Real Estate Investor Magazine South Africa April 2014 | Page 33

RESIDENTIAL RUN THE NUMBERS 2 It is important to remember that the bond repayment is not the only expense when it comes to rental property. Landlords will need to factor in expenses such as general maintenance, insurance, rates and taxes and possibly the services of an attorney or a professional rental agent. The services of an attorney will be very useful when it comes to lease agreements, defaulting tenants and advice of the landlord’s legal rights and responsibilities. A rental agent will also be useful for screening possible tenants, collecting rent and managing the property. 3 Ideally, a landlord should be setting money aside in a contingency account for the general upkeep of the rental property or if anything requires fixing. By doing the math and budgeting for expenditure, the landlord will be able to allocate money in the correct manner. 4 HAVE A CHECKLIST The checklist needs to include all the items that should be checked before a new tenant moves into the property. Having a list will save time and ensure that everything that needs to be checked is gone over carefully with the tenant. It is also far easier to check the property for any potential hazards or things that need to be fixed before the tenant moves in, rather than when they are already there. • Check the stove is in order • Check all lights and electrical points • Ensure geyser is working properly • Check for any leaks or damp that needs waterproofing • Check that the gutters are unclogged and clear of debris UTILISE AND HAVE DETAILED CONTRACTS Having all stipulations clearly stated upfront in a detailed contract will help to avoid any misunderstandings or complications with tenants in the future. The more detail and issues that are covered in the contract, the smoother the rental will run. It is more important that all elements are included in the document so that there are no areas left open for interpretation. Aspects such as acceptable tenant behaviour, breakage costs, preferred method of payment and date that the rental is payable should be included. 5 CHOOSE THE RIGHT TENANTS While it may be tempting to rent to a friend or family member, if anything goes wrong it could have a huge negative impact on the relationship. An acquaintance or work colleague could be the perfect tenant, as the landlord will have some background information and an idea of what they are like. It is essential that landlords contact the references given and try to verify as much information as possible. While it is not legal to discriminate against any tenant, it is also not wise to simply accept tenants on a first-come-first-serve basis. A rental agent will be a valuable asset when selecting the right tenant. While not always an easy endeavour, owning a rental property and becoming a landlord can be a financially rewarding venture. The golden rule however is that the principles of property are adhered to and that property is viewed as a long-term investment. RESOURCES RE/MAX www.reimag.co.za REALE ESTATE BUSINESS DIRECTORY April 2014 SA Real Estate Investor 31