Guide to Property Management Rent Arrears

How to get started in Property Management

Whether you’re a long time investor or starting out in property management; whether you have 1 property or multiple properties – you need to decide …more ›

FAQs from Landlords

Landlords frequently asked questions…more ›

Do I need a property manager?

Not everyone needs a property manager. The key question here should be what are you trying to achieve through property investment? If your goal is wealth creation then your time is best spent focusing on building your portfolio. We’ll then take care of finding tenants, organising the agreement, collection of the bond, maintaining the property, regular inspections, organising repairs, collecting the rent (and pursuing those who don’t pay) and raising the rent. And doing all this within the confines of the many laws which effect residential tenancies.

How much do you charge?

The management fee is charged only on the rents we collect for you. Lodge City Rentals fee is 8.5% + GST of the rent.

We collect the rent throughout the month and then transfer this money into your account at the beginning of each month. We also offer the option of a money transfer on the 15th of the month. In order for you to see the comings and goings in each month we provide you with a monthly statement.

How do you select tenants for my property?

Our size and the extensive marketing we undertake gives us a wide array of tenants. Each tenant is required to fill in a comprehensive application form and provide us details of their past letting history as well as identification. We undertake a number of checks on each tenant including a credit check, a reference check of past rental history and a check for prior tenancy tribunal history.

Who pays to advertise my property to let?

We do. We advertise extensively in the Waikato Times property section. We are represented on two different websites: www.lodgerentals.co.nz, and www.realestate.co.nz . Around 80% of our tenant enquiry results from our internet presence.

We advertise in the windows of both our high foot traffic branches in Hamilton East and the Central City.
We have information available at each of our 5 suburban sales branches in Flagstaff, Rototuna, Dinsdale, Hamilton East and the Central City.
We utilise highly visabile “To Let” signage where necessary.

What happens if a tenant misses a rent payment?

Each day we run an arrears report. It identifies who has missed a rent payment. We make contact to advise the tenant we have not received their rent.

A 10 day breach notice is most often sent if we do not receive the rent within 5 days of informing them that they have missed a payment. However, this is not always the most advantageous course of action for you.

If a tenant becomes more than 21 days in arrears we pursue them through Tenancy Services. This can, and is likely to include mediation. If this is unsuccessful we continue the process through the Tenancy Tribunal.

How often can rent be increased?

Under the Residential Tenancies Act we are prevented from increasing the rent more than once every 180 days or within the first 6 months of a tenancy starting. We are also required to give the tenant 60 days written notice of an increase.
Before each tenancy we carefully consider the rent and assess market conditions to determine that the rent we charge is in line with current trends.

How often do you inspect the property?

Once every six months we undertake a formal inspection of the property and report to you.

Can I accompany the property manager on an inspection?

We welcome landlords to inspect the property with the property manager if our scheduled inspection fits in with you.

What happens if something needs repairing?

Typically the tenant contacts their property manager to advise them of the problem. Depending on your instructions to us the property manger will contact you to seek instructions or if you have given us permission we will go right ahead and organise the maintenance. The property manager will contact one of our preferred contractors to complete repairs.

Our preferred contractors are specialists in their field of expertise and offer us preferential rates which we pass on to you. Once per year we compare the rates we are charged to ensure we are getting you the most cost effective solutions.

What happens if I decide to sell my property?

When you receive an offer your salesperson will guide you through the terms and conditions. It is important to consider you need to give at least 42 days notice before settlement if you are required to give vacant possession. Please contact your property manager prior to placing the property on the market so they can assist you in getting the details right.

Why Lodge City Rentals?

So why choose us to manage your property? We’ve got compelling reasons for you…more ›

As you understand that using a professional property manager is going to save you time and hassle. You believe that with that extra time you can focus on building your portfolio and your wealth.

We’re specialists in property management.

Lodge has been managing property for around 40 years and discovered in 1980 that it was not simply an adjunct to a real estate business but a specialty discipline. Lodge Rentals developed specialty systems for property management and today is renowned for their expertise in this area. In fact David Kneebone, Lodge General Manager, is a sought after key note speaker in property management systems and portfolio management.

Marketing Magic. We’re everywhere.

