No landlord wants to end up with a vacant property. Seeff offers advice to landlords on how to get – and keep – a good tenant.
PG van der Linde, Rentals Manager at Seeff Pretoria East, says a landlord’s number one priority should be to avoid vacant properties in his or her portfolio. A vacancy of just one month can have an impact on a landlord’s yield, and can turn out to be very costly.
“In order to avoid a vacant property you have to make your offer as attractive as possible to potential tenants. If you already have a good tenant, it is advisable to make certain compromises in order to retain such a tenant.”
These compromises include:
1. The deposit amount
If you find a good potential tenant it is advisable to ask for only one month’s deposit. Deposits larger than one month’s rent are counterproductive as it simply puts the tenant under financial pressure from the get-go, and in many instances could lead to the tenant defaulting.
2. Don’t pass rate and tax increases on to tenants
An increase in rates and taxes does not presuppose that a landlord must increase the rental by the same rate when considering extending the lease agreement. “At Seeff we have seen many landlords lose great tenants due to the fact that they overprice their properties compared to the market when proposing a lease extension,” says Van der Linde.
3. Reward good tenants when it comes to rental escalations
It is important for a landlord to secure a good paying tenant who looks after the premises and who abides by the terms of the lease agreement. “If you have such a tenant, it would be my advice to allow the tenant to continue renting the premises by giving a discounted escalation rate as opposed to the going rate of between 7% and 10% annually,” says Van der Linde.
4. Allow the tenant to make minor changes or alterations
If the tenant has been diligent and approaches you to ask if they may make some minor changes to the property, you should consider allowing it. Not only will this keep the tenant happy, but it could even add value to your property. A tenant who invests his time and money in a rental property is sure to be a great tenant and one you should hold onto for as long as possible.
5. Attend to issues speedily
If anything breaks in the property that is your (the landlord’s) responsibility to fix, try to act as quickly as possible to repair it. A tenant would much rather choose to continue a lease where problems are resolved quickly and where they are offered the full use and enjoyment of the premises.
6. Consider allowing pets
Keep in mind that many tenants own pets and by not allowing pets in your property you are eliminating a big chunk of the market. It is important to remember that a tenant must return the property in the same condition as they received it initially, and pets should not be a concern due to this provision.
7. Keep gardens well maintained
If you want to make your property more attractive, you could pay for garden services to maintain the garden as opposed to the tenant having to do it.
8. Set a market-related rental
The number one reason for a vacant property is that the rental price is not market-related. A landlord should always market their property at market value in order to secure a tenant.
Consider the following scenario:
An agent advises a landlord that their rental property’s market value is R12 000 per month, but the landlord insists that the rental should be R13 000 per month.
The landlord does not consider market value, and therefore receives a market-related offer of R12 000 per month, but rejects this due to the fact that is short by R1 000. After rejecting this offer the property remains on the market for another two months due to its high price.
The landlord now loses out on R24 000 due to the fact that they wanted R12 000 more for the year.
It is ironic that in many instances the property will most likely only be rented at market value anyway, and that many landlords will eventually accept the same offer they received initially two months down the line.
“It is of extreme importance that a landlord avoids this type of scenario. Therefore it is advisable to use a professional agent to price the rental property in such a way that it is competitive in the rental market,” says Van der Linde.