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Why landlords cannot afford to be stingy when it comes to having a rental agent

Economically we are in a time of fear and uncertainty, with many of us looking for ways to offset financial risks. Landlords should be aware that renting out a property, while lucrative, now comes with even more risk as the economy impacts negatively on the affordability of tenants.

This, arguably, makes a very strong case for having a managing agent’s assistance. While this means paying extra costs for the service, having an agent in your corner could be the best way to protect yourself and your pocket.

Natalie Muller, regional head of rentals for Jawitz Properties Western Cape, says that this impact has spread to all levels; even those tenants with squeaky clean rental histories.

“High risk tenants will become more exposed, but we are even finding that some outstanding tenants – those who always pay on time – are beginning to default as circumstances change economically,” says Muller. “Salaries are not necessarily being increased, or by as much, while everything else goes up in price. It is a difficult time.”

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The vetting process of tenants, even at renewal stage, as well as throughout their tenancy is essential, and even if some landlords may want to manage a rental themselves, they can come to estate agents for assistance in vetting a tenant only. The vetting costs are initially covered by the tenant, but, for a nominal fee, an agent can monitor the tenant on the landlord’s behalf.

However, there are benefits from employing an agent to manage your property. Managing agents handle all dealings with tenants from the rental payments, follow ups and deposit, to inspections and liaising with tenants on any matters.

“We assist landlords in checking that their tenants are keeping utilities up to date and are able to see at any point how a tenant is managing. Your tenant might be paying rent but defaulting elsewhere,” explains Muller. “But beyond a regular credit check, we also vet a tenant’s employer to find out if the employer sees the tenant remaining at the company for some time. We get the full picture, so we can be sure the right tenant is put in place, and only remains in place if they should be.”

The risk is even greater for landlords with mortgage bonds relying on rental income to cover bond repayments. It is especially important for these landlords to ensure that the right tenant is in place and remains in place. In that case, says Muller, it would be to consider an agent who can ensure that appropriate tenants are in place. “If your tenant defaults in these types of situations, it is even more difficult,” she says. “There are also insurance policies that we can offer landlords as part of managing the rental, which add another level of security.”

A little extra security can go a long way

Peep holes, wishbones and sophisticated locking systems should form a trifecta of security on your front door.

There has always been a high demand for safety and entry-level rental space, especially in the right areas. The result is that those who are able to often convert large rooms or staff quarters into living space that can be rented out.

In some areas landlords are seeing a return of 3.5% to 7.5%, explains Muller.

“A converted room with a shower and loo in the Southern Suburbs in Cape Town may go for as much as R5,500 or R6,000 per month, depending on the exact circumstances,” she says. “Of course, location is a factor here, but so is security. Landlords may even find that installing better security features is going to attract and sustain the right type of tenant as well.”

As a strained economy can breed opportunistic crime, security features, Muller believes, are really going to become essential requirements. Since these improvements will cost to install and maintain, it becomes even more important to preserve and insure your rental income.


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