As a landlord, saving on a rental agency’s commission by managing your own investment property may seem like a smart move. However, having checks and balances in place as well as a correctly worded lease agreement could save you money - and headaches - in the long run.
DIY pitfalls
Owning a rental property can be a breeze when you have reliable tenants and are easily able to keep abreast of maintenance needs. But when tenants turn out to be troublesome, or you need to put your property back on the market to find new tenants, DIY landlords often encounter pitfalls.
• Finding suitable new tenants: This entails marketing the property, arranging viewings, screening applicants, and preparing lease documents. The process is time-consuming and, if you don’t know the ropes, can also lead to financial losses.
• Attending to maintenance and repairs: To ensure your property remains in good condition you will need to arrange regular visits to the property and attend to any breakdowns timeously.
• Payment defaulters: In the event of your tenants defaulting on the rent, you will need to take steps in accordance with the relevant legislation. These include the Rental Housing Act and the Prevention of Illegal Evictions (PIE) Act, as well as any laws and regulations relating to complexes governed by sectional title and home owners association legislation.
Some landlords may enjoy getting to grips with these tasks, but most would prefer to spend their time and effort on other activities while their property is taken care of by an efficient agent.
What rental agents do
Reputable rental agents will confirm that your tenants have clean credit records. They will also do reference checks to establish that applicants don’t have a history of defaulting on rental payments and verify income to ensure that they can afford the rent on your property.
• Marketing: Agents have several outlets for marketing rental properties, and may already have suitable qualified tenants on their waiting list. If you hire an agent as soon as you know your property is going to be vacant, you stand a better chance of having new tenants move in immediately after the current tenants move out with no gap in monthly rental payments.
• Agents will have processes in place for screening potential tenants, running credit and reference checks which will help ensure qualified tenants. They will manage negotiations, deal with any issues and answer any questions that applicants may have. They will also be able to prepare legally-compliant lease documents more efficiently than private landlords because it’s part of their business.
• With a managed lease the agent also collects the rent and would follow up with the tenants on outstanding money.
• Also important, agents will be abreast of the current legislation and regulations concerning landlord-tenant issues, so they can help you with legal processes to be sure you are compliant. Again, this will save you money and headaches in the long run.
Choosing a rental agent
When hiring an agent, you should look for someone who is knowledgeable about your market, so it’s a good idea to ask other landlords in the area for recommendations.
Be sure to ask to see the agent’s current fidelity fund certificate (FFC). Anyone who deals in property - including rental agents - must be registered with the Estate Agency Affairs Board (EAAB) and must be in possession of a current FFC.
Some questions to ask potential rental agents:
• What can you expect from the entire process - from signing a mandate to viewings, negotiations, lease signing, pre-occupation inspections, managing of deposits and handing over of keys?
• How many rentals do they work with on a regular basis?
• How long does it usually take them to find new tenants, and what methods do they use to market a property?
• What type of screening do they do?
• If you find your own tenant, do they still charge you their full fee?
• Will they help you with the screening and lease process if you do find your own tenant?
Peace of mind
The main advantage of employing a rental agency is that you have access to their systems, procedures and agreements, and professional advice is available when necessary. Once you do find a good agent, you should be able to sit back and let her handle the entire rental process.