A number of recent incidents, says Bill Rawson, Chairman of the Rawson Property Group, have confirmed his view that the independent landlord determined to work all on his own can frequently lose out badly - for two main reasons.
The first of these, said Rawson, is that such landlords may well be out of touch with today’s market values and at a time when rents in high demand areas are escalating at a very satisfactory rate, this can result in their obtaining a rent that is far too low.
Rawson said that he had recently come across a case where the landlord had ‘jogged along comfortably’ with low rentals for several years, only to discover, once he had used a reputable agent to find a new tenant (the previous one having left), he could have been charging 20% higher for some time.
“Very often,” added Rawson, “landlords are not aware of the fact that in today’s market it is also acceptable to demand an upfront deposit of two months’ rent and a sum to cover the advertising of the unit and legal costs (if a lawyer is used).
The second big mistake made by DIY landlords is to do inadequate checks on a prospective tenant’s financial status, employment record, current employment position, previous tenancies (if any) and, above all, his credit record.
“Any estate agent of standing,” said Rawson, “will have paid-up access to one of South Africa’s highly efficient credit bureau, but very few independent landlords can do this – some are not even aware that such bureau exist.” The use of these credit checks, said Rawson, has helped good estate agencies to almost eliminate the taking on of poor rent payers.
“We have many franchises where late payers comprise less than 5% of the total and where no tenant has ever had to be evicted.” Such efficient agents, said Rawson, will on principle resist the temptation to take the highest offer and will look carefully for the tenant with the best track record. Such tenants, he said, often stay on for five to ten years, and in some cases, even longer.
“Often the really stable, reliable types are those who are not high flyers or overly ambitious but who enjoy their work and live orderly, well-managed lives without any disruption of their neighbours.”
Now that monthly rentals are beginning to be very much on the same level as bond repayments, Rawson added, it is time once again to repeat the message that many people now paying rent should be considering entering the home buying market. “Until recently,” he said, “it was often possible to achieve very significant savings every month by renting – but that situation, especially in high demand areas, is changing rapidly.