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Landlording Like A Parent

NZPIF 2018 Landlord of the Year Leilani Driessen says landlording has parallels to parenting and being a landlord has enabled her to be present for her kids, writes Joanna Jefferies. Photography by Michael Schultz

By: Joanna Jefferies

1 December 2018

Growing up in a Housing NZ home in Auckland, investor Leilani Driessen always knew she wanted to own her own property. When she was only a teenager she’d point out house ads in the newspaper to her mum, saying “Mum, why don’t we buy this?” Leilani’s mum also dreamt of owning her own place, but as a single mother of two children on the Domestic Purposes Benefit, it wasn’t a realistic goal at the time.

Her mum did go on to buy a home in West Auckland when she was 50, which was “huge for our family”, but the drive to own her own place never left Leilani.

Her interest in property lead her to read property investment titles in her early twenties and it became clear to her that she wanted to earn a passive income from property sometime in the future. So, in 2007, a year after she met her future husband Emil Driessen, they purchased a rental property in Tauranga.

But while the intent to grow an investment portfolio was there, the strategy wasn’t and Leilani calls the property “an emotional buy”.

Around the same time, Leilani’s mum passed away and her home was passed on to her two children. Leilani purchased her brother’s half of the Henderson unit from him and made plans to move to Australia with Emil with the aim of saving as much money as they could so they could return home with a deposit for their own home. They left both their properties in the hands of property managers.

Australia’s higher wages are a common temptation for those in their twenties, but few put the money earned there to good use. This wasn’t the case for the Driessens – they worked very hard – Leilani in marketing and Emil in nursing, and they saved as much as they could. There, they had their first two children, Ruby and Poppy, and after three years in 2012 they returned home to New Zealand.

When it came to deciding where to live, the pair settled on Hawke’s Bay for its good weather, and after eight months renting they bought their own home with the deposit they’d saved.

‘We had to do what was right for our family at the time and our family is a oneincome family – it was a priority for us that I was at home with the children before they went to school’

Learning To Landlord

Despite owning two rentals and her own home, Leilani wasn’t comfortable with her lack of knowledge around tenancy law and landlording. She joined the Hawke’s Bay Property Investors’ Association to “knowledge up” six months before taking over the management of the rental properties.

But despite her newfound knowledge and confidence, Leilani says “managing properties from afar was a logistical nightmare” so in 2015/2016 both the Auckland and Tauranga properties were sold.

The money from the sales was swiftly reinvested into the family home and three investment properties that were bought in a whirlwind four-month buying spree. The first two properties are standalone three-bedroom homes and the third property is a four-income unit. The same year the couple had their third child, Van.

“I always look back and think about whether we did the right thing,” says Leilani. “But we had to do what was right for our family at the time and our family is a one-income family – it was a priority for us that I was at home with the children before they went to school.”

Taking on the management of the rental portfolio, along with raising three young children has been a great learning curve for Leilani and she says she sees direct “parallels between parenting and landlording”. The firm-but-fair parent and landlord has since experienced evictions, abandoned tenancies and tribunal hearings along with many positive landlording experiences, too.

And if she had any doubts about the decision to sell in a rising Auckland and Tauranga market, the increase in Hawke’s Bay’s property values and rents since 2015 has laid that to rest.

The first property the Driessens bought in Hastings cost $159,000 in May 2016 and now has an approximate market value of $245,000 on Homes. co.nz. It had an 8.6% yield when they bought it – “We painted the outside and inside the garage and had to do repairs and renovations on the bathroom” – and with a total spend of $19,000, the property now has a gross yield of 9.8% only two years later.

The Flaxmere property which was bought for $189,000 is also valued at approximately $245,000 on Homes. co.nz and the yield has increased from 8.2% to 8.7%.

But the property that has given the couple the most joy is a block of four 1960s two-bedroom units in Hastings, purchased for $425,500.

“When we bought that it was in a shocking state,” says Leilani. So much so that when they were doing their due diligence they had a builder come and inspect the property and Leilani urged the tenants to let the builder know of any issues they had with the property.