If you’re a prospective tenant you can’t help but notice us. That’s why we generate over 1400 tenant enquiries a month. Learn how we find tenants.

Reputation

The quality of our service can be measured by the quality of our property managers and support team, and what our clients say. We’ve collected more REINZ Awards of Excellence for Property Management than all other Waikato firms combined, testament to the strength of the training Lodge Property Managers receive. Hear what our clients think of our services.

Hamilton – It’s all we know.

We are parochial Hamiltonians. We know this city – we know where to invest in this city – we know why you should invest in this city. We bestow this passionate pride in the city within the care we give to your portfolio.

Peace of Mind

Rest easy and focus on the things that matter most to you. We’ll go about taking the hassle out of owning a portfolio and maintaining occupancy so you can concentrate on building your wealth. Find out how we resolve tenant disputes.

8 Point Written Service Guarantee

If you’re not totally satisfied we’ll refund your charge, that’s how confident we are that we can help.

The numbers tell the story.

Big really is better. It means we have greater tenant enquiry, can negotiate better rates with trades-people, give more comprehensive staff training, have better cover of a portfolio when a property manager is absent and have more marketing muscle to ensure you have higher occupancy rates. Understand our size and the advantages it brings.

How do our property managers find so many tenants?

Our property managers field around 1400 enquiries per month. This makes it easier for us to find the best possible tenant for your property ensuring the property spends as little time as possible without a tenant.…more ›

Selecting better tenants for your property

Our 5 step selection ensures we find the very best tenant for your property…more ›

Your rent is safe with us

Each year we collect over $40,000,000 in rent for Hamilton landlords.…more ›

Property Managers

Once let, the property will be managed day to day by your property manager…more ›

Communication

Initial consideration of the factors affecting your property can keep unnecessary communication at a minimum. As specialist property managers we tailor our communication to each individual landlord.…more ›

The numbers tell the story

Check out some of our impressive property management figures…more ›

Property Management Performance Guarantee

We 100% guarantee our property management performance.…more ›

Guide to Rent Arrears

A plan of action for missed rent payments…‹ less

Step 1 - Day 1

A phone call is made to the tenants to advise them that they have a missed payment and to further notify them that written notice will be issued immediately. This written notice includes thte property address, the tenants name, the date, the amoount in arrears and a clause giving the tenant 14 days to remedy the missed payment.

If the tenants confirm that they will pay the rent promptly they are reminded that it is not acceptable to have rent outstanding. The tenant is also advised that if the breach is not remedied as quickly as possible action may be taken to terminate the tenancy.

Step 2 - Day 3

A phone call or text message is made to remind the tenant of their obligations to bring their rent up to date.

Step 3 - Day 5

A second, more serious, letter is sent advising the tenant that an application to the Tenancy Tribunal may be made for termination of the tenancy within the next 24 hours as the rent remains unpaid .

Step 4 - Day 7 or 8

This is the day that the rent will now fall two weeks behind if it is not paid.

An application is lodged with the Tenancy Tribunal.

A phone call/text and written notice is made to the tenant to advise them that the application has been made.

Applications to the Tribunal for the recovery of rent arrears are made before the tenant gets two weeks in arrears. We avoid waiting for 10 day notices to expire as bonds will not cover rents by the time an application is made or we get to the Tenancy Tribunal.

If an application is made before the 14 day notice expires Tenancy Services will schedule a mediation for the earliest available time after the 14 days has expired. If the tenant remedies the missed payment before the mediation the application can be withdraw.

If notices go unanswered then a follow up notice with an application to the Tenancy Tribunal will be sent.

However, if a tenant is taken to the tribunal a third time then we recommend against negotiating with them and would request a termination of the tenancy. Our argument is that there is clearly a history of ongoing rent problems.

How we resolve tenant disputes

…more ›

Let us take the headaches out of owning a residential investment

Owning a residential investment shouldn’t mean spending your free time sorting out problems. You are more productive using that time to build your portfolio and build your wealth.

Property management is our area of expertise which means we remain up to date with your legal rights and move quickly to resolve issues which arise.

