Property Chit Chat by Louise Roke
Property Chit Chat by Louise Roke
The Ins and Outs of Rental Appraisals
I talk to Linda Wong Property Manager extraordinaire. Today she takes me through the process of how she conducts rental appraisals; tips for a landlords and tenants. She explains the two different types of property rental appraisals; one just from photos and the preferred method by visiting the property and assessing the flow, the sun, the location, the condition, damage and things that need to be done. Sometimes these things can't be seen by photos alone.
Whether you are a tenant or a landlord make sure you find out what you should be doing; to save you hassle, time and money down the track.
Landlords and tenants should listen up to this knowledge.
Welcome to the property chit-chat podcast. I'm your host Louise Roque where I talk about everything and anything property
Speaker 2:right today I've got Linda Wong back from Ray white in Birkenhead. Thank you so much Linda for spending a very valuable time to speak to us today about rental appraisals. You're welcome Louise. Yeah, so okay, you get a phone call and somebody says, I am moving town and I've decided I want to rent my house out. What's the process that you go through? Well, the first thing I do is like make an appointment and go and meet the owner of the property at the properties. I actually really need to see the property as much as photos do it justice. It doesn't quite get the feel of the place. I'm really glad to hear that because that was one of the things I was going to talk to you about because I know that a lot of agents, rental property managers, I should say, they actually do this thing where they see some photos that somebody sends them and then they do an appraisal based on that. And I'm not a big fan on that. So I'm happy that you've said there. And can you tell us why you do that? Because when you go out to the property, you actually get to see where the location of the property is. If you're not familiar with the area, get to see what its surrounding areas like you need. You see the driveway, you actually drive into the driveway. You actually walked down the driveway, you go enter it. And sometimes when you walk into your house you get an instant feel about it. And I can't describe it. It's just, it's like a welcoming feel. Yes. And you go, wow. And you can tell too, like was end of last year, I walked in, I did an appraisal for a property and I walked down, I went, this carpet's new, isn't it? And she went, Oh, it's about a year old. And I said, yeah, you can tell, you can feel it. Yes, yes. And it's just been able to feel that. So you can say it's you know, brand new renovated and can say, Oh the walls are all clean and you can just tell, it's like you know exactly what the property looks like now. Whereas in photos you don't know when those photos were taken. That's right. And also you don't really know. You don't get a great idea of the flow of the property. You don't, it's being able to walk through and just see everything and you're making notes and everything and it's just like your head is like overwhelmed. But then you take photos but then it's more to refresh your memories because I must say that for instance, one time we bought a property and it had a rental appraisal, which was quite high and it wasn't really, to be honest with you, it wasn't at a rentable state as such to that level. In fact, there were things that needed to be done on that property before it even got rented out. And I found out that the rental appraisal was only done off the photos that the listing agent had actually done. So I thought that was a little bit misleading to be honest. It is because you do need to make sure that obviously with our healthy homes does meet all the requirements to make sure there were smoke alarms in there, make sure that it's insulated, but at least you can sell it as a selling point. As insulators got heat pumps to keep you warm and when to call in summer. It's those things that as a property investor looking to buy that they're not going to have to spend extra money. Exactly. And I mean there were quite bad stains down on under the furniture downstairs and then a lot of the windows didn't have their sort of, uh, you know, the arm on them. So there were, there was lots of things to do before that property could even be rented out. So they couldn't see that just from looking at photos or you're not, because photos generally present a property at its best, usually staged photos for when it was sold or whatever. And you don't know how long ago that was. Yeah, I'm normally, I like to talk to the owners as well because you get a feel of the owners and they asked questions like should we leave our white where in there? And I generally tell them unless it's fixed oven harm, dishwasher, whatever and rain showed and stuff. It's like with the fridges, if you leave it in there or white where like washing machine or dryers, if you leave it in there, as soon as it breaks down you are like point point. So, so that is a really good point you're making because this is something that landlords do need to know. So for instance, what Linda is saying is that if you've got a washing machine and a dryer there and you say, Oh look, let's make that part of the property, the tenant agreement, the chatter list. I mean is it then, then you are responsible, the landlord is responsible when it breaks down to fix it or replace it. So what about if there was a, say a washing machine in there and the, and the person says to you, well listen, I'll, I'm prepared to leave it here but I'm not making it part of the turtles but the tenants if they want to they can use it. But if it breaks down I would go no, take it away. Okay, that's good to know. So hope you're listing out their landlords. If that's the story and you're not sure and you don't want the hassle of having things breaking down and having to fix it or replace it, then that might be an option for you. So if you were, if people are doing one, is there any requirement if people are, you know, if a property manager is doing a um, an appraisal and they have not been to the property, cause I know there's a lot of people who actually don't go to these properties, is there any requirement for them to put in their appraisal that this property was sight unseen? Yes. As like for at the moment with our office, unfortunately with the amount of listings that are going through, there are a lot of rental appraisals for every listing. There is a rental place or Dan and there were not enough property managers to go around. So basically what we do say