HOW TO MANAGE EXPENSES
WHEN buying a sectional-title property, Michelle Dickens says you need to make sure the scheme is financially sound, and you should ask about possible special levies.
You also need to look at the size of the complex, because, the larger the complex, the more the risk of owners defaulting on their levy payments is spread across all owners.
Look at how well the other units in the sectional-title scheme or the houses in the area are maintained. “It’s no good having an oasis of a wellmaintained property in an area where the surrounding properties are badly maintained and there is a high rate of delinquency: you are unlikely to attract a good-quality tenant,” Dickens says.
The more owner-occupied properties in a complex, the better, she says, because owner-residents tend to take better care of units and be actively involved in the management and maintenance of the complex.
Dickens says that nowadays landlords can recover expenses from sectional-title tenants that they were not able to in the past, including water, sewerage, electricity, refuse removal and parking. She emphasises that these expenses must be detailed in the lease agreement and cannot be suddenly foisted on a tenant.
You need to be disciplined in how you collect the rent (it’s best, for example, to issue written monthly invoices) and how you deal with latepaying or non-paying tenants. The quicker you take action against nonpayment, the less money you lose, Dickens says. (On the legal process required to remove tenants, see “How to evict a tenant (lawfully)” on the Personal Finance website, www.persfin.co.za.)
Having good-quality, long-term tenants is the ideal, because you have a regular income and fewer periods when the property is vacant. To attract or keep such tenants, it is worth being slightly negotiable on the rental.