The most common areas in which issues arise are;

Rent arrears
Repairs and maintenance
Tenants refusing access
Damage to property
General issues around legal obligations

How our property managers resolve disputes

Careful tenant selection, sophisticated information systems coupled with regular communication with tenants and the ability to respond in a timely manner assist in limiting problems from occurring. When they do arise, in most circumstances, property managers will be able to quickly and easily sort out the problem without involving the landlord.

Representing you at the Tenancy Tribunal

If, for some reason, a problem is not resolved, Lodge City Rentals property managers will represent their landlords at the Tenancy Tribunal, as part of our service.

The benefits of having a property manager to resolve your disputes include;

Knowledge - All our property managers are highly trained and familiar with the Residential Tenancies Act 1986 & Amendments and the rights and obligations for both landlords and tenants.
Systems – Our in-house management information systems captures the history of the tenancy, including payment history and communications to ensure we are well prepared for the tribunal.
Training - Our property managers are constantly up skilled and trained on all the latest rules and regulations.
Experience - When required, our property managers represent our landlords at mediations and tenancy tribunal hearings, with over 3000 tenancies under our care we have a depth of experience in attending these forums.

Top 10 tips for adding value

Renovating a Hamilton property to realise the potential of the investment can be a lucrative way to unlock capital gains. Here are 10 areas that we’ve noticed have added good value without costing the earth.…more ›

1. Kitchen

New cupboard doors and handles can transform a kitchen. It’s a relatively inexpensive way to give a kitchen a fresh modern makeover. Colour can really date a kitchen so you might consider just painting or re-lacquering the doors to freshen the look.

Replacing the benchtop can give a kitchen that new feel. However, be mindful that the cost justifies the expense.

The splashback is another feature that can inject personality into a kitchen. Coloured glass is still a popular option but acrylics offer a stunning range of colours and are only half the price of glass. However, one of the drawbacks is they can’t be used behind stoves.

2. Fit new taps

Fitting new, good-looking, matching tapware, or taps that look aesthetically good in the room is a simple way of modernising your home. You bring a sense of cohesion to the house.

3. Bathroom
Consider re-grouting tiled areas or at the very least grout pens for painting over discoloured grout. Think about your presentation in bathroom areas and ensure you have new fresh towels folded neatly.

4. Paint
Painting the interior can instantly lift the look and mood of your house. A contemporary colour pallet on walls brings the sense of modernism buyers appreciate.
At the very least give the skirting boards, doors and window and door frames a good clean with sugar soap or a natural alternative such as washing soda.

5. Update the flooring
It’s amazing how many odours get trapped in carpet let alone the transformation that occurs when carpets are renewed. Hence, a carpet clean is almost a must. However, a clean can only do so much. If carpet is thread bare, or simply ghastly, getting new carpet or flooring might prove profitable.

5. Groom the garden
Look at any gaps in planting that need to be dealt with. Make sure hedges and bushes are trimmed and well kept. Get hold of a high-pressure hose and give paths and paintwork the once-over. From the street it sets up a good picture of the house.

At the rear, it is about enlarging the outdoor space: providing lawn for kids and entertaining areas which connect with indoor living spaces. Creating these spaces can add the most value, particularly to older homes which neglected to provide for outdoor living when they were first established.

7. Change the light switches
Replacing light switches is a cost effective way to liven up your house. The major cost will be labour, which even then, isn’t too expensive. Coloured or metal switch plates are available to match a modern décor.

8. Rethink window treatments
Curtains are another area which reflect the style of an era and can date a home. To make a big difference to the mood a house conveys consider firstly whether curtains or blinds work best in the space. Secondly, what are the colours, style and textures which best compliments the rest of the home. Adding value in this way doesn’t need to be expensive as we note a wide variety of ready made styles available in multiple sizing.

9. Revamp the entrance
First impressions determine whether a buyer walks through looking for reasons to buy the house or reasons to eliminate the house from their list. Quick fixes such as painting the front door in a strong colour, such as red or blue, or updating doorway furniture and the entrance mat can make a big difference to a buyer’s impression. Remember to also give the entrance the once-over by cleaning the path, removing cobwebs and trimming plants. Check the letterbox isn’t shabby and fix any loose pavers or fence palings. People gain confidence if a property is well maintained.

