Protecting your Rental Property Investment

By Harry Meyburgh

Owning a rental property (or rental property portfolio) can be and usually is a very good long term investment to generate not only a monthly income, but also capital appreciation over time.  Like any other investment, there are certain fundamentals that must be in place and you need to be aware of the “rules” applicable to get the best out of your investment.  You also need to actively protect your investment.

Etchells & Young manage a large portfolio of residential rental properties and we believe that we do this very well! The rental market has however changed of late as a direct result of the state of our economy. 

We have seen that some tenants are starting to struggle to keep rental payments up and some have become a bit more erratic with their payment patterns.  Tenants are under pressure and feeling the effects of a stuttering economy and some of the reasons given for non- and slow payment of rent are: not being paid their salary, being retrenched, not receiving any salary increase and cut backs in hours being worked. 

Those who are self-employed are also struggling with non-payment from clients and business in slower and more difficult in general.  Vacant rental properties in certain rental brackets are also becoming an issue and it is taking a little longer to find good tenants to fill these vacant properties, partly due to the scarcity of really good tenants and partly due to the number of properties on the market to choose from.

5 Keys in Protecting your Rental Property Investment

• Tenant placement – ensure that you screen prospective tenants very well by checking and verifying their income/affordability, employment, credit profile, tenant profile and get a reference from their previous landlord. Beware of the many fraudulent tenant application currently doing the rounds with false passports, fake bank statements and letters of employment.  This is one of the cornerstones of Etchells & Young’s success; our experienced admin team knows how to identify the fraudsters and knows what to look for in all applicants.  Screening tenants and only placing approved applicants according to our criteria significantly reduces future tenant problems.

• Sign a good, legally compliant Lease Agreement with your tenant to protect your interests and investment, should things go wrong later. Having a good lease, correctly signed that protects your interest, but is still fair to the tenant, could well save you a lot of time and money down the line.

• Be fair to your tenant during the lease – maintain and repair the structural and wear & tear items that you as landlord are responsible for and be reasonable in responding to tenant requests for repairs. Repairs & maintenance should be a standard item in your budget as preventative maintenance will prevent small problems from tuning into big expensive problems later on.

• Know the law, your rights and your tenant’s rights – ignorance, arrogance and non-compliance with the law could be very costly for a landlord in the long run. This can be one of the biggest factors affecting the return on your investment if you fall into this trap and act outside of the law when dealing with your tenant.

• Deal decisively if your tenant defaults, starts making excuses and does not remedy a breach, don’t delay the inevitable. Once your tenant starts defaulting and does not rectify the situation, it is better to terminate the lease and start again rather than be strung along for many months without receiving any rent.  Again, be fair and reasonable and if that does not help seek the advice of a good rental attorney sooner rather than later. Eat the frog!

We will discuss the above points in more detail next month, so watch out for that.

As a registered Estate Agent, Etchells & Young has a duty to act in the best interest of our clients and our experience and expertise make us an excellent partner to landlords who are serious about protecting the value of their rental property investments.  We have a really good team of agents to source and place new tenants and a very experienced rental management team that manage to day-to-day aspects of the tenant and to deal with any issues that may arise.

What our Clients say about us:

Meltown Investments (Pty) Ltd is a property holding company that has mainly invested in the townhouse and student accommodation sector with 120 units to let.

Etchells & Young has over the last six years played a pivotal role in the success of these projects. They have a full understanding of the rental market and take care of finding suitably vetted tenants. To ensure the smooth running and servicing of these tenants, they always keep in touch with them to assist and should any repairs and maintenance be required they coordinate these functions as well.

The understanding of the sector also requires intimate knowledge of the Sectional Title Act and all the role players that are involved. Communicating and dealing with Managing Agents, Estate Managers, Body Corporates, Trustees, etc. are all vital components of the tasks that they fulfill.

The entire team at Etchells & Young are capable and know exactly what they are doing. Queries are always attended to in time and we have never had to question their integrity.

Mike Muller

Director

Meltown Investments