Advice : Unlocking 12 % rental returns and ensuring on-time tenant payments
ASK THE EXPERTS
Advice : Unlocking 12 % rental returns and ensuring on-time tenant payments
Carlo Mariani Founder THE PROPERTY COACH
I
hear about residential investors getting north of 12 % on their rental returns . want to break into the residential investor rental market , but I can ’ t seem to find a good residential property in Johannesburg that can a . Give me a positive CashFlow return with above 10 % ROI and ensuring that tenants pay on time .
What makes a residential property a good investment ? Simply reducing the attractiveness of a deal to initial gross ( or net ) yield and / or net cash flow against an arbitrary benchmark can be very misleading . A cash-flow neutral deal in Area A could be a much better deal than a cash-flow positive deal in Area B , depending on many variables , such as capital growth expectations , rental growth , tenant profile , vacancy ratios and non-payment ratios in the area , insurance rates , municipal valuation and service delivery .
Start building key expertise in a small geographical area so that you can “ buy the right property , at the right price , in the right area , with the right funding ”.
Depending on your circumstances and objectives , you might still want to consider investing in
Johannesburg CBD for high-yield , despite all the negative recent media hype . Whenever entering a new area , I would recommend the following :
• Start small and slow . Property is a life-long journey , so don ’ t try to catch up in 6 months what has not been done in 6 years
• Connect with investors that are active in the area
• Develop a solid network of letting agents / property managers to get invaluable micro-knowledge on the rental supply and demand
Getting tenants to pay on time It ’ s never the property that ensure your tenant good payment behaviour . While statistics show the on average your 7k-12k per month rent is the least at risk , statistics are just that … numbers without a face .
So here are my hacks : Don ’ t accept a tenant just because you need the money . If the screening is not giving you the right results , say no !
A tenant is a customer . You are not doing them a favour by renting out your property . So treat your tenant like a good customer , and in particular fix maintenance issues in full and promptly
11 SEPT / OCT 2023 SA Real Estate Investor Magazine