The Trouble With Middle-Income Earners…

The Trouble With Middle-Income Earners…
Many will try to keep up with the Joneses, and make bad choices. What’s the difference between a beneficiary and someone earning $100,000?  Not much if they can’t make ends meet. Every week middle-income families are swallowing their pride and seeking budget advice.  They’ve lost jobs or businesses, gone from two incomes to one, or have simply spent their way into debt. Raewyn Fox, chief executive of the New Zealand Federation of Family Budgeting Services, says about half of the middle income people who ask for help see an adviser in person. The others prefer to do it over the phone. Another option, says budget adviser Simon Tierney of the Jubilee Budget Advisory Service, is to consult an accountant, but they cost money. Tierney sees a steady stream of people earning good salaries whose spending exceeds their income.  In many cases they have made basic budgeting errors. “Middle-income people justify that they need a bigger car, clothes, meals out or a week in Fiji,” says Tierney, who used to be a financial adviser.  “It is not that they are making a mistake, but they could make better choices.” Despite having good incomes many Kiwis in this bracket don’t plan for the future.  “If the middle-income earner has surplus funds, they might put this towards another or a longer holiday, staying in a nicer place, buying a nicer car, or another renovation on the home that didn’t need it,” says Tierney. “Many may not see this as wrong, but it may only offer short-term value. “If they could have bought a more basic holiday, cheaper car or not renovated the kitchen...

Taking a blind bit of notice

Taking a blind bit of notice
Privacy, temperature control, functionality and nice décor are important when it comes to your home’s window furnishings and it’s no different for tenants.  While decent quality, ready-made curtains or blinds are often sufficient for rentals, it is important to consider how they may impact everyday living for your tenants. Blinds look smart and are ideal for daytime privacy but they don’t hold in as much warmth as curtains or give the same night time privacy.  Curtains also enhance décor and have good thermal qualities but they do not provide for daytime privacy or block out unattractive views. BLINDS The most common blinds are Venetian blinds (horizontal slats), vertical blinds, sun-roller blinds and block-out roller blinds, Graeme Tearle, of Furnish NZ, who works with Maintain To Profit on fitting out rentals, says privacy comes down to the location and use of the room. “Blinds are particularly good for daytime privacy because you can retain light coming in and some vision out but not the vision in,” Tearle says. “But because of the moving parts required for functionality, blinds don’t fully cover the window so you don’t get total block-out of vision in at night – there are always little gaps.” He recommends curtains for a room where full block-out at night is a priority and daytime privacy is not much of an issue.  Blinds on the other hand could be ideal for a bedroom or lounge facing on to a busy street where people can easily see in during the day. Blinds are also good when trying to block off a bad view, like a wall or a neighbouring house....

What lies beneath?

What lies beneath?
Tenants like nice looking floors – when they move in that is.  Despite comfortable, clean and good-looking floors factoring high on tenants’ “must haves” when viewing a  place, most of them, even the very best ones, wont’ really actually look after the floors that well.  Spills, stains, heel marks, scuffing… you name it. Putting down durable, hard-wearing, decent-looking and low-maintenance flooring will go a long way in reducing headaches later.  Like all refurbishments, it is almost never best to go really cheap and you need to get the preparation right. CARPET Solution-dyed nylon carpets are popular with both landlords and home owners. Newer varieties won’t fade and stains can be more easily removed from them, not to mention they look and feel more natural. Nylon also won’t harbour bacteria so is low-allergen and it doesn’t hold carpet beetles either, which attack natural fibres like wool. Maintain To Profit co-owner Dean Larritt says the manufacturing process of nylon carpet has come a long way.  He works with lots of investors in recarpeting and says they want durable and easy to maintain carpet that cleans up well when tenants move out. “Nine times out of ten times investors are going for heavy-duty, entry-level-loop-pile carpet, either polypropylene or solution dyed nylon,” Dean says. “Occasionally they want something a little nicer.  Often you’re better to spend a little more and go for a nice cut-pile as it looks fantastic down and more expensive than it actually is.” Loop-pile tends to be a bit more durable than cut-pile but cut-pile feels more luxurious underfoot.  Wear will also depend on the foot traffic through the...

