19 Jun 2013
Usually micro-landlords (those with one to ten properties) tend to manage their properties and their tenants themselves.
Michael Bauer, general manager of IHFM, says in these cases there are aspects of property management, rental collection or tenant selection that landlords might need guidance on.
Bauer says if the property is not maintained properly or the occupancy of the unit not kept at a steady rate, the investment profitability or viability is lessened.
If tenants are good payers, they must be looked after in order to keep them in place and not risk losing the steady income from that tenant. It is often the case that tenants will leave the premises at the end of their leases (some will even cancel their lease) if they are unhappy with the way the property is being managed and will not be convinced to stay with promises of change or improvements.
The longer the landlord can keep one good tenant in the unit, the better his return. “You have to take into account the costs of advertising for a new tenant, maintaining the property while it is standing empty or keeping an eye on it security-wise and the loss of income during the time the unit is vacant," he says. The time it takes to advertise and vet prospective tenants needs to be taken into account. If you are doing it yourself, i.e. if your time is worth R400 an hour for example, and it takes you an hour to meet with a new tenant, it is a loss from your personal income.
To manage the property well, there are a few basic principles to stick to:
However, the management of a tenant starts with the completion of a rental application and not only when the lease is signed, says Bauer. The landlord must check the references supplied, their employment history and their credit record thoroughly.
The lease agreement must clearly state the date that the rent is due, where the rent must be paid and what the penalties will be if the rent is late. Some tenants who have been reliable and in good-standing sometimes also fall on hard times, and in these cases it sometimes pays the landlord to try and establish a workable plan for both parties than evict the tenant. If, until that time, he was a good tenant, chances are high that once he is again financially stable, he will resume his usual good habits.
Remember that if the unit is in a complex, Bauer says the body corporate or HOA rules must be given to the tenants before they move in, preferably before they sign a lease, as many problems can creep in later, such as a pet they did not know they were not allowed to have live with them.
He says as in any business arrangement, fair enforcement of rules and regular communication will keep the relationship on a sound footing.
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