is these are from photos only. It's got that Scotia, it is quite clear. Yeah. So I guess if you are purchasing a property, what you need to make sure is that. If it doesn't say that in there, I guess you'd need to really ask what property manager went to this property and exactly. Yeah. Yup. Yeah, because it would be worth even making a phone call to that person actually, just to make sure they have, because sometimes they, they might not have that on there. It might not be on it, but it should be on the appraisal. It was, but it was based on photos only. Obviously mistakes do happen and sometimes people use the wrong template. Right. It might be a genuine mistake, but I think you need to really know that that is the true, yeah, that's a really good one. What else can we say about rental appraisal? So you go there and you meet the landlord, you talk about the charitable as you go through the property. Now what about if there's anything that needs fixing or anything damaged? I mean the inspection report for instance, what happens there? Okay, so what you need to make sure is when you're going through, um, you want to make sure that it is all fixed before it gets tinted out because you don't want to tear down a property that's really not well maintained. Because what we generally do is, um, for their ingoing inspection report for a tenant, there's basically the status quo. This is like the condition of the property. When the tenant goes in, they sign it acknowledged that so that when the tenant leaves, that's what we're going to base the outgoing speech, allowing for fear, wear and tear. Yes. So if you've got a sparkling clean oven when the tenant moves and the oven is not sparkling clean, when they move out, you can say it's not clean. You need to get it clean. This was the condition it was in when you moved in. It's just proof. Well see that's interesting too because when you are selling a property, there's always this gray area talking about
Speaker 3:there was a gray area in property management as Allen would ask you that because I thought it might've been, I thought it might've been a miracle. No, it's just a
Speaker 2:when, when we go in there and you know we see a property especially with, I mean ovens are a classic example, right? Because you get grease on it, sprays on the glass door, you can see it. Um, it just locks as long as they have it. Look, put it this way, you haven't got last night roast all over the oven. They've actually made an attempt as soon as it made an attempt. But the thing is if the owner had it professionally cleaned beforehand and then she can say it to, it's going to be professional clean. Cause that's another thing I was going to ask you. So. Okay, so you're saying do some people when they are renting out a property, give you evidence that they've heard it professionally cleaned, the fed, the carpets professionally cleaned and then when you're renting it out you say to the people that when you exit this because it was professionally cleaned, the carpets and the house still very hard to enforce. I'm fortunate even the carpets cause I know in Australia that that actually in some States was, was um, a requirement we can't enforce and that's not a New Zealand just reasonably claim because we can't actually tell a tenant how to live. Yeah, exactly. And everybody has a different interpretation of the claim. Yeah. And that actually is also with the inspections because basically when you go to inspector house, when you're doing a property inspection, you're not really looking there how the tenants living. No you're not. You're just actually trying to make sure that there are no leaks. Like underneath the sink and everything. You're looking at the state of the cells, you're looking at the state of the blinds. Are they ventilating, cause obviously the property is supposed to be ventilated. Is there any maintenance? There's up and coming that we can see other lawns being done as a garden being kept up to speed. So we're really not looking at how the tenants are loving. We're actually more looking at the state of the property to make sure that we're looking after the owner's asset. And how often do you do these inspections? We do them every three months. Okay, that's good. Oh, that's pretty good, isn't it? Gosh, that's great as well. Some insurance companies, so everybody reads your fine print. Really make sure that you're actually doing inspections as your insurance company side. You need to speak to Linda. Some of them we'll say six months. Some of them will say three months. So it's actually in your insurance policy. But the most probably house I've come from an insurance background so I'll get a little fun. Go. Gosh, that's really interesting Linda. So the other thing is too is the rights of the tenants. As far as you know when you, well not the rights of the tenants but what I'm saying is when you are actually taking on a tenancy agreement it is very, very important. Do you meet the tenant at the property to go through this property management inspection of how the property is? Um, we don't always have to. Some tenants like to be there when we're going through the property and what we're doing is we're just trying to put them at ease. It's like we're not looking at how they love. Yeah we really are looking at the state of the property. No sorry. I meant when the person is thinking of taking on the property. So what we do, we don't meet them at the property cause they've obviously done a viewing the property already. So we don't rent out a property to anybody that hasn't come to a viewing that's good for, we've had some interaction with them prior and we generally meet them up at the office and we will go through the tenancy agreement with what they should be doing and some of the 5% just what our office processes as well. So they understand where we're coming from. So if they get sent an arrears text or a letter, don't take it personally, but it's just part of our office process. Cause the thing is, what I'm saying is is that my advice to tenants out there, when you go to view your property, you need to make sure that you make some notes of perhaps you know a bit of paint was off there or there was a Dean to net because you have to make sure that that is on your property inspection, which is what we do is we actually have a detailed and going inspection report where the report and the photos and we go to them, look you've got a week, go through their property. Okay, can you take a photo and let us know and we'll put it on the property or you ate. There's as much as we see the housemen is empty, we're going to miss