CPIA Link Autumn 18 : simplebooklet.com

Tony Mounce Mortgages Insurance First we arrange your mortgage Then we protect it Tony Mounce Mortgages Insurance specialise in advising property investors on the best finance techniques and investment strategies Tony Mounce Mortgages Insurance is one of the largest broker firms in the South Island Accordingly we have access to a wide range of products in order to offer clients the best finance and insurance solutions We provide our service to clients throughout New Zealand and internationally We have advisers on our team who can speak English Cantonese Mandarin Freephone 0800 668 623 Phone 03 365 8625 Email info tonymounce co nz www tonymounce co nz Fees Our fee for a standard residential mortgage is paid by the mortgage provider when the contract is completed There may be a fee for commercial contracts which varies on a case by case basis We offer a high level of personalised service and represent you when dealing with the bank working on your behalf to get the best loan and insurance contracts We are an independent organisation accredited with all major banks and various specialist lenders able to compare different providers in order to offer you the best finance products for your requirements

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From the editor THE CANTERBURY PROPERTY INVESTOR Contact CPIA Editorial vanessa cpia nz Advertising vanessa cpia nz Accounts office cpia nz Office 22 Buchan Street Sydenham PO Box 7382 Christchurch 8240 Phone 03 379 5251 visit www cpia nz Office hours are Monday Friday 10am 2pm CPIA is a member of the New Zealand Property Investors Federation Inc CPIA committee members 2017 2018 President Stephen East Vice President Graeme Smith Hamish Wilson C PIA has talked about increased regulation in the landlording industry a lot and with good reason of late I ve certainly heard of some landlords who are selling up and choosing to abandon the property investment dream as times get tougher I don t blame them at all the adjustment is difficult especially if you ve been landlording for some time Before you go to extremes though perhaps it s helpful to take a step back for a moment and think about why you got into property investing in the first place That may even out the pros and cons balance sheet if you re scratching your head and trying to remember the positives right now At CPIA s Canterbury Conference last year Mike Catton ran our first session on the Why of property investing It boils down to one thing for most people the end goal of freeing up our time and improving our lifestyle by having more available money The means that we ve chosen to obtain that money whether it s cash flow or equity is property investment Any investment is only worth its salt if it s making more than it s costing So it s always wise to weigh up whether you re putting in too much and not getting enough out If you re in it for the long haul though you re likely putting in the hard yards now for a future payoff It s important to put increased regulation into perspective yes it s going to cost upfront to bring properties into line with the Healthy Homes Guarantee Act But we don t know how much yet and what subsidies will be made available We also have to remember that a fully insulated double glazed properly heated property is going to need less future maintenance Another plus is that this year will also potentially see the wrinkles pertaining to accidental damage ironed out of the Residential Tenancies Act So it s swings and roundabouts and we have to remember where we re at in the property cycle if we re thinking about abandoning ship Hanging on until the next upturn could make all the difference in obtaining the goal of financial freedom As always CPIA and NZPIF are campaigning hard behind the scenes to ensure that landlords get a fair deal Enjoy this edition and feel free to get in touch at any time VANESSA O BRIEN EDITOR In this issue Treasurer Vivien Cowey 16 FIVE MINUTES WITH New CPIA member Malcolm Campbell Secretary Shirley Berryman 18 UPCOMING EVENTS Forum times dates and details Committee Helen Blanchard Philippa Ireland Lloyd Manson Disclaimer and copyright The Canterbury Property Investors Association does not endorse any claims made in this publication and suggests readers obtain independent advice before acting on information or suggestions contained herein All original material in this magazine remains the property of the editor and cannot be reproduced in any way without permission from the editor As a magazine we accept advertising in good faith We trust the advertisements are not misleading and expect advertisers to provide good service We appreciate their advertising revenue and thank them for their support but we stress the Canterbury Property Investor does not endorse or guarantee the products or services of its advertisers 19 NEGATIVE GEARING Is this tax write off really a big loss From our sponsors 19 5 PRESIDENT S COMMENT CPIA president Stephen East writes about regulation 6 Q A WITH HOUSING MINISTER PHIL TWYFORD We asked he answered 9 PETS AS TENANTS Being pet friendly could give you a market advantage 10 COMMERCIAL PROPERTY INVESTMENT Sound like a good idea but how do I start 11 ASBESTOS THE NEW METH Why you need a plan to deal with asbestos 12 QUOTES A few snippets on property investment in the last quarter 13 KEEPING UP BUSINESS MOTIVATION Tips to keep your head in the game 16 RENTAL STATISTICS Check out the Christchurch rent averages by suburb 14 A1 PROPERTY MANAGERS Five top tips for keeping tenants 15 TONY MOUNCE MORTGAGES INSURANCE The LVR and OCR and what it means for property investment Specials 17 MARKETPLACE LETTERS TO THE EDITOR We welcome your thoughts at Link If you have comment to make you are welcome to write to vanessa cpia nz Letters should be no more than 150 words and may be edited for spelling grammar and legal reasons Please supply your full name telephone number for our office s reference only and email address THE CANTERBURY PROPERTY INVESTOR LINK AUTUMN 2018 3