10. Lighting

Great lighting adds value and good looks. Don’t underestimate its transformative powers -it can make an average room look great. Modern lighting can change the personality of a room. With a little thought lighting can be used to highlight the atmosphere of a room transforming the mood within the space and adding value along the way.

Building your property portfolio

Should you at any point decide to restructure your property portfolio or simply update the values of your portfolio we can help…more ›

How we helped clients build their portfolios

Take a look at ways our property managers have assisted clients unlock the potential of their property investment.…more ›

Case Study 1

Building your wealth

Background

First time investors had bought a property as a rental which was managed by Lodge City Rentals. The investors were interested in building their portfolio and subsequent cash flow and asked Lodge City Rentals for some direction as to the best way to do it.

Business Challenge

Whilst the investors had benefited from the improvement in property prices from their time of purchase they were not in a position where the bank would allow them to release enough equity in their current properties to purchase another.

Business Solution

Whilst they did not have enough equity to purchase again Lodge City Rentals suggested they consider adding and ancillary dwelling for which the bank would lend them enough for. Their existing rental was sited on a 750m² piece of land which gave them ample scope to complete. The simple build process took 10 weeks and the two bedroom

60m² ancillary dwelling cost $100,000 to erect.

The Final Say

The initial investment property was grossing 6.5%.

The new ancillary was tenanted for $250 per week giving a gross yield of 13%. The combined gross yield was 8.4% a 29% increase in gross yield.

Case Study 2

Protecting your wealth

Background

In March 2008 Lodge City Rentals met with an owner who had 32 units in Hamilton but was experiencing problems with the investment. A small private property management firm was engaged to manage the property. However, the monthly statements were inaccurate, bonds were not collected – or if they were they had not been lodged, there were inappropriate tenants and rents were much lower than expected. In addition tenant ledgers were in disarray with complete confusion as to who was in what unit and how much they had paid.

Business Challenge

There was no quick fix to this situation. Lodge City Rentals set about the arduous task of untangling this web. It required firstly calling on each tenant, identifying them, unscrambling their rent payments and working with the bond centre to ascertain where some bonds were. Step two involved ending some tenancies and finding more suitable tenants.

Business Solution

Using Lodge City Rentals pool of resources and extensive knowledge to unravel this mess was the first step. Ensuring the ongoing smooth running of the investment from the time of engagement was the primary focus of the team. The property has enjoyed 87% occupancy from the time of management with 100% of the rent collected and expenses accounted to the landlord. Regular inspections have ensured that small maintenance issues are dealt with at the time and do not burgeon into a large capital expense.

The Final Say

We gave this to the owners, here’s what they had to say……..

“Lodge City Rentals gained our confidence from the outset. We were greeted with a ‘can do’ attitude – willingness to take the challenge on – without question.

We were kept informed throughout the process. “Contact us anytime” was a genuine invitation. Our investment was fragile and our anxieties high, so the personal and sensitive concern for our plight from the team at LCR was appreciated, as was their prompt efficient action.

A dismal (and potentially ruinous) situation was turned into a successful business within a year. We now spend little time on site and we know that our managers will contact us when needed” - Gail Loane

How other investors have done it

Our feature property investors share their journey through the real estate market.…more ›

Success Story 1

Our feature investor has been one of our favourite and most successful investors for 30 years. She is, however, private and humble preferring to keep her identity unpublished. We respect this but also believe you’ll find value in her remarkable achievements. After all, since purchasing her first property in 1980 in Glenfield, Auckland, she has amassed over 45 residential investments.

Her advice for first time investors is to start sooner rather than later. It becomes too easy to find excuses for why not to invest. “Creating strong relationships” she councils and for that reason advises using only one bank and listening to the advice they give.

She was fortunate to receive good advice when she started out. Keep your properties in good condition she was told. In addition she received good advice on tenant selection although today she enjoys leaving this to the expertise of Lodge City Rentals.

As a long term investor she has developed clear buying criteria for her portfolio. She invests in property with good location, the ability to develop future potential and it must be a property she feels comfortable renting to tenants. As long as the rent covers the bills she is comfortable as her primary gains have been made from the shrewd selection of properties based on these principles and her ability to uncover hidden potential. This has included purchasing neighbouring properties to develop a larger block for future comprehensive development.