something because we're only human. Yeah, that's really good to know. So they've got a week to do that. They've got a week to do that. So what sort of things, when you meet the landlord there, you go through the property, what sort of things do you ask them or what do you need to, you know, what information do you need from a landlord? Well, we need to make sure who's going to pay the water rates, how is that going to be charged? Land rights. We can take care of them. That for the most part. So they obviously need to sign over the authority. So we manage all that process. Sorry Linda, who normally does pay water rates? What's the water rights? We have the invoice coming to our office and generally what we do is then we invoice the tenant for the volumetric charges. Basically the landlord pay the fixed charges and then we just charge the tenant what they use, the volume and then we attach a copy of the water rates invoice to their invoice so they can actually see what they have been charged for. And what else do you need to know from the tent? From the landlord? We need to actually remind the landlord that they need to spend money on the property every year. So whether they need to, they get the house wash or the gutters clean. There is going to be a minimum spend they're going to need, they can't get away with not spending any money on the property unfortunately. Yeah. And that's to keep it as a good investment as well as an infinitely, I mean you've spent a lot of money on it already, so you need to be prepared to spend a little bit more on it. Yes. So at the moment in the North shore, what are the main type of properties that people are looking for, do you think? Or was it just a whole range? It's quite interesting. At the moment we're probably, we got a lot of people inquiring after either two bedrooms because it's either a cup hole and they need the extra room for an office space or whatever. Or are sort of going to the light, the street beds when there's a couple one child and then there's just an extra one or less. Then you go to the, you know what the other extremes where there's like the four B's or five bits, but there's two couples. Okay. So everybody is having to share and everything because of the, there's, I think a lot of them, we found that with the bigger houses they were prepared to pay a little bit more and get a better quality. Whereas if they were looking for a two bed, they weren't getting the same quality. And how could you, what's some tips that you could give some tenants if they were looking? Cause it's, it's hard to get a property, isn't it? Is that right? Is there, there's very difficult at the moment, especially certain areas, certain bedroom sizes and everything like that. We've had a few where they've needed to find one like in a week, two weeks because they've given notice and they've just like turned up at box and they've actually, you know, there's been about 30 people. Jeez. And they've just not been able to get anything. And then they had no responses from property managers. Do you actually let everybody know who's been through whether the, you know, if they've applied? Yes. Sometimes if they haven't seen them and they've just made inquiries and the probably Sunday the application, I will tell them back. That's good. That's really annoying actually when people, and I know it happens all the time in real estate it does. And like sometimes we forget. Yeah. Unfortunately we are human and we do forget. But there are some people and some agents out there, sales consultants out there that just do not get back to you. I mean, you know, it's just ridiculous. And, and if you're giving a service, well that's what you should be doing is acknowledging people, you know, it's just letting them know that it's gone. Yeah. So what's some tips that you can give some tenants that to make themselves, you know, have a chance. What, what's some things they can do? Fill out the application properly, put the right email addresses on there, especially if there's more than one applicant. Be aware that there will be credit chase seven of them. So there is anything untoward be up front about it. We've had a few now where you know historically where as our growing up they've had their wild years and they've done things they haven't done, but they'd been upfront about it and it's like, you know what, we are prepared to give people a chance. Yeah. Okay. Well that's, I'm really covering how to get into a property and a few bits and pieces for the landlord. Is there anything else that you can think of when you do appraisals or when you meet the landlord and tenants? Um, when you're doing an appraisal it is only a guesstimate and it depends on what the market is at the time. Demand doesn't, it is so, I mean sometimes we can get it rented within a week at a time, take six weeks. It's just really, yeah, supply and demand and we can't figure out how it's going to be. Properties that are well kept and clean and tidy, which we think we should rent, just like that have taken the longest time, which is really unusual. Okay. So where do you advertise? I mean, how do tenants find out about these properties? Our biggest probably portal is trade me. I thought it would, we actually had a pad a few more quarters from now through real estate.co. Dot. NZ. Okay. That's, that's actually coming through now as well. So yeah. Okay. Well so that's given people some tips about especially investors and about if they are looking at buying a property to just double check, if, especially the bank might want to know that too. You don't want to be thinking that your property is going to rent out for$900 and then you find out at$700 near$200 short. So make sure that whoever you get that rental appraisal from it is actually either a site unseen or that property manager actually has been to the property cause I think that's probably way more accurate. It is accurate because it can do is you can have basic three bedroom home. I just did an appraisal just based on my, and it's like a four bedroom home. But by doing it by photos, it wouldn't have done it justice. So by me going out there and visiting, I could actually see the true value. So that was the other way round that actually gave you actually probably thought by visiting it. The rent was actually more than if you'd just seen the photos. Both ways can work both ways. Definitely. Oh, that's fantastic. So that's Linda Wong. Thank you very much from the property management and Ray white in Birkenhead office on the main street there. Thanks very much, Linda. Thanks Louis.
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