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Opinion President s comment T wo thousand and eighteen is shaping to be the year of change and increased regulation The word uncertainty is bandied about a lot recently with due cause for concern Let s take a minute to look at a couple of those changes Firstly Labour s Healthy Homes Guarantee Bill Whilst this bill has been passed the devil is in the detail and the detail is certainly very unclear at present By the time of reading perhaps the Ministry of Business Innovation and Employment MBIE will have released and confirmed some of the standards But I think it will be the end of year or longer before MBIE have done so In relation to the Bill the need for a heat pump in every rental property regardless of whether they already have a suitable source of heating and the requirement of landlords to keep the ambient temperature in their rental properties at a suitable level are certainly questionable requirements If there is a suitable and legal source of heating why is it necessary to also have a heat pump It s also ridiculous to expect landlords to be responsible for keeping the ambient temperature of a rental property at the prescribed level when this is obviously beyond their control One of the other issues that will be of concern to landlords is the security of tenure that the Labour led coalition is proposing i e the removal of no cause notice to end a tenancy The 42 day notice will extend to 90 days with the further clause that rents not be raised more than once in a year and that the increase must be accompanied with a reason I personally believe these regulatory changes are creating an environment where by landlords have less control over their properties If there is a suitable and legal source of heating why is it necessary to also have a heat pump We as landlords take all the risk to provide rental accommodation but are increasingly losing the ability to manage and control our properties in the manner we choose These changes have already seen a marked increase in landlords selling up and getting out of the industry And these regulatory barriers put in front of investors and landlords will also deter new investors entering the market The end result will be fewer rental properties available thus increasing demand and resulting in higher rents being asked Bar a couple of the smaller property investment associations in New Zealand membership over the last couple of years has been pretty STEPHEN EAST stagnant with the PRESIDENT bigger associations declining slightly This is in part due to a very difficult investment climate that some investors have experienced in recent times Landlords have and will continue to exit the market and new investors are reluctant to become property investors for the reasons outlined above This of course could open up opportunities to other established investors to increase their portfolio if they see fit to stay in the market We can look at some of these issues as the glass half empty or the glass half full scenario If we as landlords follow the mantra of providing quality rental accommodation at market rental levels ensuring our properties fulfil at the very least the standard requirement or better there is going to be an increase in compliance That will mean an increase in costs to manage rental properties too and as a business some if not all of these costs will need to be recouped from the end user in this case the tenant Don t get stung by bright line non compliance N on compliance with the bright line test has been high but people shouldn t take that to mean they can get away with not paying the tax involved Landlords co nz writes The bright line test which was introduced by the previous National led Government requires income tax to be paid on any gains from residential property sold within two years of acquisition with a few exceptions It was a bid to dampen property speculation rather than property investment and the current Labour led Government intends to extend the test to 5 years which may affect property investors as well as sometimes circumstances change A joint IRD Treasury impact assessment has revealed that voluntary taxpayer compliance with the existing bright line rules appears to be less than 50 per cent Tax specialist Terry Baucher said that people were pushing the boundaries of intent However he advised caution as the IRD s Property Compliance Programme had extensive powers to investigate and to gather information on the activities of taxpayers when it comes to property An IRD spokesperson says they went to significant lengths to help taxpayers meet their tax obligations Residential Commercial Electricians Servicing Canterbury for Over 60 Years Rewiring specialists Mains switchboard upgrades Alterations Wiring checks Thermal imaging of switchboards Maintenance repairs Free Quotes 24 Hour 7 Day on Call Service Contact Gavin 03 366 1718 gavin bowden christchurchelectrical co nz 64 years www christchurchelectrical co nz THE CANTERBURY PROPERTY INVESTOR LINK AUTUMN 2018 5

