We, at Wealth Buy Property, understand why Kiwis love property – after all it is a tangible commodity. You can touch it, see it, live in it and people like the security associated with property.

Also, everyone understands property – they have either owned, rented or lived in a home. It’s familiar and human nature tells us that things that are familiar naturally feel safer.

Property is a fundamental necessity – everyone needs a roof over their head, whether they rent or own their own home. Housing will always be in demand and will always have value because we simply can’t live without it.

This is what gives property the advantage over other forms of investment such as shares etc – less risk and greater stability over time. In other words property is as “safe as houses”.

No other investment vehicle provides:

• The opportunity to leverage 80% of its value in order to acquire more of it as part of your portfolio
• Higher Tax incentives to assist in supporting your investment/s
• Proven and stable rates of return (look back over the last 100 years)
• The average kiwi to become an expert in wealth creation
• The easiest and simplest retirement plan with the ability to develop financial independence

In New Zealand, surveys and statistics show that we have a huge number of our population is renting, and with a housing shortage and all of the benefits as stated above, is why more and more New Zealanders are purchasing residential rental investment properties as their preferred investment vehicle to achieve their future goals.

Contacts and expertise will help you get an insider’s edge and the best start to your investment portfolio. Many investors choose to take advantage of companies that have the experience, knowledge and know how to kick start their investment journey.

An additional attraction to working with one of these companies is that they can offer rental management and rental guarantee options to assist in the day to day management of their investment and the confidence in knowing the rent will be paid on time. The “hands free & peace of mind” rental investment property.

Still need convincing?….if you look at the results others have achieved you have to agree that property makes pretty good investment sense.

Many investors only claim nominal depreciation based on the value of the chattels assessed by a registered valuer. This value is assessed for finance purposes and will not maximise the depreciation claimable by the property investor.

There are three main asset classes that should be included in an apportionment report for depreciation. These asset classes are:

LAND – Non depreciable
BUILDING STRUCTURE – Not depreciable as from 1 April 2011
CHATTELS & BUILDING FITOUT – Depreciable at between 8% to 60% for all dwellings

By applying the correct depreciation rates as specified by the IRD you can maximise your depreciation claim and therefore your cash flow.

IRD carries out regular investigations into rental properties (this includes depreciation claimed). It is important that you engage a specialist Property Accountant or Valuer to ensure the values placed on your depreciation schedule are correct. Penalties will be imposed if the information in your return cannot be substantiated.

The two main benefits of having a specialist do your depreciation apportionment are:

1. Maximise Depreciation
2. Minimise Depreciation Recovery

Even with some changes announced in the May Budget 2010, the key for investors is to remember that despite the reduction in depreciation, most of this should be offset through personal income tax rate reductions and some minor rent increases.

Above all make sure you are claiming the maximum depreciation you can!

For futher advice contact us at Wealth Buy Property

Landlords are looking for tenants that will pay the rent on time, keep the premises neat/tidy and report needed repairs, do not damage the property, and do not disturb neighbours, in short, responsible tenants looking after the place as if it is their own.

Tenants are looking for a house that is clean and tidy and built in compliance with all relevant laws, at an affordable rent. The most important issues are that the property must be safe and not hazardous to life.

Wealth Buy Property Rental Homes

We, at Wealth Buy Property, are fortunate and proud to be able to offer brand new and modern homes to tenants where they simply move in and enjoy the warm environment created by the double glazed, insulated, carpeted interior with a powerful heat pump thrown in.

The internal accessed double garages underline the way in which we cater for the comfort and wellbeing of tenants. Imagine arriving home in sleet and high winds and be able to just push a button and alight from your car in the warmth of the house.

The partnerships between the landlord and tenant in our company, Wealth Buy Property, is cemented in providing what the tenant wants and more, and also finding tenants that would appreciate and look after the homes.

“Location, location” is not always applicable as experience has shown that the quality of the house is paramount in attracting the tenant. Even a house of 20 years will quickly be re-tenanted if it is regularly painted and the carpets and vinyl replaced. A tenant that does not complain is usually a happy satisfied tenant.

A good and professional relationship between the tenant and landlord (property manager) is the foundation which will ensure that the investment is secure and looked after; with the tenant assured that he/she is being looked after.

Wealth Buy Property (Rentals)

Each type of entity has pros and cons – listed below are the options available (check with your accounting specialist as to which entity option will suit your situation best):

PARTNERSHIP:

A partnership, like individual ownership, enables you to offset losses against other income. These losses on your Investment Property are apportioned to each partner according to their share holding (the same goes for any profits made).

