LETTING - A JOB FOR THE PROFESSIONALS?
Category Landlord Advice
Whether you're a tenant or landlord, there are important aspects of the letting and renting process which needs smart and meticulous management. Are you up for it, or is this a job for the professionals?
At Wakefields' Pinetown branch, Linda Mitchell has just received her seventh consecutive award for top rental agent in KZN for the Wakefields' group. What's her secret, you ask? The answer's easy for somebody who lives and loves her work: "It's not about the property practitioner, it's about the tenant or landlord. That's the focus. It's all about relationships. I'm on an absolute high when I've found a tenant a home, or a perfect tenant for a landlord...and ensured that the lease protects both parties and is to their mutual satisfaction."
We all know the last few years have been challenging financially and emotionally for so many people, and whether it's a divorce or retrenchment, certain people needing a home can and will try to circumvent legal and ethical processes. Tough situation if you aren't knowledgeable on the process, and its potential loopholes. Linda says that while she certainly feels sympathy for those in difficult times, experience has shown her where transgressions are likely to occur, and she can spot them quickly. The increased pressure of the country's economic situation has put a great deal more on the shoulders of rental agents, who have to make doubly sure that background checks, scrutinising of documentation, and investigations are extremely thorough.
Bottom line is that a good lease, drawn up correctly, it's worth its weight in gold - especially when the chips are down.
In today's market, when choosing a rental property practitioner, you'll want somebody who's responsive on the phone and emails.
"I respond almost instantly to requests for help regarding rentals," says Linda. "The public expect instant responses on the various media platforms, and it's certainly a contributing factor as to why I get so many referrals from satisfied clients."
Renting out your own property is perfectly possible, but it's not for the faint-hearted. You're unlikely to have the legal knowledge, IT and other support systems, not to mention the 'people' experience to deal with a situation when it goes wrong: "And it can," says Linda. "With little official assistance out there when that happens."
Linda has three quick questions she likes to ask a prospective tenant, before she can proceed with helping them: When do you need occupation? How many occupants? You just can't squeeze five people into a two bedroomed unit); and what's your net salary? For example, for a R5 000 rental, the net income needs to be R15 000 - three times the rental figure. When she has all that information, there's a final qualifying question: Employed by a company? A salary slip makes everything run far more smoothly and can be a deal breaker when finding a property in a competitive rental market.
As a caring person, Linda puts in a great deal of effort trying to assist those who might not have a good credit rating: "I look into that credit check very deeply, to see if it's possible to assist them. Everybody makes mistakes at some stage in their lives - I hear tough life stories on a daily basis."
One thing you want if you're looking to rent - or rent out your property - is somebody knowledgeable and straightforward to assist you: "I'm as straightforward as I'm knowledgeable," says Linda. "It's far better for all parties to know the reality of the situation, even if it means bluntness. But having said that, most people appreciate straight talk because we ultimately have the same goal. If you think in terms of a tenant, we will have at least a 12-month relationship, so best we understand each other from the onset."
Advice to landlords:
- The most important thing, above all else, is to find a good quality tenant with a proven track record, a clean credit record and a good, solid job with a salary that pays at least 3 times the rental. The better the condition of your property, the higher paying tenant you will attract, so it may well be worth spending a little upfront to make your property stand out from the crowd.
- It is worth remembering that it is not always possible to cover your bond and other expenses with the rent so ensure you have sufficient additional income to cover any shortfall. Try and keep some funds in reserve for emergency repair work.
- Pricing your property correctly is key. If your property is vacant, it is creating no income for you, whereas, if you are prepared to lower your asking rental just enough to make it a viable option for tenants, you will make more in the long run. It can easily take a year to make up one months missed rental, not to mention that when empty, your property is vulnerable, not just to break-ins but also to maintenance issues that may go unreported if no-one is there to do so.
- Once you find a good tenant, who is paying the rent in full and on time, ensure you keep that tenant by being a pro-active landlord who deals with any maintenance issues efficiently and keep rental increases to a minimum so as not to lose the paying tenant. There are costs associated with finding a new tenant which could easily outweigh your potential increase over the next 12 months.
5 reasons why you, as a landlord, should use a fully registered agency to source your tenant and manage your rental:
- Having a rental property, like any other investment, comes with its own set of risks. In order to mitigate these risks, it makes good financial sense to have someone who has the knowledge and expertise to look after your investment for you.
- Residential rentals in South Africa are governed by a diverse and often confusing set of laws and legislation. When managing your own rental, it's easy enough until, for example, your tenant wants to leave before the lease has expired. What are your rights and obligations in this scenario? What can you do to ensure you get re-imbursed for your expenses whilst keeping within the constraints of the law? Or your tenant stops paying. How do you go about attempting to evict him? What steps can you take before you involve attorneys that will incur costs? A good managing agent will handle all of this for you.
- You will not need to interact with your tenant at all. You will not receive a weekend or nighttime emergency call for burst geysers, flooding, etc.
- At the end of the tenancy, you will not need to concern yourself with getting the inspection completed at the right time in the right way, or how to deal with the deposit return. All of this is taken care of for you.
- If you use an agency registered with TPN (Tenant Profile Network), your tenant's payment profile is uploaded every month, and any other member agency who does a credit check on them can see if they are good paying tenants. This gives a huge incentive to the tenant to ensure they pay on time and in full. It is also easy for the agency to load a default on your tenant if they do not pay their rent for at least three months in a row - this includes if they leave without paying the full amount they owe. Your deposit is also protected because, by law, it must be held in a trust account and is secured by the Fidelity Fund.
If you choose to deal with an unregistered agency, be aware of the potential pitfalls. Only registered property practitioners have the legal right to claim commission from you, however, ask yourself whether it is worth entrusting your most valuable asset to an unregistered agent. If anything should go wrong when using a registered agency, you have the backing of the PPRA (formerly the EAAB) who hold all registered property practitioners accountable in terms of the Code of Conduct.
Author: Haydn Wakefield