Her interest in property first surfaced when she and her husband were living overseas. She needed to find a unit for her daughter and new baby so they would have a safe and secure place to call home. Despite interest rates of 19% she went ahead and purchased a two bedroom unit. Her daughter paid the then market rent of $65 per week. Once the equity built up she went on to use it to buy further investments.

Despite her undoubted success she is still an avid learner. She encourages investors to read books and talk to people to develop their investment strategy. Seek out expertise she wisely councils. The only time she broke this rule it had disastrous consequences. “I purchased an apartment and didn’t do my homework which would normally include taking advice from my property manager”. She lost almost 25% on the purchase and is a mistake she will never repeat.

She is continually looking to add to her portfolio. Even during volatile times in the property cycle she understands there are bargains to be had. She considers herself a professional investor and, therefore, gets Lodge City Rentals to take care of the management of the property. This allows her time to study the market, understand the trends and recognise great buys.

Her residential quick guide

1. Start now!

2. Save a deposit (that’s the hardest part of the property ladder) and get into real estate.

3. Don’t wait until you can afford the dream house – buy a cheaper rentable house and rent a house in your dream area.

4. Develop a criteria

Her Criteria

· Location

· Potential to add value

· Make sure you feel comfortable with tenants renting the property.

5. Be a professional investor – leave the management of property to the expertise of Lodge City Rentals.

6. Listen and take advice from trusted experts including your bank manager, property manager, accountant, lawyer and a sales professional.

7. Join your local Property Investors group – a wealth of information and support there.

Success Story 2

Graeme Walker purchased his first property in 1987 and today generates in excess of $350,000 in rent per year.

The first property was bought in partnership with a mate but within six months they had purchased another 3 within the Forest Lake suburb. All of the properties shared the same characteristics – they were run down – required high maintenance and generated high returns.

Graeme’s motivation for property investment stemmed from his recognition that the Government wasn’t going to provide the retirement income that would suit him. Therefore he set about establishing his own future income.

Graeme believes in developing a diversified property portfolio. His properties represent a balance between low maintenance, steady income, high yields, favoured locations and strong potential for capital growth. An active investor regardless of market conditions Graeme’s assessment of a property to purchase takes into account the value of the purchase and how it will affect the balance within the portfolio.

A strong advocate of the team approach to investing Graeme surrounds himself with trusted professionals and seeks their expert opinion before committing. His pack includes his bank manager, accountant, lawyer, property manager and trades people. “Develop great relationships” he councils when pressed for his advice on getting started in property investment.

He also believes in the power of curiosity. Ask plenty of questions of your trusted professionals. Listen carefully to the advice they give. Formulate a strategy with a criteria – and stick to your criteria. “The only time I’ve come unstuck is when I deviated from my criteria” he says. In 1996 Graeme purchased a property thinking it had future potential without asking enough questions of enough people. It turned out the future potential was uncertain and did not materialise. He eventually cut his losses after 18 months and reinvested in a better property with an important lesson learned.

Graeme believes buying well is a function of being constantly active in the market. “You’ve only got to be in the right place at the right time – You’ve got to know you’re there” he says wisely”. This means keeping up with market conditions, sale movements and rental trends all the time. “This is easier today than ever with the information Lodge Rentals sends me and the analysis on their web site” Graeme points out “but you still have to make the effort to get out and see the buys”.

Graeme’s latest addition to the portfolio is fully furnished self contained studio units. Don’t expect it to be the last. “Housing is one of ur essential needs – and as the Hamilton population grows it places more pressure on both prices and rents” he finishes.

Graeme Walker

1. Ask lots of questions from current and former property investors

Always get advice from property managers they are professionals with their ‘fingers on the pulse’.

Get good advice from a broad range of professions.

2. – Not all about return

- Dont sell unless you really have to

- Work with good professional people, trades people, property managers, bank manager, accountant etc

- Location counts; be prepared to pay extra for the right location.

3. – Location, location, location

- Age of property relating to ongoing maintenance

- Future potential of property relating to future city planning etc

- Yield – although this does not form the main criteria