Rotorua landlords are selling up amid tough new housing regulations but the scenario has created opportunities for newbies or those who want to build up existing portfolios, experts say.
Nationally, the New Zealand Property Investors Federation says 1400 of its 7000 landlords could exit the industry and Rotorua Property Investors Federation president Debbie
van den Broek says there will be a number of local landlords "that will leave".
She said the introduction of the 90-day notice was "frightening" and "a few landlords have made it horrible for the whole lot of us".
Van den Broek, who has been in the industry for 40 years, said she spent 12 months trying to get rid of a "bad egg" tenant, which concluded in an eviction after the case was heard in the High Court.
Most of her tenants were lovely but her experience with that "nightmare" had made her re-evaluate.
"The courts can be a scary place and I will just see how it goes, going forward. I don't know if I'll continue ... there are lots of emergency housing people and I'd love to give them a chance but I'm too scared to any more."
She said new investors were coming into the market but property prices had jumped since 2015 and "they think it is an easy way to make money and get rich".
"Come next year when things go wrong, I don't know if they'll last long in the industry."
McDowell Rotorua Property Management business development manager Rhiannon Greenwood said its portfolio was growing and rental prices remained high while "demand for supply is still huge".
"We are getting an average of 5 per cent, with some stronger than this. With house prices on the incline in Rotorua, rents need to be continually looked at and assessed to maintain investment returns."
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Some DIY landlords had also realised the amendment changes and future Healthy Homes regulations were going to mean a lot more work.
"Investment homeowners are seeing the benefits of paying a professional to manage their property/ies rather than concerning themselves with keeping up to date with the government regulations."
Prospective purchasers were interested in and searching for properties that already meet insulation and heating standards as it meant they could be tenanted immediately after settlement.
Because of the high volume of tenants and low availability of houses, landlords could also afford to be more selective.
"Once phase two takes effect in February 2021, the removal of no-cause terminations will mean landlords have to submit evidence to the Tenancy Tribunal in cases where tenants are disruptive or are regularly damaging property. The stipulations around the three-strike policy will inevitably see the rise of tenants who are aware of the requirements protecting them from being evicted.
"We already see this with rent arrears and tenants knowing just how far they can push without seeing major repercussions such as eviction."
Simon Anderson, managing director of Realty Group, which operates Eves and Bayleys, said there was a new wave of investors who were looking at the Rotorua market "with fresh eyes".
There were also a lot of speculators in Rotorua who were "coming in early and making offers on properties".
"They are really testing the market to see what type of level they can buy at. There is no shortage of investor buyers in Rotorua and there are a number of Hamilton investors looking."
Demand had also continued to outstrip supply and there could be 30 applicants at a time vying for the same rental.
Rotorua Rentals director Pauline Evans said many owners were realising the minefield of current changes and amendments which was challenging their perception of what being a landlord was actually about.
"Change can either be approached negatively or it can be embraced as a way to lift our game and offer higher levels of service."
She said while returns were important, it was not the sole focus of the serious investor.
"Capital gain is their focus as they are investors not speculators. High return usually comes with high risk; most prudent investors would be looking for capital gain over time."
But with low mortgage interest rates, challenging supply and demand issues, and low bank deposits, in Evans' view real estate was one of the best solid long-term investments - although she advised due diligence.
"Make sure your numbers stack up and always have a contingency fund for that rainy day, factor in higher vacancy rates and lower rents, especially for the next one to two years."
New Zealand Property Investors' Federation executive officer Sharon Cullwick said it expected about 20 per cent of rental property owners would leave the industry because of an over-regulated market.
She estimated close to 17,000 were on the state housing waiting list.
"This list will now continue to rapidly increase as tenants without impeccable tenancy records find it challenging to rent a property from private rental property owners."
Ministry of Housing and Urban Development quarterly figures show in the Bay of Plenty there were 1327 applicants waiting for public housing to the end of June compared to 1215 to March 31.
Over the same timeframes, emergency housing providers in the region were paid $8.5 million compared to $6m to March 31.
Trade Me data reveals the median rent in Rotorua was $460 in June compared to $400 in June 2019.