What Every Landlord Should Know
While some homeowners may think that letting out their property could be the ideal way to earn an extra income, becoming a landlord is not always the right choice.
This is according to David Williams, Broker/Manager of RE/MAX Central, which services the northern suburbs of Johannesburg.
He notes that there are several factors that potential landlords should consider before they let out their property. “Firstly, a homeowner should do their research regarding the market and possible rental amount that can be attained for their property. They might find that selling their property is a more financially feasible idea than actually renting it out,” says Williams.
According to Spencer Schwartz, a rental specialist at RE/MAX Central, other considerations for landlords include whether or not it would be better to rent out the property furnished. He notes that furnished homes are generally more focused on the corporate client for which there is far less demand. The furniture would also be subject to fair amount of wear and tear.
“A potential landlord would also need to decide on how much they are willing to invest back into the property for maintenance and general upkeep, bearing in mind that as the owner, all of the maintenance will be their responsibility. Where possible landlords, should be conscious of maintenance-friendly fixtures and fittings,” says Schwartz. “Another big question is whether the landlord is willing to manage the property on their own or will consider hiring the services of a professional rental agent.”
He adds that a rental agent can add value to the process by sharing their knowledge and experience with the landlord. “Rental agents have the expertise to deal with all aspects pertaining to a lease agreement. There are many laws that favour the tenant, so one needs to be armed with enough information to make sure that the agreement is well structured and takes other points and considerations into account,” advises Schwartz. “Agents also have access to credit checking facilities in order to ascertain which tenants are more likely to be suitable, as well as access to a trust account where deposits are handled and administered.”
According to Schwartz, landlords that use a management agent will also have access to insurance facilities through the agent, a broader scope of marketing materials and mediums, easier access to faster legal advice because of existing working relationships as well as contracts that have been tried and tested, thereby giving them more protection.
Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says that one of the most critical aspects of being a landlord is selecting the right tenant to occupy the property. Schwartz agrees, saying that when vetting tenants the landlord needs to look for a person who will be able to afford the monthly rental and who has a clear credit history with no outstanding judgments. He notes that it is important to check references in order to establish a history of the tenants past letting habits.
“Once the landlord has made their selection and the tenant takes occupation, they still have seven days in which to report and highlight any damages or non-functional electrical, plumbing or other issues. The onus will then be on the landlord to provide repair where necessary, or in some instances acknowledge these defects, so that at the end of the lease, the rental deposit cannot be offset by these listed items,” says Schwartz.
“Landlords need to be aware of the Consumer Protection Act and how it could allow a tenant to give early lease termination, and conditions thereof. It would be advisable to landlords to include clauses or conditions which allow them under certain circumstances to call for early termination of the lease, e.g. to sell the property or to re-occupy the property.”
Providing potential landlords with some closing advice, Schwartz says that it is better to deal with only one rental agent at any given time, as having more than one rental board outside the property will look as though the landlord is struggling to let out the property, and that there must be something wrong with it. He adds that entry and exit inspections in a timely manner are of critical importance, otherwise damages can’t be recouped against the deposit or via legal proceedings.
“It is also important to remember that the landlord is not obligated to take the first potential tenant that comes along. Landlords shouldn’t rush into a rental agreement, and those tenants who are desperate to find a place two days before the start of a new month should be investigated in more detail,” he concludes.
This article “What Every Landlord Should Know” was issued by RE/MAX Southern Africa – http://www.remax.co.za/