Drawbacks:

• No ability to income split a larger portion to a partner on a lower tax rate to minimise the amount of tax paid
• Lack of asset protection – you can be liable for claims against your partner or partners
• Potential to be ‘tainted by association’ with other partners

COMPANY:

One benefit of owning investment property through a company is that it offers limited liability, so your private assets won’t be at risk from any claims by company creditors.
With company ownership you can split income on a discretionary basis (by paying Directors’ fees and by employing a director-shareholder as manager)

Drawbacks:

• Inability to offset losses against income – any losses have to be deducted from future profits
• To access any profits the company has to declare a dividend to shareholders (which is taxed according to their personal tax rate)

TRUST:

Trusts are a great way of passing on assets to future generations. They have the flexibility to hold assets that are both investment and family owned (isolate the family home from investment properties). They offer the benefit of asset protection.

Trusts provide an opportunity to split income for tax purposes (allocate more income to beneficiaries on lower tax rates). They also offer flexibility in the distribution of profits.

Drawbacks:

• Like companies, trusts don’t allow for losses to be offset against other income with losses being accrued and deducted from future profits
• Trusts can be relatively costly to set up

LAQC:

One of the key benefits of an LAQC is the flexibility it offers in distributing profits and losses, as well as for restructuring. Losses can be offset against personal income (distributed to shareholders based on their shareholding).

Profits are distributed likewise.

LAQC also offers the ability to access capital gains from the sale of the property tax-free, and to restructure ownership of the company without having to pay tax on depreciation recovery.

Drawbacks:

• Banks may require individual shareholders to provide personal guarantees for mortgages taken out by the LAQC
• Individual shareholders are liable for tax owed by LAQC

Sure we cannot claim as much on depreciation as before, but from October this year the tax changes will put more cash in our pay, which offsets most of the loss. Also when the property is sold there will be less depreciation to pay back. These changes are probably a correct and sound move by the Government. Most residential houses that are maintained to a good standard do not depreciate and in fact usually appreciate over time.

Inflation is now well contained within the Reserve Banks targets. Unemployment dropped from % to 6% from Dec’09 to March 2010. This is the largest fall o record. Wage growth only rose 1.3% March 09 to March 2010. Taking these factors into consideration the Reserve Bank should be in no rush to raise interest rates in the near future.

When is a good time to buy property? This is a question I get asked often. My standard answer is now. Reason for this answer is the longer you own the property the more chance you have to get capital growth. Also the cost to build a new house only goes up, Council requirements get more stringent every year adding also to the cost.

The GST changes put an additional 2.5% on the cost of a new house. Land is a non renewable resource, therefore the more land that gets use, puts the price/value of remaining land up, and the list goes on.

Everybody needs a warm/dry place to live. Why would anyone pay almost the same rent for a colder/damp property? The answer is simple, they don’t. With our new properties, the demand is very high. When demand is high, prices tend to rise faster than when demand is low. This has a twofold effect: – Firstly our rental rates are at the top end of the scale and secondly re-sales are easier to realise.

Reading an article on Donald Trump recently he answered the same question “I entered into New York real estate when it was supposedly a terrible market, but I became successful. If I’d listened to all the negativity I wouldn’t be where I am today” I think this sums up perfectly that we should all trust ourselves and if we believe in something, to follow our beliefs.

I sincerely hope Wealth Buy Property can help (in some small way) you to achieve your dreams.

Well, I never stood back from a challenge, and the results speak for itself. Wealth Buy Property Rentals, in close association with Wealth Buy Property Ltd systematically built up sufficient housing units to be self-sufficient. We have not focused on a single region, but secured stock in Invercargill, Katikati, Morrinsville, Cambridge, Auckland and Whangarei.

We offer two options to investment owners, the Gold or Bronze options.

Wealth Buy Property: Gold Option

The Gold option includes a guaranteed floor rent when the property is vacant and has no hidden or additional expenses other than the management fee. All inspections, Tenancy Tribunal issues, advertisements, tenant assessments and placements are included.

It gives the investment owner peace of mind. We further keep a close eye on market movements, with special reference to rent. With our intimate knowledge of the rental market, it is monitored and will adjust any rent when the market dictates. Rent reviews are regularly done to ensure the benefits accrue to the investment owner.

Wealth Buy Property: Bronze Option

The Bronze option is similar to what most other property managing firms offer: 8.5% management fee, extra for visits or inspections, and you only get paid what the tenant has paid. If they don’t pay, you don’t get paid.

