Home­owner must-knows

Lesotho Times - - Property -

AL­THOUGH it may not have been your orig­i­nal in­ten­tion to be­come a land­lord and let out your property, there are cer­tain sit­u­a­tions in life where the need may arise.

“Some home­own­ers may need to re­lo­cate for work or are deal­ing with fi­nan­cial dif­fi­culty that they need to ad­dress,” says Adrian Goslet, Re­gional Direc­tor and CEO of RE/ MAX of South­ern Africa.

“If the end goal is to hold on to the property, rent­ing it out could be a fea­si­ble op­tion, bear­ing in mind it does have both ad­van­tages and dis­ad­van­tages.”

Goslett shares some ad­van­tages of let­ting out your property:

1. Fi­nan­cial re­lief or the elim­i­na­tion

of a dou­ble house pay­ment A rental in­come will be gen­er­ated when the property is let out. This money can be used to pay the bond on the property, as well as other ex­penses re­lated to the home, pro­vided of course that the rental in­come is suf­fi­cient to cover these over­heads.

Even in the in­stance where the money re­ceived is not enough to cover ev­ery­thing, it will pro­vide some fi­nan­cial re­lief to a home­owner who needs to pay for a bond, and pos­si­bly a rental on an­other property as well.

2. In cer­tain cases, it is bet­ter to have a ten­ant in the house than have it stand

empty While there is a cer­tain amount of risk to hav­ing a ten­ant in the home, leav­ing the home un­oc­cu­pied can come at a greater cost.

If the home is va­cant it can be­come a tar­get for thieves, van­dals or squat­ters. This is es­pe­cially true if the owner has re­lo­cated to an­other city or prov­ince and is not able to keep an eye on the property on a reg­u­lar ba­sis.

Hav­ing the right ten­ant in the home pro­vides some pro­tec­tion to the property, and they could also as­sist in main­tain­ing it.

3. The ten­ant could be the fu­ture buyer of the property If the owner de­cides that they would like to sell the property at a later stage, there is al­ways the pos­si­bil­ity that the ten­ant may de­cide to pur­chase it.

The ten­ant may have been rent­ing while they were sav­ing for a de­posit or to cover other costs associated with a property trans­ac­tion, and could be the ideal buyer. The rental de­posit could also be used as part of the pur­chase de­posit. Goslett dis­cusses the down­sides to let­ting out your property:

1. The owner may re­quire eq­uity to pur­chase an­other home The only way that let­ting out the property can be a fi­nan­cially vi­able op­tion is if the owner can af­ford to rent or buy some­where else. In the in­stance where the home­owner has re­lo­cated and in­tends to pur­chase an­other home, they may re­quire the eq­uity from their pre­vi­ous home as a de­posit. If this is the case, let­ting out the home would not be an op­tion.

2. Cer­tain ten­ants could make it more

DIF­FI­CULT TO SELL THE HOME If the ten­ant does not want to pur­chase the home, they may not be very co­op­er­a­tive dur­ing the sales process, and could make it dif­fi­cult for buy­ers to view the property.

There is also the risk that the ten­ant has done lit­tle to en­sure the up­keep of the property, or has caused dam­age. If the home is un­oc­cu­pied, it is far eas­ier to make re­pairs, clean up and get the property ready for show days.

3. Deal­ing with delin­quent ten­ants Once a ten­ant has taken oc­cu­pancy of a property, it can be a long and te­dious process to evict them, even if they are no longer pay­ing their monthly rental.

Land­lords al­ways run the risk of hav­ing to deal with a delin­quent ten­ant who is cost­ing them money, and pos­si­bly caus­ing dam­age to the property.

In­cur­ring ad­di­tional ex­penses such as lawyer’s fees com­pletely elim­i­nates any ben­e­fits of rent­ing the property out. This risk can be mit­i­gated to a de­gree by proper vet­ting and back­ground checks of all pos­si­ble ten­ants.

4. Manag­ing the property re­motely

CAN BE DIF­FI­CULT Manag­ing a rental property could prove to be rather dif­fi­cult, es­pe­cially if the home­owner is liv­ing in an­other city. If this is the sit­u­a­tion, it would make sense to hire a property man­age­ment agent who has the ex­per­tise to ef­fec­tively vet ten­ants, col­lect rent and en­sure the property is well looked af­ter.

In con­clu­sion “Look­ing at both the ad­van­tages and dis­ad­van­tages will as­sist home­own­ers to de­ter­mine whether let­ting out their property is the best de­ci­sion for them in their cur­rent sit­u­a­tion,” says Goslett.

“While be­com­ing a land­lord can be ben­e­fi­cial, it is def­i­nitely not for ev­ery­one.”

Land­lords al­ways run the risk of hav­ing to deal with a delin­quent ten­ant who is cost­ing them money, and pos­si­bly caus­ing dam­age to the property.

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