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Feature What can landlords expect We ask Hon Phil Twyford T here s lots of speculation about coming regulation amongst landlords so LINK figured why not go straight to the source We asked Housing and Urban Development Minister Phil Twyford a few questions about what landlords can expect from a Labour led Government We ve chosen Q A style so you can see exactly what LINK asked and the Minister answered Q What does a reformed RTA look like for landlords A Around half of all New Zealanders now rent The Labour led Government s committed to making renting more stable and secure Both landlords and tenants benefit from greater certainty over their rental arrangements I ve committed to a review of the Residential Tenancies Act which will get underway this year It s aimed at improving overall standards in the renting environment and ensuring there are appropriate protections in place for both tenants and landlords It will also contain initiatives to improve security of tenure and better allow tenants to make their house a home This review is expected to result in legislation being introduced to Parliament by the end of the year Q Will you address accidental damage to afford landlords more protection and clarity for the courts If so how A The Residential Tenancies Amendment Bill No 2 is currently being considered by the Governance and Administration Committee and will clarify some areas of legal uncertainty for landlords and tenants including creating efficiencies in the way rental premises are covered against the risk of careless damage caused by tenants This Bill includes tenant liability provisions which are designed to ensure as much as possible that landlords are not out of pocket for tenant damage and incentivise tenants to take care of rental premises while protecting them from excessive risks and costs It specifically makes a tenant liable for careless damage up to the value of their landlord s insurance excess if applicable but not more than four weeks rent Tenants will remain liable and no cap will apply for intentional damage damage caused by an act or omission that constitutes an imprisonable offence or if insurance money that would have been payable in respect of the damage is irrecoverable because of the tenant s act or omission The Bill also contains provisions addressing issues related to unlawful residential premises and methamphetamine contamination in rental properties The Select Committee is due to report back to Parliament on the Bill in April Q Christchurch landlords feedback we have received about changing the RTA so that they can only raise rent once a year is that that they will be more likely to do so Some landlords haven t raised rents in some time so this could be a huge negative for tenants How to maximise your cash flow with depreciation D epreciation is a tax allowance for the wear and tear on your investment property It is claimed as an expense against your rental income The greater the depreciation claimed the less tax you pay While property investment is a fantastic way to increase your wealth many investors never fully realise the potential returns their property can offer All types of investment properties benefit from having a depreciation apportionment completed not just houses but also flats apartments and commercial properties The changes to depreciation regulations in 2011 left many including accountants with the false impression that there is no longer any value in claiming depreciation But this is not correct A Valuit report will divide the value of your property into various IRD depreciation categories to help you Maximise your depreciation claim Reduce the risk of IRD penalties How it all works The IRD allows you to run your investment property as a business This means that you can claim the expenses incurred against the income received for it in order to reduce tax liability 6 Depreciation is an expense that can be claimed to reduce taxable income Let s have a look at an example of how depreciation can improve your cash flow Rental income of 400 per week 20 800 Less cash expenses insurance rates interest etc 10 000 Income before depreciation physical income in your pocket 10 800 In summary Depreciation is about providing you as an investor with additional cash flow through reducing your tax liability Estimate your depreciation on your residential property on our website To find out more about how depreciation can improve your cash flow contact Valuit and request a full report today www valuit co nz 0508 4VALUE 0508 482 583 Less non cash expense depreciation 5 000 Taxable income after depreciation what the IRD taxes you on 5 800 Using this example you can see that the end result will be that less tax is paid on the income received once depreciation is claimed THE CANTERBURY PROPERTY INVESTOR LINK AUTUMN 2018 Note that the actual amount of tax paid will depend on the type of ownership structure that is in place for the property

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Feature will have the opportunity to provide feedback on the Residential Tenancy Act reforms before legislation is introduced to Parliament The information received from these consultations will ensure the reforms strike an appropriate balance between tenants and landlords in the modern renting environment What is your comment on that A This Government is committed to ensuring that all renters have safe warm and dry homes regardless of where they live in New Zealand Renting has become a life long reality for many families As we work towards restoring the Kiwi dream of home ownership these reforms will bring the law up to date to reflect the reality of modern renting We recognise the important role good landlords play in providing housing for those who are saving for homeownership or want to continue renting Most landlords operate with integrity and try to provide decent accommodation at a reasonable rent These reforms are aimed at stopping exploitative behaviour by a small minority of landlords Q What s your plan to keep landlords in the market and ensure that rental supply is sufficient for demand A The policies the Labour led Government is planning to bring in aim to make life better for renters and ensure that New Zealand has a fair and progressive tax system We recognise that as a result of these changes and the evolving state of the housing market some landlords may choose to sell their rental property and invest their money in productive areas of the economy Our KiwiBuild policy will increase the supply of houses throughout the country by building 100 000 affordable homes within 10 years There will be an initial focus on areas with high housing demand and affordability pressures Q Landlords have been portrayed as evil and greedy in the media yet the bulk of CPIA s landlords are mumand dad investors whose retirement investment is being hit hard by the Labour led Government s proposed changes Do you think landlords are being unfairly targeted A Landlords tenants property management companies and any other interested parties Q We still don t know exactly what the Healthy Homes Guarantee Bill will require of landlords what it will cost or what the Government will offer to subsidise the costs What timeframes apply A The Healthy Homes Guarantee Act was passed last December and aims to make rental homes warmer drier and healthier The Act allows regulations to be made for standards that landlords must comply with relating to heating insulation ventilation moisture ingress draught stopping and drainage These regulations would replace the existing regulations on insulation The Ministry of Business Innovation and Employment expects to consult on the proposed standards and the timeframes for landlords compliance in the first half of this year I encourage landlords to provide feedback on the consultation to ensure the requirements that are developed are fit for purpose standards for healthy homes Note Link also asked the Minister questions pertaining specifically to the Christchurch market pointing out that Auckland and Wellington s boom markets are driving reform Those questions were not answered METH CONTAMINATION CLEANING Guaranteed to pass current regulations NZS 8510 2017 Honest assessment of remediation strategy Prompt completion for fast re occupancy of property Free onsite consultation and quote Quotes within 48 hours Contact Joanna 022 314 0618 jo gjsolutions co nz THE CANTERBURY PROPERTY INVESTOR LINK AUTUMN 2018 7