A very important part of our service is the quarterly inspections of all homes. We compile a detailed report after the inspection and inform the investment owner of the results. We have been fortunate to have contracted a very capable lady, Tracy Henton, in Invercargill, to act on our behalf, with regards to inspections and tenant placements.

Once or twice a year we visit Invercargill to personally inspect the properties and confirm that the investments are being looked after, as well as looking for expansion opportunities.

The properties on the North Island are being serviced by me personally.

Contact the team at Wealth Buy Property for any enquiries in relation to rental property management.

Wealth Buy Property on October Tax Changes

This year we have the uncertainty of tax changes. Until May, we will not know for sure what will transpire.

Meanwhile Wealth Buy Property have our own opinions of what we think will happen. My personal opinion is the Government will do something to put money into their deleted tax account, also try and stop another boom in the property sector.

New Zealand already has a robust tax on a number of property transaction involving speculation and in 2007. Inland Revenue increased investigations in this area. Unfortunately for us investors the Government is in dire need of more income, (Just like you and I).

Last year the Crown gave away $2 billion worth of tax refunds to companies, whereas the previous year it was $1 billion approx. On top of this personal tax refunds were up 15%. This year after a recession refunds are expected to be even higher, hence the need for the Government to be proactive and be seen to try and stem the outflow of monies.

Wealth Buy Property Says Not All Is Doom and Gloom for Investors

Not all is doom and gloom for investors though. A little less depreciation allowed means less to pay back when selling potentially. Also if tax rates drop we will have more after tax pay to help towards the shortfall.

Finally I think these or any changes will spark the long overdue rise in rents. When rents rise and tenants cannot afford the weekly outgoing what then?

Housing New Zealand and other Government agencies will be under even more pressure to supply Housing or more subsidises than they currently are.

I do not have all the answers but I do know that property investors like you and Wealth Buy Property are supplying New Zealand with quality affordable homes to raise their families in.

On a brighter note the Wealth Buy Property Mavora Mews subdivision has now got titles issued and 50% of the houses are completed.

The 52 McQuarrie Street subdivision has also got titles and 50% of these houses have settled and the other 50% are under construction. Brown Street is another relatively new subdivision where all earthworks/drainage etc is completed and the houses have started to be built.

The largest of our subdivision 262 McQuarrie has stage one houses well underway as are earthworks and drainage. Most of our properties under construction can be viewed on two websites www.wbpgroup.co.nz and www.progressreport.co.nz

If you have any questions or queries please feel free to call our Administration Manager Josie on 09 477-0151, or just pop into the Wealth Buy Property offices for a coffee and a chat.

Wealth Buy Property Perspective On Property Rental Business
Wealth Buy Property

• Ask for references and check with previous landlords
• Make use of available services such as Tenancy Information New Zealand
• Google them by name
• Carry out credit checks on your prospective tenants
• Check for any Tenancy Tribunal orders against them at www.tenancytribunal.govt.nz
• Ask for four weeks Bond as a safe guard
• Have adequate Insurance cover
• Keep a close eye on their rental payments – especially around the holiday season
• Be decisive and act promptly when something is awry
• Keep in regular contact and build a warm professional relationship with your tenant

The first step is to check whether the prospective tenant is actually who they say they are, they are in a strong position to pay and that they don’t have defaults recorded against them.

Wealth Buy Property: Credit Checks

Credit checks are a great way to do this and to get an insight into the reliability of payments from your prospective tenant – they offer information such as:

• Basic identification details
• A full history/listing of credit applications (whether approved or not)
• Any negative events such as bankruptcies, court judgements, defaults to collection agencies etc

(Veda Advantage offers a service that will alert landlords by email, fax or post should any payments defaults appear on a tenant’s credit file as well as a VedaScore Plus report that provides a numerical score/rating on a prospective tenant’s credit worthiness).

Make the time in selection of your tenants to do your homework – don’t panic and rent it to somebody you wouldn’t normally rent it to – if you choose the right tenant you won’t have too many (if any) problems.

Create a warm but professional relationship with your tenant and let them know your expectations so that they have a clear indication of where they stand and what will happen if they miss a payment etc – a zero tolerance to rent arrears is always a good policy.

These basic steps are and tools provided by Wealth Buy Property to help mitigate risk and protect your revenue.

For more information or a FREE INTERVIEW contact the team at Wealth Buy Property today.

Wealth Buy Property on 2010 Tax Changes
Wealth Buy Property

Valuit Specialist in property depreciation