed budgets).
  • Handling of bond lodgement, bond refunds and payment of rent.
  • Tenant screening and selection criteria.
  • Processes for dealing with complaints, rent arrears or other problems.
  • Processes for reviewing the rental price with potential or existing tenants.
  • Procedures for handling maintenance – both routine and extraordinary.

How can I avoid overpaying for my investment property?

If you are in any doubt about the price you're about to pay for a property, stop.  Engage whatever real estate research or valuations are required to give you (and your lenders) complete peace of mind over the price being paid.
  • There are a number of checks and reports you can have carried out on the property, including a Land Information Memorandum (LIM) report, a Builders Report, a Title Search and a Valuation.
  • If you are in negotiations to buy, you can make your offer conditional on a satisfactory outcome from any or all of these reports.
  • The total cost of all four reports is typically between $1000 and $2000.  House and land sizes and location of the property can influence these costs.
  • Do your own due diligence on the property and the local area by researching it thoroughly and finding out how much nearby properties are selling for.
  • If there are any auctions in the area around the time you are selling, attend these to see what price is reached and how much demand there is.  This will help you to further establish a true market price (range) for your property.
  • Look up recent sales in the area using real estate agent’s websites.  Contact your First National Real Estate agent for any further assistance you require.  They will know the local market intimately and are well placed to help you.

Do I need landlord insurance? What does it cover?

Landlord Insurance protects property investors from a range of events that might impact on their property value, or cause disruptions in rental income. This type of insurance typically covers items such as the property itself (for fire, flood, theft), along with unexpected repairs, damage done to the property by accident or by your tenants, and loss of rent if your tenants stop paying or you are forced to evict them.  Many policies also cover accidental damage caused to others on your property.

Landlord Insurance is advised for all investors, to minimise your financial risks.

As a landlord of a holiday home, what services should I be supplying to my tenants?

All tenants must be provided with the keys to your bach or holiday home. Landlords should also specify (in writing) the services and facilities, if any, that are included in the rental price. Some commonly provided services include:
  • Electricity, gas, water and local phone calls. 
  • Cleaning services.
  • Gardening.
  • Sky TV.
  • Broadband internet.
  • Laundry services.
While some customers enjoy a traditional and basic kiwi bach experience, other guests (especially from overseas) may be expecting more high-end facilities such as:
  • Modern kitchens and bathrooms.
  • Quality furniture and soft furnishings.
  • Luxury sheets, towels, and pillows.
  • Contemporary appliances (Flat screen TVs, computer games, modern kitchen and laundry appliances).
  • Adequate air conditioning and heating systems / pumps.
  • Outdoor dining and cooking areas / barbecues.
If your holiday home has these features, it’s a good idea to advertise them prominently.  These features may persuade tenants to choose your accommodation over other properties, or to pay a higher price to rent your accommodation.

What costs should I expect from my commercial property investment?

The costs associated with buying commercial property in New Zealand are relatively low due to the absence of stamp duty. There are some costs to be considered in addition to the purchase price and ongoing maintenance costs, such as:
  • Loan application fee
  • Conveyancing costs and other legal fees
  • Building inspection costs
  • Land Information Memorandum (LIM) report
  • Registered valuation report
  • Council rates
  • Property management fees
  • Real estate agents’ fees
Your First National Commercial real estate agent can help you calculate these costs.

How do I determine an appropriate, competitive rent for my commercial property?

To maintain good occupancy rates in your commercial property, you must offer rents that are competitive with other similar commercial properties in the area.  If you are managing your own property, you should undertake a comparative market analysis that compares your commercial property with others of a similar size, type and location. Note that getting information about the rents charged by other landlords, or their internal building improvements, may be difficult to obtain.

Engaging an experienced commercial property manager is a great idea.  With their years of experience, they can provide you with a realistic market analysis quickly. They can inspect your property and compare it with similar commercial or industrial properties under their management.  A good commercial property manager will also be able to help you set a rent that will make sure your property is leased at the earliest possible opportunity, whilst also maximising your investment return.

How can I make sure tenants don’t do any damage to my investment property?

Make sure that you or your property manager conduct a thorough review of the property before each tenant moves in. Complete a Condition Report outlining any existing damage, marks, or signs of wear and tear on the inside and outside of the property. Complete an Inventory Report detailing all furniture, appliances, cutlery, crockery and other items provided with the property, along with their condition.

The better the Condition & Inventory Reports are prepared, the better the outcome for both parties at the end of the tenancy.  Some landlords take photographs to prove the condition of certain items, and attach these to the Agreement. Both of these reports should be signed by the landlord and the tenant.

Inform your tenants that you will be inspecting the property again at the end of the tenancy. This should encourage them to take care of your property while they are living there. Let them know that if they do happen to damage something, they should contact you.  It's easier to work something out together during the tenancy, rather than sending the tenants a bill once they’ve left. It is usual for landlords to cover minor expenses (such as the odd broken plate) or fair wear and tear themselves. For more significant damage, the occupant will be responsible.

Taking a bond at the beginning of the tenancy offers landlords some protection.

How much can I borrow to fund my investment?

Ideally, you should arrange your finances before you start searching for an investment property. This will let you know exactly how much you can spend.  The amount you are able to borrow depends on a number of factors, including: 
  • Your annual after tax income.
  • Your monthly expenses.
  • The type of loan and current interest rates.
  • Repayment type (principal or principal and interest).
  • The loan term (number of years to pay the loan back).
  • Estimated repayments.
Visit the website of any major bank in New Zealand to find a loan calculator you can use. Your lending institution should be able to give you a more detailed outline and / or a pre-approval on your borrowing capacity, which is usually valid for three months. 

How much rental income can I earn per week from my investment property?

Rental prices are highly individual and will be decided by the type of property you have, the number of bedrooms or offices, and the area the property is located in.

Our First National Real Estate agents can give you an estimated rental price through a free, no-obligation Rental Appraisal.  With over 400 offices around Australia & New Zealand, we've got agent coverage in your area.  Many First National Real Estate offices also offer a property management service should you require this.
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