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Feature Do pets make good tenants T here s been a lot of media talk recently about pets and whether landlords need to take a more lenient approach to accommodating them in their properties Housing New Zealand HNZ New Zealand s largest letter is set to ease restrictions on pets Housing Minister Phil Twyford told media in late 2017 that pets should be allowed so long as they were not a nuisance or dangerous to neighbours I ve had contact with dozens of renters for whom their dog or pet is a really important part of their quality of life Mr Twyford said This move has seen media pressure come on private landlords to follow suit After all New Zealanders own more pets per household than anywhere else in the world apart from the United States Figures from 2016 show that about 64 per cent of New Zealand households are home to at least one pet Yet just 13 to 14 of landlords welcome pets in their rental properties The reason for landlords reluctance towards four legged friends is clear the potential for damage or wear and tear to the rental property That s been exacerbated by the Osaki ruling in which tenants fiscal liability to repair damages and restore a property to its original state was essentially removed That s led to a confusion in rulings at the Tenancy Tribunal and the courts You may recall a case in which the Tenancy Tribunal ruled in favour of a tenant whose dog had destroyed their rental property carpets despite a no pets clause in the tenancy agreement That said Fido and Snowy are not necessarily a liability when it comes to New Zealanders own more pets per household than anywhere else in the world apart from the United States tenanting A pet s behaviour is usually a reflection of their care So a responsible tenant will likely be a responsible pet owner too When that s the case there are serious benefits to having pets as tenants Firstly you have a greater pool of tenants to choose from Secondly some studies show that a pet owning tenant usually stays on average nine months longer due to a lack of available pet friendly rentals Thirdly Barfoot Thompson data shows that new rentals that allowed pets received an additional 54 46 week in rent on average for the year ending August 2017 If you re considering a pet friendly rental here are a few tips Interview pets with their tenants Get a pet reference as well as a tenant reference from previous landlords Check vaccinations etc a responsible pet owner is usually a responsible tenant Allow for an annual commercial carpet clean in your rental price Allow for extra inspections if you have cause for concern THE CANTERBURY PROPERTY INVESTOR LINK AUTUMN 2018 9

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Feature Is buying a commercial property feasible O ne of my clients who is a shareholder of a privately owned large commercial portfolio once gave me two bits of commercial property advice 1 If you can your first commercial property should be multi tenanted with staggered leases This helps when a tenant moves out at the end of the lease because you still have other tenants to pay the mortgage 2 Budget budget budget with commercial property you normally have fixed long term leases with regular rent reviews and a CPI or market rent increase That means you can do 5 to 7 year budgets With budgets you know if you are going to go broke and with forward planning you can change your strategy sooner than when it s too late Purchasing a commercial property may seem out of reach and for some it can be a bit complicated to understand compared with residential property investment However the reality is that if you have done your homework on feasibility and understand the risks during your due diligence commercial property investing can provide great rewards such as good capital gains and being cash positive In February we held our CPIA Commercial Investors Group seminar on commercial property investing The Feasibility Stage We were very grateful to have six incredible speakers with great commercial property investment knowledge join us Tony Mounce from Tony Mounce Mortgages CPIA principal sponsor lending Racheal Robertson and Rowan Aspros from Corcoran French CPIA major sponsor lawyers Mark Macauley and Will Franks from Colliers commercial real estate Dorian Crighton from PKF Goldsmith Fox accountants It is important to find what you want to buy who you may buy it with will the bank lend on this investment and how much and do the numbers stack up at the feasibility stage There is a bit of work in number crunching and research before signing the sales and purchase agreement S P Examples include What type of commercial property to purchase retail office industrial hotel mixed or maybe one that needs a refurbish before you can tenant it There is a bit of work in number crunching and research before signing the sales and purchase agreement Do you plan to change the classification of the rent type such as from office to retail and will you be able to get council consent What s the going yield for commercial property in the current market How to calculate the yield Are the current tenants paying a gross or net lease and what is OPEX CAPEX and non recovered expenses What is the return on investment ROI Before you sign the S P have you made sure your lawyers have checked it and given you good advice on an out at due diligence time Will you pay GST or will the transaction be zero rated GST Tony Mounce talked about how a standard loan for commercial property was for 15 years principal and interest and banks are expecting that the building is 67 National Building standard NBS The standard LVR for commercial property is 65 and it s easier to finance owner occupied commercial property Rachael Robertson and Rowan Aspros emphasised how important it was to have a sound due diligence clause It s not sufficient to put down on approval from lawyer or due to finance as it won t necessarily provide you with the out you need They had heard of someone who put due to finance in their agreement and used it to get out of the contract However the vendor offered them finance This was the first of three seminars about commercial property with those to come including Doing your Due Diligence and Managing your Commercial Property We d love to have you come along BY VIVIEN COWEY Property development is the business of buying land and buildings and then making improvement so that they sell for a price that exceeds the cost If you are interested in getting started in property development in a shared investment option then we as project managers and quantity surveyors can lead you to a sizable opportunity whereby one will have shares in a development There is a lot of confidential information to be shared in this regard so please do contact us for further information Michael Reddy Project Manager Senior Quantity Surveyor Mob 021 209 8478 Ph 03 421 1478 Email michael rtprojects co nz www rtprojects co nz 10 THE CANTERBURY PROPERTY INVESTOR LINK AUTUMN 2018