https://bnkr.convert.build/edits?___store=default&nostodebug=true

https://bnkr.convert.build/edits?___store=default&nostodebug=true
Adding a room can be a great way to increase the equity, rent and rentability of an investment property but the key is doing it right.  By Carolyn Brooke Deciding if and how to add a room to an investment property should be based on understanding the numbers, the potential equity or rental returns and the area’s rental market.  While a $60,000 to $80,000 cost of extending a house in a high-growth area could be justified with the resulting valuation increase, the additional rent might be similar to what can be achieved by creating a room for around $10,000 using existing space at a much lower cost in a lower-decile area. It is important to understand the market you are in – talk to property managers and find out what is renting for what in your area.  There may be little point in adding a  third bedroom if the area is popular with young professionals who only want two bedrooms, while adding a fourth bedroom in a lower-decile area may fetch an extra $100 rent each week. According to the Ministry of Business, Innovation and Employment’s latest statistics for average weekly rents, a four-bedroom house in Massey/Royal Heights in west Auckland fetches $97 more than a three-bedroom.  Out south in Weymouth a fourth bedroom would get you an extra $104.  In more central St Lukes/Sandringham a third bedroom gets an extra $96 and a fourth an extra $145. Using existing space is almost always the way to go for investors when adding a room as it is hard to make the numbers of an extension work on rental returns...

Flipping not all quick work and big profits

Flipping not all quick work and big profits
Many a first-time investor dreams of “flipping” property.  That’s buying it at one price and selling it on for more soon afterwards.  It’s not uncommon.  Look around your suburb and you’ll see houses being renovated and flicked on. If it works there is good money to be made (but watch out for the taxman).  Renovating and/or flipping property isn’t, however, as easy as it looks. Some investors lose money on the deal. Financial adviser Ian Milligan of the Financial Success Group reacted to a NZ Hearld article about a couple who had “made” $300,000 when they renovated and resold their homes.  “(The) article indicates they make $300,000, which looks great. However, he says, investors and homeowners alike fail to take into account: • Any costs for renovation • Council and legal fees • Interest costs • Time spent on the project, which can often be significant • Real Estate fees • Legal fees The real biggie, says Ian is tax.  Anyone, even a homeowner who buys a property with the intention of selling at a profit, is required to pay income tax on his or her gains.  A lot of property investors try to get away without doing this.  Some live in the home, but that isn’t a failsafe guarantee of not paying tax.  Every year quite a few property investors get caught red-handed by the Inland Revenue Department. If you’re thinking of buying and doing up a house or just flipping it, find a good calculator and do the numbers.  A basic flipping calculator can be found online or downloaded from iTunes or the Google Play Store.  Other...

Is now the time to build

Is now the time to build
Well the renovation market is certainly buoyant, with many investors taking stock and ensuring their properties are the best presented and rented easily with minimum vacancies. We have had our busiest period in the last three years with investors adding value to their properties and increasing rents on many occasions. So, with our business booming in a recession,   I went in search of other companies working in property investment and also making a real fist of these tough times. I sat with Stuart Shutt, Managing Director of “Investor Homes” and talked to him about what is really happening at ground level with the new builds. I asked Stuart to take me through the process of building a new home or investment property and to share with me his hints and tips on how to make it a successful project on time and on budget. Inception Whether you have your own plans or if you want a standard plan that maximises space, if you are wanting to create the most equity or rental yield, or even if you are simply building a family home, the process always starts with the initial meeting. This meeting covers your intentions for the property; is it to be geared for cash flow, resale or as a family home?  It also covers timeframes, guarantees, council and completion process. It is a good idea to get your builder involved before you actually purchase your section, as there are many potential pitfalls.  Your section’s soil type, slope, location of services, access and overland flow paths are just a few concepts to think through. The “C” Word Council...