If a person has chosen to invest in a few properties to rent out, but chances are they won’t own more than 10 units, they would probably lean toward managing their properties and tenants themselves.
There are, however, sometimes certain aspects of property management, rental collection, money management or tenant selection that a DIY landlord might need guidance on, says Sunell Afrika, rentals manager for SAProperty.com.
Firstly, if the property is not maintained properly or the occupancy of the unit not kept at a steady rate, the investment profitability or, even viability, could be reduced, says Afrika.
If tenants are good payers, they should be looked after in order to keep them in place and landlords should not risk losing the steady income from them. Tenants will often leave the premises at the end of their leases (some will even cancel their lease) if they are unhappy with the way the property is being managed and will not be convinced to stay with promises of change or improvements.
The longer the landlord can keep one good tenant in the unit, the better his return.
“You have to take into account the costs of advertising for a new tenant, maintaining the property while it is standing empty or keeping an eye on it security-wise and the loss of income during the time the unit is vacant. The time it takes to advertise and vet prospective tenants also needs to be considered, if you are doing it yourself, i.e. if your time is worth R400 an hour and it takes you an hour to meet with a new tenant, that is a loss from your personal income,” she says.
- Handle repairs to the unit as soon as they are reported;
- Check what maintenance needs to be done on a regular basis, e.g. wooden window frames might need to be treated or the facia boards and exterior walls might need cleaning or painting, or large plants in the garden might have to be cut back; and
- Be willing to upgrade certain aspects of the unit from time to time, for example, they might ask for geyser timer switches or an upgraded stove which does not cost a huge amount but will add to their enjoyment of the unit.
In addition to managing his property, the landlord should manage the tenant’s deposit well, in ensuring that it is in a separate interest-bearing bank account, and not be tempted to use it for something else. Landlords should consider setting aside a portion of the monthly rental to build up a maintenance and repair fund, so that any unforeseen expenses can be paid out of this fund, advises Afrika.
Lastly, the management of a tenant, which starts with the completion of a rental application and not only when the lease is signed, says Afrika.
The landlord must check the tenant’s references supplied, employment history and credit record thoroughly.
The lease agreement should clearly state the date that the rent is due, where the rent must be paid and what the penalties will be if the rent is late. Some tenants who have been reliable and in good-standing sometimes also fall on hard times, and in these cases it could benefit the landlord to try and establish a workable plan for both parties than evict the tenant. If, until that time, he was a good tenant, chances are high that once he is again financially stable, he will resume his usual good habits.
Remember too, says Afrika, that if the unit is in a complex, the body corporate or HOA rules must be given to the tenant before they move in, preferably before they sign a lease, as many problems can creep in later, such as pet ownership or use of common areas, etc.
“Fair enforcement of rules and regular communication between the landlord and tenant will keep the relationship healthy and long-lasting,” she says.