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Feature Have you got an asbestos plan M ost property managers and landlords will have at least a bit of knowledge around the Health Safety Act 2015 and their obligations under it It s the legislation that says that landlords or property managers in control of leased premises are considered Persons in Charge of a Business or Undertaking PCBU That gives landlords property managers some responsibility to Ensure work is carried out safely and all foreseeable hazards are under control or minimised Ensure any work carried out or not which is under the PCBU s influence and control does not cause any harm to tenants contractors and public members Ensure qualified and competent people are hired to carry out any services of repair on the premises Ensure everyone who may be affected by the work that is being carried out are informed and notified of potential hazards But wait there s more mark 4 April 2018 in your diary That s the date that the Health and Safety at Work Asbestos Regulations 2016 kick in From April 2018 every property under management may need to contain an asbestos register if there is a risk that the property may contain asbestos It is the PCBU s responsibility to have prepared or reviewed an asbestos management plan to satisfy WorkSafe that there has been action taken to comply with the legislation The consequences of this could be far reaching as many rental properties will be of an era where asbestos contaminated materials ACMs were commonly used in construction There are also potentially big fines for noncompliance So how do you manage an asbestos risk LINK got in touch with Tenancy Practice Service principal Scotney Williams to get a clear answer TPS has received and is passing on the following advice A dual prong approach 1 Have a plan in place to send surveyors into properties as part of any maintenance response that has been flagged as high risk mostly due to age of construction and type of material a This will be a very effective method of dealing with possible risk the surveyor assessor can give the tradesmen direction b 2 on how to deal with additional asbestos risk A management report will be generated that then satisfies the requirement for an Asbestos Management Survey as mandatory for rental properties Secondly parallel to the Maintenance Response Refurbishment surveys a structured plan for Asbestos Management Surveys and Management Reports will need to be enacted and evidence needs to be made available to show that reasonable and practicable steps have been taken to ensure that the leasing agents and landlords are working to compliance with Health and Safety at Work Asbestos Regulations 2016 Floor Covering Bargains EXCLUSIVE OFFERS FOR CANTERBURY PROPERTY INVESTORS ASSOCIATION Dalton Extra heavy duty solution dyed nylon carpet 10 fantastic colours to choose from Normally great value at 97 00m Now just for CPIA members Timber look planks Stunning Value These top quality commercial vinyl planks are in a warm bleached oak colour called Ghost Gum and are suitable for the hardest wear areas Normally 59m2 that s just 34 32m2 Only for a limited time please be sure to mention this ad Now 89 00m 35 00m2 Only while stocks last Plus lots more floorcovering bargains instore call us today Open 8 30 to 5 00 Monday to Friday 47 Gasson Street Sydenham Christchurch Phone 03 353 8899 info tfwl co nz www theflooringwarehouse co nz THE CANTERBURY PROPERTY INVESTOR LINK AUTUMN 2018 11

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Quotes How do you encourage tenants to look after a property when there are no consequences for breaching tenant agreements and causing damage CHRISTCHURCH LANDLORD SUSAN LINKLATER ON A HIGH COURT RULING THAT TENANTS CIGARETTE BURNS TO CARPET WERE NOT ACCIDENTAL DAMAGE DESPITE A NON SMOKING POLICY There are a lot of practitioners in our industry that don t belong there they are literally cowboys and are adding to the negative perception of this industry NELSON BASED DECONTAMINATOR BILLY ROYAL ON WHY IT WAS NECESSARY TO SET UP THE METHAMPHETAMINE FEDERATION OF NEW ZEALAND At this point every change that the government makes to the rental laws makes me worry that there will be even more expensive ones to follow LANDLORD SHAWN ADRIEL AI ON THE WORRY HE FEELS ABOUT THE ESCALATING COSTS OF PROVIDING A RENTAL PROPERTY I feel that is very positive but we will have to wait and see what happens with the rest of the suggested reforms NEW ZEALAND PROPERTY INVESTORS FEDERATION EXECUTIVE OFFICER ANDREW KING ON HOUSING MINISTER PHIL TWYFORD S DECISION TO RULE OUT RENT CONTROLS WHEN HE REVISES THE RTA THIS YEAR The solution is to back off a lot of these ridiculous measures allow landlords to be able to conduct a reasonably profitable business thus drawing them back into the game Otherwise we as taxpayers are going to be footing the bill to a huge extent to house tenants and we know that that will cost the country far more than a few tax breaks for landlords FORMER LANDLORD ROBERT LILLY ON THE SOLUTION TO THE HOUSING CRISIS AND WHY HE HAS SOLD UP HIS PROPERTY PORTFOLIO Making your Property Work for you www mypropertyworks co nz Don t let the largest investment you have slowly deteriorate or let someone else destroy it Plan Manage Create Rental Inspections Contamination Testing Warm Homes Project Management Property Reporting Alarm Systems Handyman Services Landlord Obligations Insurance works Preventative Maintenance Sign up now for our quick read newsletter on Tips and Tricks around the home at www mypropertyworks co nz Lloyd Manson Cell 0275 251 855 12 THE CANTERBURY PROPERTY INVESTOR LINK AUTUMN 2018

