Real Estate Investor Magazine South Africa April 2016 | Page 32

MANAGING

Risk Management in Buy-To-Let

Is your Tenant a risk to your property?
BY GERT VAN STADEN

M

any buy-to-let property investors have been
unnerved by urban legends of malicious
tenant behaviour. While there certainly
are types of tenants that landlords should avoid, it is
a myth that tenants are a landlord’s worst nightmare.
While it cannot be denied that there are isolated
incidents of malicious destruction of a landlord’s
property, it is but a small percentage of tenants that
display malicious behaviour. Most of us have, at some
time or another, rented someone else’s property. Did
you wilfully wreck your rented accommodation? Do
you have friends or family who have maliciously
damaged a rented property? While urban legends
of delinquent tenants abound, experienced property
investors will confirm that they are the exception and
not the rule.
Similarly, only a minority of tenants pay their rentals
late, or not at all. TPN’s latest Rental Payment
Monitor report shows that the percentage of tenants
in good standing with their rental payments reached
a high of 86% in the last quarter of 2014. However,
even at the lowest point of the economic recession
in 2009, the percentage of tenants in good standing
stood at 71%. The reality, therefore, is that the vast
majority of tenants nationally are paying on time and
in full, even under tough economic conditions.
It is important to understand that tenants are not
adversaries, but rather the clients of a buy-to-let
investor. In every business and in every industry,
business owners face a risk of delinquent clients. It
is a risk that smart business owners and investors
identify and manage. In fact, if managed correctly,
and tried-and-tested risk management strategies are
implemented, the landlord-tenant relationship can be
a very mutually rewarding one.
There is no reason for a property investor to do bu