Real Estate Investor Magazine South Africa Real Estate Investor Magazine - September 2017 | Page 29

Part 8:
Maximising Your Investment
As a first-time investor, knowing how to make the most out of your property can be tricky.
Depending on the type of property you’ve purchased, the list of things to consider will
vary. There are, however, two core points that need to be considered.
The property
When renting out a property, the goal is to make money, right?
In order to earn the best income from this property, you’ll need
to make peace with the fact that you’ll first need to spend some.
Upgrades or renovations are an important part of preparing
your property for the rental market. The extent to which you ren-
ovate will depend on the area, as well as the tenants you’re looking
to attract. These upgrades don’t have to be expensive: something
as simple as a new lick of paint or ripping out old carpets do won-
ders for the value of your property. The trick to renovating your
rental property is to place yourself in your general tenant’s shoes.
Without going overboard on trendy or fashionable fittings and
fixtures, think about the things a person staying in your property
would need. A basic requirement that most tenants have is ade-
quate storage and parking. Ensure your property has ample built-
in cupboards, and if possible at least one parking spot.
In the South African market, security features are considered a
given at this stage: make sure there are adequate safety measures
included, such as burglar bars and security gates. With unpre-
dictable electricity and water supplies, the South African landlord
also needs to consider the installation of low-energy lighting and
appliances. Depending on your market, location, and budget, it
might even make sense to install water filters, water tanks, gener-
ators, or solar panels.
Although more expensive than a mere paint job, the upgrading
of a kitchen and bathrooms does wonders to the value of your
property. As with anything else in a rental property, don’t overdo
the styling choices in these rooms. Instead, choose neutral and
timeless fixtures. If you aren’t looking to spend too much on a
complete remodeling, consider replacing showerheads, taps, and
cupboard handles.
If your property has a garden or any outdoor space, be smart
about what you plant. In most cases, tenants aren’t looking fo r a
high-maintenance garden. Instead, focus on an easy-to-maintain
and neat garden layout. If there is a pool, ensure the necessary
supplies are at hand to keep it clean.
The tenants
Once you’ve fixed up your rental property, you need to start
looking for someone to rend it. The process of finding a suitable
tenant shouldn’t be rushed.
Since this is the first time you’ll be a landlord, it’s important
to be aware of any possible pitfalls along the road. The first step
is doing a thorough background and credit check on any poten-
tial tenants. Once you’ve established that the person is reliable
and able to afford your rental price, you need to ensure you have
all the necessary paperwork. Don’t be caught off guard without
the correct forms – this is, once again, an opportunity to get
advice from your property attorney.
As a landlord, it’s important to stay up to date on the market
and your competition. Be aware of the occupant rate and rental
prices of similar properties in your area. Take note of any signif-
icant changes in the environment, such as a new shopping mall
or office building, and adapt your prices accordingly. By doing
this, you’ll also be geared with more information about your po-
tential tenants. As a result, you’ll be better equipped to create a
property that will appeal to your market.
There’s a problem…now what
Chances are, you’ll experience some problems with either your
property or your tenants. This isn’t the end of the world, but
needs to be managed swiftly and effectively.
If your tenant reports a problem with the property, be sure
to offer a solution as soon as possible. By keeping your tenants
happy, you are more likely to have a stable income from this
property. Of course, it is essential to maintain the property, re-
gardless of a tenant’s requests, since this will ensure your invest-
ment stays in good nick.
In the case of problems with your tenant, the same rule ap-
plies. Don’t delay taking action or attempting to solve the prob-
lem. Your primary goal as a landlord is to earn an income from
your property. If problems arise regarding the paying of rent, ad-
dress the problem as soon as possible. Similarly, it is a good idea
to communicate concerns regarding a tenant’s treatment of your
property. To protect yourself against possible damages and wear-
and-tear, ensure you receive an adequate deposit. Additionally,
be upfront about the conditions of rent. Pay special attention
to the date on which rent is payable, what is and isn’t included
in rent, and who is held responsible for breakage or damages.
Short term vs long term
When renting out your investment property, you can choose to
accommodate short or long term tenants. In both cases, there
are distinct benefits. With the rise in popularity of websites like
AirBnB, short term rental prices have skyrocketed.
The main benefit of long term rentals is relative peace of mind.
When signing an agreement with a tenant, you can rest easy
knowing that your property is occupied for a substantial period of
time. On the downside, however, this also makes it more difficult
to get rid of a bad tenant.
Short term rentals hold the benefit of potentially being more
profitable than long term ones. In major cities, the daily rate of
apartments is oftentimes disproportionately high. At the same
time, short term rentals carry more risk regarding occupation
rates. The day-to-day time spent on paperwork and management
of a short term rental could also be off-putting to some investors.
The bottom line
When it comes to property investment, the key is to make use of
the resources at your disposal. Thorough planning, sound advice,
and a long-term mindset are important factors in the property
world.
SOURCES
My Bond Fitness, MDW Inc.
SA Real Estate Investor Magazine SEPTEMBER 2017
27