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Feature Keeping up business motivation A t CPIA we say it all the time an investment property is a business and you have to treat it as such It s easy in any business particularly in entrepreneurial self employed roles to lose focus and not put as much attention in as you perhaps need to So we thought we d give you a few tips on how to keep the fire going Plan ahead and set reminders The single largest stressor in any business is a lack of forward planning Nip this one in the bud by planning out your year in advance Whether you keep a digital diary or an oldfashioned pen and paper secure dates for property inspections rent reviews valuations mortgage reviews and any other key task over the year You may have a goal to buy another property schedule in time to analyse the market search for properties and scope houses Schedule and budget for ongoing maintenance that way it s much less likely to hit you hard when the unexpected happens Remember the why Network What motivates you to be a property investor Maybe it s a nest egg for retirement more time with the family or a hobby you d like to pursue if only you had the resource Whatever it is put a picture of it on the fridge and remind yourself every day why you are putting in big hours and living on a tight budget now You ll definitely need that motivation on the cold winter mornings when you re up early to fix a leak or tenants leave a property in less than desirable condition This is just fancy speak for hanging out with and befriending people who will support you on your property investment journey Meeting with other investors is a wonderful way to gather ideas sound out your plans and learn about what has worked for others Building these connections could also be the crucial link in your next property deal too Educate yourself This is key If landlording is your business you need to know how to do it well to be successful This means keeping up with legislative changes reading property investment books searching YouTube for online seminars and learning from those who have done it before you Know the market Belonging to CPIA is a great way to learn about landlording in your area Reward yourself As property investors we can err on the side of being too tight at times Yes we re conserving now for future gains but sometimes it pays to reward yourself a little on the way Otherwise where is the fun It may just be a trip to the movies or dinner out for a change but those little things can make a big difference to how you feel about property investing long term TENANCY LAW CHANGES WE RE HERE TO HELP Installing quality insulation in Christchurch homes and rentals since 2008 We arrange a FREE assessment of your properties Supply install Ground Vapour Barrier Heavy Duty 250 micron Supply Install Autex Polyester Underfloor R 1 5 or R 1 8 Insulation OR Supply Install Knauf Earthwool Glasswool R 1 5 Quilted Underfloor Segment wrapped Supply Install Knauf Earthwool Glasswool R 3 3 R 3 6 or R 4 1 Ceiling Insulation Check the smoke alarms We provide a Statement of Insulation certificate after completion of install 476 St Asaph Street Phillipstown Tel 03 381 1111 info home insulation christchurch co nz www home insulation christchurch co nz THE CANTERBURY PROPERTY INVESTOR LINK AUTUMN 2018 13

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Advertorial Five top tips for keeping tenants 4 A ttracting and keeping A grade tenants while increasing rent over time and minimising vacancies gives you optimal return on investment Once your dream tenant finally decides they want to live in your rental property you need to ensure you can keep them as long as possible Although sometimes life changes and tenants will need to move on from the best of property managers or landlords they might decide to buy their own home or leave town Who knows What you do have control over is keeping the property well maintained and up to a great standard therefore keeping What you do have control over is keeping the property wellmaintained and up to a great standard 14 your tenants happy and giving them more of a reason to stay longer and be happy to take rent increases As we say happy tenants stay and pay Five easy tips for keeping those excellent tenants as long as possible 1 Be responsive Respond as quickly as possible to things that need attention to avoid your tenant becoming angry or feeling neglected 2 Respect their privacy Give the right amount of notice to inspect Treat your tenants with respect and expect the same in return 3 Perform regular maintenance This protects your investment and avoids any potential problems popping up down the track Budget 5 of the annual rent towards maintenance each year THE CANTERBURY PROPERTY INVESTOR LINK AUTUMN 2018 Address problems quickly Act promptly on even small problems Many little problems can escalate into the beginning of CLAIRE WILSON an adversarial A1 PROPERTY relationship and MANAGERS make it more difficult to request things of the tenant 5 G o the extra mile Tenants requests do of course have to be reasonable but sometimes going the extra mile in order to make sure your tenants stay put is worth it Good long term tenants are one of the most important factors in maintaining great returns from your property over time Living by these top tips you will save thousands of dollars in advertising and vacancy costs and instead you ll have happy tenants that renew year after year

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Advertorial Tony s thoughts for the New Year I t s great to be writing another column as the principal sponsor of the Canterbury Property Investors Association This year 2018 is well underway and looks to be another busy and eventfilled year We look forward to continuing to provide value to the CPIA community and collaborating on a number of events throughout the year The LVR improvements late last year mean the door may have opened for investors who only just missed out at the 60 mark in the past We have seen a number of clients outside the mark by a small margin so the change to 65 is a great improvement Don t hesitate to reach out we can sit down and find out what will work for you Recently the first OCR announcement of the year took place The main key point was that rates are expected to stay flat for the immediate future The flow on effect from this The recent LVR and rate announcements may create an opportunity for you is that short term rates have fallen with one rate as low as 4 09 being obtained recently Remember 80 like for like transfer still exists for investors TONY MOUNCE looking to start TONY MOUNCE interest only terms MORTGAGES again INSURANCE It s been a positive start to the year with an increase in activity in the Christchurch market We are seeing more client enquiry after a fairly quiet final quarter of last year We look forward to continuing to build relationships within the CPIA community and providing our clients with a well rounded and trusted service Our insurance specialist Craig Collins works exclusively with our clients to ensure their portfolio is safe and protected The recent LVR and rate announcements may create an opportunity for you If you would like to chat with us about the new changes and your property goals give Tony Mounce Mortgages Insurance a call on 0800 MOUNCE Housing report key points Government report A Stocktake of New Zealand s Housing was released in February 2018 Here are a few facts Population has outstripped housing growth by 2 1 per cent New Zealand has 1 9 million private homes with an average of 2 6 people per dwelling 574 000 households are renting Rents for three bedroom houses rose 25 per cent 2012 17 but wages just 14 per cent 32 per cent of rental properties are poorly maintained 29 per cent of households struggle to afford power bills spent a large portion on the bill or felt cold Number of children under 15 living in rentals up 65 per cent between 1986 and 2013 Between 1991 and 2013 the proportion of Maori renting privately rose from 41 per cent to 77 per cent and for Pasifika from 27 per cent to 56 per cent THE CANTERBURY PROPERTY INVESTOR LINK AUTUMN 2018 15

