Rotorua property from the trenches: Covid-19 edition
The recent escalation of COVID-19 is having a profound effect on the tourism industry in Rotorua as well as around the country. The increasingly imminent shutdown of most hospitality businesses in New Zealand means will be the loss of many hundreds of thousands of jobs in the short term.
I’m sure there will be two groups of investors out there; one will be excited the other terrified and worried.
I specialize in Rotorua investment but a lot of my advice today really applies to investors in all areas in New Zealand.
As a property investor in the NZ market for the past 39 years I have been through high interest (20%+), the Asian crisis, SARS and the GFC. I didn’t go through the Great Depression though, nor are there many people left alive (with working mental facilities).
I’m not a financial advisor, I am not giving you financial advice, but I am offering some experience as to how to weather the coming storm.
This crisis will pass you just need to survive through it with moral & financial integrity
There will be tenants that will lose their jobs and be unable to pay their rent for a period. Plan for this now. If you have WINZ tenants you should be safe, but work out what your risk is NOW and understand what resources are being made available to help people through it.
Your tenants will be possibly more worried than you, they stand not only to lose their income but also the roof over their heads for them and their family. It is very unlikely the Tenancy Tribunal will grant an eviction due to a family being unable to pay because they lost their jobs and it will be gut-wrenching for you to be in a situation where that is your only recourse. Work with your current tenants as you have a better chance of being repaid your arrears. You will not be the first owner to have cooperated with a tenant through a downturn.
I suggest you reach out to your tenants now and be reassuring and tell them to contact you. MY text to tenants went like this.
“Should you become financially impacted due to COVID-19 please contact us as we will try to work with you to ensure your tenancy continues should the need arise”
But also be aware some people will take your as a sucker so be careful who you help. But mine were incredibly appreciative
I noticed a number of To Rent adverts on Trade Me this morning of Airbnb properties, this combined with thousands of empty hotel & motel rooms. This will increase the number of rentals available in the market and could cause rents to reduce.
These adverts were from people looking to self-manage their property and I don’t think they are yet aware that international & domestic guests are the opposite end of the spectrum to the vast majority of people currently looking for homes.
There is no shortage of tenants wanting homes in Rotorua, many homeless arrive by the busload from other towns but many are not the sort of people that you want as a tenant, particularly given the incoming RTA changes. If you own an Airbnb property please seek professional property management or use the services of a social housing provider to see you through this.
If your risk level is high i.e. lots of tenants working in the hospitality industry or your job is precarious make arrangements now. Talk to your bank or broker see if you can get an interest only period on your loan for say 12 months or perhaps prepare for a mortgage interest holiday. Do this now.
Cut your discretionary expenditure so you can afford to prop up some mortgage payments should the need arise.
If this still isn’t enough to get you through then contact iFindProperty as we have an increasing number of investors looking to invest right now and we can manage a sale for you without crowds of viewers and your tenant needing to leave. Only the purchasing party and any independent inspectors working for them will visit the property and the tenant will be reassured that it is being sold to another investor.
Most importantly, look at the next 30, 60 and 90 days so you are prepared ahead of time as the situation deteriorates.