One of the tenants said “we don’t have hot water in the shower” – Leilani was shocked and even more determined to be a better kind of landlord.

Once purchased the units were painted inside and out, given new floor coverings and new curtains, spouting and heating was installed. The drains which were constantly blocking were also completely re-laid, all at a total cost of $37,000. But all the effort was well worth it – the block of units was returning a 9.0% yield at the time of purchase and with all the improvements it now returns 12.1% gross.

“We’ve got them to a point we like – and those relationships with the tenants are good,” says Leilani. “But it has been a bit of a ride.”

Firm But Fair

Issues such as tenants getting behind on their rent hasn’t been an uncommon occurrence says Leilani, but she always stays on top of rent payments and will automatically send out a 14-day notice to remedy when a payment is missed.

“I’ve had tenants panic and go, ‘Oh, it’ll be in tomorrow!’ and I say, ‘Well, that’s fine if it’s in tomorrow – the letter will become null and void’,” she says.

Leilani always tries to keep open communication lines with her tenants, while setting clear expectations and following up on her promises.

But she did have a tenant who was constantly getting behind on her rent and Leilani ended up going to the Tenancy Tribunal with her. Before entering the Tribunal, they ended up chatting in the waiting room and came to an agreement that the tenant would pay the first payment of the outstanding rent before the following Friday, or face eviction. The adjudicator, who told Leilani she already had the ability to evict the tenant in three days’ time, asked Leilani if she was sure she wanted to give the tenant a second chance.

“Yes, but it has to have parameters,” said Leilani. The adjudicator was happy with the pair’s pre-arrangement and asked them if they were both clear about the agreement, to which they both confirmed.

Leilani was gobsmacked then when the tenant, who was a single parent with three children, didn’t pay on the agreed date and sealed her own eviction.

The tenant pleaded with Leilani to let her stay and WINZ even rang her to see what could be done to keep her in the property.

But Leilani says this is where landlords need to be firm with tenants, just as they do as parents – but this must be done with transparency, fairness and kindness, she says.

“You know you may see these people in the supermarket the next day – I live in a small town with them.”

This was certainly the case with another tenant who had abandoned her tenancy due to a partner who had left her and her child. Leilani bumped into her at the supermarket and listened to the woman’s story and told her to prioritise taking care of herself at such a difficult time – “I genuinely wished her the best”.

Later that day, Leilani thought to text the woman and ask if she would agree to release the property back to Leilani, which would mean she could have immediate repossession, rather than having to go through the Tribunal to get it, to which the woman agreed.

It’s a perfect example of why she was selected as the Landlord of the Year – for her compassionate, kind, yet firm approach.

But while Leilani feels like she’s finally mastered landlording skills and a good working knowledge of the Residential Tenancies Act, her next goal is to take on the “strategy” side of property investment – so she’ll be looking to knowledge-up her numbers game in 2019.

Leilani's Lessons For Landlords

  1. One thing we’ve learnt is to get vacant possession,” says Leilani. “But that doesn’t necessarily mean kicking out the tenant that is there” – it can simply mean having them re-apply so that proper checks can be carried out.
  2. Be hands on: Emil does the lawns at each of their rental properties and this allows him to spot any potential maintenance issues and allows tenants to approach him with any problems as they arise, says Leilani.
  3. Join your local Property Investors’ Association and understand your obligations and your tenant’s obligations. “Don’t underestimate the responsibilities that you have”.
  4. Be kind but firm “Things happen in life for everybody – you can be sympathetic, you can be kind, but at the same time be firm, outline your expectations, if they’re not met you have to put your foot down and follow through.”
  5. Use your gut instinct when assessing a potential tenant and look them up on social media.
  6. Don’t get personal or emotional – always be professional and stick to the facts. Use the “headline test” to assess your own behaviour as a landlord – “It’s about conducting yourself in a way that if it became the next day’s front page headline you wouldn’t be embarrassed of your behaviour”.

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