Becoming a landlord is not for the fainthearted, says Chris van der Merwe, Broker/Manager of RE/MAX Coastal, whose offices service the Knysna, Sedgefield and Wilderness areas.
He notes that while there are many positive aspects as well as the opportunity to be able to build wealth through letting out property, there are several considerations that potential landlords need to take into account before they decide to rent out their property or build up a portfolio of rental properties.
“Essentially, becoming a landlord is like starting a business in that the homeowner needs to have a plan in place and a clear understanding of what they hope to achieve. There is also the fact that the rental property needs to be managed correctly in order for it to be a successful endeavour. There are number of decisions that a potential landlord will need to make regarding their rental property and how they intend to handle it before they put it on the rental market,” says van der Merwe.
Van der Merwe provides potential landlords with a few of the decisions they will need to consider:
– Will the property be let out on a long term or short term basis?
– Will it be furnished or unfurnished?
– How much will the rental price be?
– Will the property be managed by the landlord or a rental agent?
Van der Merwe says that other aspects to consider would be whether or not the home requires maintenance, cleaning or needs to be updated before it is let out.
“It goes without saying that a well-maintained and clean property will attract a higher number of potential tenants,” says van der Merwe. “The landlord should consider painting the home if needed, along with having the carpets cleaned so that they can provide the new tenant with a clean and sparkling house. Hopefully this will also ensure that the get the property back in the same condition when the tenants vacate.”
He notes that if the landlord decides they do not have the capacity to manage the property themselves, a rental agent can be a valuable asset, however the type of agent that the landlord chooses to work with and the agency they are from is key.
“There are a number of positive aspects that a rental agent to bring to the party, particularly when it comes to understanding a tenant’s rights and the laws related to letting a property,” says van der Merwe. “To a large degree, the rental agent will take the burden off the landlord in many ways, such as liaising with and following up on the tenants and ensuring that the rent is paid timeously.”
Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that a rental agent will be able to handle the complicated aspects of letting a property, such as drawing up a lease agreement that protects both parties. He notes that a rental agent will also do thorough inspections before, during and after the tenants have vacated the property. Another advantage is that they will deal with all the enquiries or problems that the tenant may have. Perhaps the most important service that the rental agent will be able to provide is assisting the landlord with vetting the potential tenants.
According to van der Merwe selecting the right tenant is a vital aspect to the property owner’s success as a landlord. The landlord needs to select the right tenant who will suit the property and look after well. It is also important to ensure that the tenant has the financial capacity to pay the rent every month. He notes that when vetting potential tenants, checking their credit record is very important. The landlord should undertake a credit check to see if the tenant is behind on any payments or has any judgments against their name.
“It is also advisable to get references from the potential tenant and contact the references. This will provide great insight into the tenant and their previous rental history,” advises van der Merwe.
He concludes by saying that owning a rental property and becoming a landlord is not for everyone, however, if the right steps are followed it can be an interesting way to build prosperity and start seeing returns on property investments.