First National warns of meth risk to property investors

7 March 2017

First National warns of meth risk to property investors

First National Real Estate Chief Executive, Bob Brereton, says first time property investors who choose to manage their own rentals are taking unnecessary risks – exposing themselves to loss of rental income, insurance issues, and often significant and expensive damage to their asset.

Quoting statistics recently released by Meth Remediation firm Meth Solutions, Mr Brereton points to the significant rise in meth use, in particular, as a huge risk to inexperienced property investors who think they can save a few dollars by managing their own rental. He cites one recent instance where a property owner faces meth cleanup costs which could exceed over $20,000.

“Meth Solutions found very high incidences of meth contamination in the properties they tested throughout the country – with some locations in Auckland showing meth contamination in as many as 50% of the homes tested”.

Mr Brereton said the overall Auckland figure showed contamination in 42% of the properties tested while Wellington showed contamination in 39% of the homes tested and Christchurch showed 29%. Other locations such as Northland, Waikato, the Bay of Plenty and Hawkes Bay were also high. He also noted that many of these tested houses were new builds but still experienced alarmingly high incidences of positive readings.

He said this meant that first time property investors were taking a huge risk when they managed their own properties.

“There are significant costs associated with repairing a home after it has been exposed to meth use (or meth manufacturing) and, while there are no guarantees, experienced property managers are more likely to spot the danger signs”.

Mr Brereton said that the amount of meth being intercepted by Police and Customs showed that the meth issue, in New Zealand, is staggering.

“Between them, Police and Customs intercepted 1920kg of meth last year. That works out at about 8 points of meth for every kiwi aged between 16 and 64. Obviously we don’t know how many New Zealanders are regular users – but if average usage was 1 point, per week, we’d be looking at almost 370,000 users, per week, or about 15% of the working population. Add to this the fact that Customs and the Police believe that they only seize 10% of the available Meth and the numbers above become exponentially frightening in terms of usage”.

Mr Brereton said that, whatever the actual number, a large percentage of these people are likely to be renters.

“It’s too big a risk for first time property investors to take on their own. They need to engage professionals to provide an additional line of defence”.

Mr Brereton said that Property Managers typically charge around 7.5% of the weekly rent and manage almost the entire process from letting the property to day-to-day management of maintenance issues and early notification of legal compliance matters.

“Toward the end of April Standards NZ will be releasing their guidelines for contamination in property and whilst this will give some reassurance and solidity to the remediation issues the incidence of meth use is so alarming that serious measures must be taken at the top of the cliff as well”.

“Using a Property Manager should be a no-brainer”.

ends

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