Left to right Kathryn Seque, Lew Sarten and Angela Sefton
Cliff and Kathryn have a business which has grown to the point where they now build student flats, hiring tradies on labour-only contracts and supplying the materials themselves. They have become experts at finding durable, low-cost fittings and appliances, and they are not afraid of hands-on DIY themselves.
“Our standard build is two levels, with flats at front and back separated by a firewall. The front flat has a garage downstairs and two bedrooms, bathroom and separate toilet upstairs; the rear is one bedroom down and bathroom and toilet up. Removable ceiling panels give easy access to the plumbing. Including floor coverings and curtains or blinds, we can do these for $230,000-250,000. We reckon we save about $150,000.”
They also furnish with beds, lounge furniture, dishwasher, stove and washing machines.
The key to keeping damage and maintenance costs to a minimum is a very detailed and tightly applied tenant selection process. Rather than having a lead tenant, each tenant is assessed, signed up and bonded (3 weeks rent) separately (Kathryn lodges 450 bonds annually, she’s the bond centre’s biggest customer). The agreement makes them jointly liable for any damage. When a tenant leaves, the others find an acceptable replacement asap to avoid paying extra rent. They are all 12 month tenancies with inspections 3 monthly.
Each tenant gets separate emails about any issues so nobody can claim they weren’t notified. She uses a scanning app on her phone to send any paperwork straight to the tenant. She takes around 120 photos to benchmark the condition of the flat at the start, says videos are difficult to produce before a Tenancy Tribunal hearing. However she goes to great lengths to avoid such hearings as they are costly and time-consuming. She has not had a case before the TT for four years.
Tenant selection is based on: their appearance, how they complete the application form, reference checks, credit checks, Google and social media, TT orders, court news, Facebook profile and gut feelings.
“About half my job is social worker, dealing with all kinds of stuff. You don’t know how truly crazy some people are until you’ve worked in property management.”
Her major communication medium is Facebook because it’s free, can accept videos and she can readily post news about burglary being active, or rubbish collections, in addition to her vacancies. She has had as many as 13,000 page views. All her flats are fully booked for next year.
For her own property investments she chooses on the location, land size, zoning, state of foundations, plumbing and wiring, water damage and value-add potential. “Basically I tend to buy mouldy old dungers, do them up and get a good return.”
Chocolate fish prizes!
Bayleys Real Estate consultant Angela Sefton (who sponsored the evening) used a quick-fire quiz to win her audience over, tossing out chocolate fish as prizes. She provided the answers, audience had to respond with the question (inlcuding the following):
$11b: value of properties sold by Bayleys this year. 6796: house sales in NZ this year. 98: percentage of tenants who choose on price first, 85% on location, while insulation and heating are the lowest criteria. 47%: tenants who have been in residence for over 5 years. 355,554: number of rented residential properties in NZ. $617,971: average sale price of NZ houses. 1.1m: the number of people who use realestate.co.nz every month. 64: total sales NP in August. $447,500 Taranaki average sale price August.
Overall: prices are upwardly mobile, listings are down by 20%.