Marathon, not a sprint
If done properly, renting your property can be lucrative
BEING a landlord is more complicated than simply signing a lease agreement and collecting a monthly rental fee, said Adrian Goslett, chief executive officer of Re/Max of southern Africa.
This is true whether you are renting out your property, a cottage on your property or an extra room, or if you are an investor who has found an excellent incomegenerating property.
Goslett provides five key elements to consider when entering the property rental business. • Have a clear time line
While there may be some investors who are able to find a rental property that can generate a rental income that covers all the costs, generally, this is not the norm.
A rental property may pay for itself in the long run, perhaps once the bond is paid off or when the market booms, but initially there will be a cost involved in owning a rental property.
Property should be viewed as a longterm investment, regardless of whether the buyer has bought the property to live in or rent out.
“Turning a rental portfolio into a profitable business is more like a marathon than a sprint,” said Goslett. • Run the numbers
The bond repayment is not the only expense on a rental property. Landlords need to deal with expenses such as maintenance, insurance, rates and taxes, and possibly an attorney or a professional rental agent.
An attorney is useful when it comes to lease agreements, defaulting tenants and advice on the landlord’s legal rights and responsibilities.
A rental agent is useful for screening tenants, collecting rent and managing the property.
Ideally, a landlord should set money aside for the upkeep of the rental property. • Have . a checklist
Essentially, the checklist will include all the items that should be checked before a new tenant moves in. Having a list will save time and ensure that everything that needs to be checked is gone over carefully with the tenant.
It is easier to check for any potential hazards or things that need to be fixed before the tenant moves in, rather than when they are already there.
Items to add to the list could include: check the stove is in working order; lights and electrical points are in order; the geyer works correctly; leaks or damp that needs waterproofing; and the gutters are unclogged. • Have detailed contracts
Having all stipulations clearly stated upfront in a detailed contract will help avoid misunderstandings or complications with tenants.
The more detail and issues that are covered in the contract, the smoother the rental will run. Aspects such as acceptable tenant behaviour, breakage costs, preferred method of payment and the date that the rent is payable should be included. • Choose the right tenants
It might be tempting to rent to a friend or family member, but if anything goes wrong it could have a negative impact on the relationship.
An acquaintance or work colleague could be a perfect tenant, as the landlord will have some background information and an idea of what they are like. When renting to a stranger, landlords should inquire about their previous rental history, reasons why they are moving, their place of employment and income. It is essential to contact the references. While it is not legal to discriminate against any tenant, it is also not wise to simply accept tenants on a firstcomefirstserve basis. A rental agent would be a valuable asset when selecting the right tenant.
“While not always an easy endeavour, owning a rental property and becoming a landlord can be a financially rewarding venture,” said Goslett.
— Business Editor.
Evaluate prospective tenants carefully before leasing your property.