Marathon, not a sprint

If done prop­erly, rent­ing your prop­erty can be lu­cra­tive

Weekend Witness - - Scene Around -

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.

PHOTO: SUP­PLIED

Eval­u­ate prospec­tive ten­ants care­fully be­fore leas­ing your prop­erty.

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