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Market watch Rental prices The following market rents table is derived solely from information gathered from bonds lodged through the Ministry of Business Innovation and Employment It has been adapted from its website www tenancy govt nz The figures supplied are based on houses not flats or apartments They cover the 6 month period from 1 August 2017 31 January 2018 Suburb Addington Aranui Bromley Bexley Avon Loop East Christchurch Avonhead Yaldhurst Bishopdale Papanui Burnside Harewood Burwood Dallington Avondale Christchurch Central Hagley Fendalton Strowan Bryndwr Halswell Wigrim Hillmorton Hoon Hay Hornby Islington Hei Hei Ilam Westburn Linwood Phillipstown Marshland Redwood Merivale St Albans West Bedrooms Rental price range 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 315 390 370 450 293 333 348 396 350 410 385 480 360 380 412 465 340 385 395 430 345 390 493 460 336 350 371 410 345 421 451 537 350 438 415 550 380 418 430 490 335 376 395 448 330 380 380 420 360 395 400 467 280 350 350 405 320 360 388 450 350 407 420 527 Suburb Bedrooms Rental price range North Beach New Brighton South Shore Redcliffs Sumner Riccarton Richmond Avonside Richmond Shirley Sawyers Arms Northcote Belfast Sockburn Upper Riccarton Spreydon Somerfield St Albans East Edgeware St Albans North Mairehau St Martins Beckenham Huntsbury Styx Parklands Sydenham Waltham Westmoreland Cashmere Barrington Woolston Opawa 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 300 348 370 410 363 420 420 520 330 370 395 471 310 378 345 414 300 350 370 430 329 380 380 450 328 370 396 436 330 376 382 450 320 380 391 480 319 387 372 457 350 370 390 455 325 398 380 450 302 399 382 430 335 385 395 530 300 355 350 400 Five minutes with Malcolm Campbell N ew CPIA member Malcolm Campbell is an old CPIA member returned He s just hit 60 lives in Prebbleton and all his investments are in Christchurch He s now getting his grown up boys into thinking about making property investments of their own a tenant caused careless damage in a 2 year old town house excessive wear and tear I looked into it and the tenant is not liable for anything not even the insurance excess Q How did you get into property Q How would you investment A In the early 1990s I worked with someone who had been in property investing for awhile and he talked me through the benefits Our children were young and we wanted to secure their future I did homework with a colleague and went from there Q How many properties do you own A Eleven including two blocks of four flats Q What is your biggest challenge A The uncertainty around new regulations and taxes We were hit by the Osaki ruling whereby 16 rate the Canterbury property investment market right now A Reasonably good a buyers market We are not looking to buy but are selling one property at present to free up capital for reinvestment in higher returns There are good buys to be had in parts of the market at or below GV Q Best advice for a new investor A Get good advice from a cross section of experienced property investors Choose which part of the market you want to be in Three THE CANTERBURY PROPERTY INVESTOR LINK AUTUMN 2018 bedroom houses are popular but there is a lot of competition when you come to rent them Do your homework with the benefit of others experiences Be prepared to alter your strategy if it is not suiting you or generating good outcomes Q Why did you join CPIA A We were members for many years but lacked time to go to meetings Issues with a property recently made me realise I was out of touch with new rules and findings We re keen to share knowledge and get access to good advice Q Best experience as a landlord A Long term tenants we ve had several that were 10 years plus who become like friends

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Marketplace ACCESS Lock Specialists Ltd for all your lock and key security Call FREE 0800 KEYLESS 170 Waterloo Rd Hornby Christchurch Freephone 0800 539 537 Phone 03 344 5959 sales accesslocks co nz www accesslocks co nz Full Mobile and Workshop Service 30 or 10 off your first bill Property Management by Property Investors No hidden costs Top quality work On schedule 7 step tenant screening Caring for your property 67 Montreal St Cnr Montreal Caton St Sydenham Christchurch 8023 Exceptional service Within Budget Ph 03 348 3366 E info topa co nz www topa co nz New Ho usi ng P 64 3 379 5033 E office rubyhousing co nz W rubyhousing co nz Specialists in Call today to find out about the Ruby Housing difference ign es D mercial Solar Water He ating t Com Ligh d l i u B Jonathan Toulson Mobile 021 498 442 Matthew Benzie Mobile 021 498 455 Phone 03 341 2001 admin h2flowplumbing co nz www h2flowplumbing co nz THE CANTERBURY PROPERTY INVESTOR LINK AUTUMN 2018 17

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What s on Calendar of events Upcoming forums CPIA forums are free for CPIA members There is a 25 door charge for non members All welcome April Date 17 April 7pm doors open 7 30pm start Speaker s MBIE Compliance and Investigations Tenancy Services national manager Steve Watson Topic The role of the MBIE Compliance and Investigations team and what s happening in compliance currently Location The Atrium 455 Hagley Avenue The Netball Centre Hagley Park Christchurch May Date 15 May 7pm doors open 7 30pm start Speaker Tenancy Tribunal principle adjudicator Melissa Poole Topic Update on accidental careless damage claims unlawful dwellings and all things related to the Tribunal Location The Atrium 455 Hagley Avenue The Netball Centre Hagley Park Christchurch June Date 19 June 7pm doors open 7 30pm start Speaker Andrew Dorgan Topic Commercial Property Syndication Location The Atrium 455 Hagley Avenue The Netball Centre Hagley Park Christchurch Young Kiwis in Property Active Investors Bookings are required for these events due to number limitations Please visit www cpia nz to reserve your place These forums are free for CPIA members and there is a 15 door charge for non members May Date 30 May 7pm doors open 7 15pm start Speaker s TBC Topic TBC Location CPIA 22 Buchan Street Sydenham Christchurch June Date 27 June 7pm doors open 7 15pm start Speaker s TBC Topic TBC Location CPIA 22 Buchan Street Sydenham Christchurch Breakfast Club Breakfast Club is a low key property investors catch up over coffee and breakfast on the first Friday of every month It s open to all CPIA members buy your own breakfast Conversation free Bookings are not necessary Held at Little Poms on the corner of Fitzgerald Avenue and Kilmore Street When 6 April 7 8 30am 4 May 7 8 30am 1 June 7 8 30am Women in property April Date 5 April 7pm doors open 7 30pm start Speaker TBA Topic TBA Location TBA May Date 2 May 7pm doors open 7 30pm start Speaker TBA Topic TBA Location TBA June Date 12 June 7pm doors open 7 30pm start Speaker TBA Topic TBA Location TBA Commercial meeting April Date 10 April 7pm doors open 7 30pm start Speaker Tony Tony Mounce Mortgages Insurance Rowan Aspros and Rachael Robertson Corcoran French Dorian Crighton and Mark Cole PKF Goldsmith Topic Managing a commercial property Location CPIA 22 Buchan Street Sydenham Christchurch Please note event speakers or topics change occasionally Visit www cpia nz to check for up tothe minute information March Date 28 March 7pm doors open 7 15pm start Speaker s TBC Topic TBC Location CPIA 22 Buchan Street Sydenham Christchurch April Date 24 April 7pm doors open 7 15pm start Speaker s TBC Topic TBC Location CPIA 22 Buchan Street Sydenham Christchurch New members The following CPIA members have joined us in the past six months Welcome to the CPIA Michelle Hogan Maree Hynes Lynn McKenzie Tracy Moffatt Alan Skehill Annab Harrold Leith Graydon Timothy Shue Andrew Dorgan Jon Manhire Aaron Morrison Lisa Winter Kirsty Rutherford Jon Whitlow Paula Campbell Mark Winter Abby Ley Rachael Whitlow Malcolm Campbell Tony Wylie Cameron Bird Joseph Van der Loo Andrew Cottee Pauline Wylie Fergus Waddell Holly Monrad Tammy Rossiter Aaron McGuinness James Roberts Sean Rossiter Paul Hynes Wayne McKenzie Tim Moggatt 18 THE CANTERBURY PROPERTY INVESTOR LINK AUTUMN 2018

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Feature Negative gearing is it a good investment strategy T he new Government has indicated a plan to abolish negative gearing tax benefits This is where the investor generates a loss on the investment which is tax deductible against other income With the removal of depreciation on buildings these losses occur where the operating costs rates insurance interest etc are higher than the income generated This means that the investment has negative cash flow and the investor is not only funding the loan repayment from other earnings but also the operating costs A strategy where you spend 1 now to save 33c tax later is not the best of strategies although it is often the only option for firsttime investors The success of this policy is dependent on an ever increasing property value and relatively low interest rates As interest rates increase the top up increases thereby impacting the investor s cash flow significantly In the worst of scenarios the property value crashes leaving it worth less than the debt outstanding and the investor can neither sell nor repay debt with the bank likely to demand a reduction in borrowings to return the investment to positive equity With the last property correction now 10 years ago this is not as unlikely as it sounds Of further note for property investors is the intention of the Government to extend the Bright line test to five years encouraging property investors to buy and hold property This is particularly aimed at the Auckland property market where more than 30 of properties are sold within three years of purchase Any property purchased with the intention of re sale has always been subject to income tax but intention and action are often difficult to link The purpose of the Bright line test has always been to clarify what the government sees as intention On the better news front the Government has stated it will not impose a capital gains tax until after the next election So property investors should consider the following 1 Undertake a portfolio review are there any properties providing poor or negative returns 2 Review funding agreements should you be fixing interest on loans 3 Consider structure of loans as they come off fixed terms In all cases it is wise to seek professional advice BY MARGARET HOLMES Margaret Holmes is a member of the Tauranga Property Investors Association and director at Engine Room in Tauranga Courtesy UP the Ultimate Property magazine Become a member First name Last name First name Last name Home phone Mobile phone Mailing address Paid by cheque Conferences and expos Newsletters and updates Quarterly Link magazine subscription Email Post code Monthly seminars Monthly Property Investor subscription Resources Exclusive trade discounts Industry representation Recommended by Or internet banking Internet banking to account 02 0828 0101338 083 Subscription 250pa application fee 25 total 275 Please send completed form and cheque to CPIA PO Box 7382 Sydenham Christchurch 8240 or email to office cpia nz Visa and Mastercard payments are accepted online only visit our membership page www cpia nz

CPIA Link Autumn 18

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