Keep Tenants Paying on Time

This article is with courtesy of Realestateweb and Bill Rawson (“How to keep your tenants paying and behaving”, 23 October 2008).

Chief executive of the Rawson Property Group, and seasoned investor, Bill Rawson, says that it is of the utmost importance that landlords receive rent from their tenants on time every month. This comes after financial institutions started clamping down on default mortgage bond payments. He added that the days where banks understood a landlord’s predicament regarding tenants not paying rent are over – the National Credit Act made sure of that.

A landlord can find himself blacklisted should he fall behind on bond repayments, and for tenants this means tighter restrictions, like paying a deposit equal to 3 months’ rent as oppose to the earlier one month’s rent. This huge deposit can often only be paid back after a tenant has fully vacated the premises and the landlord has properly assessed damages to the property. This results in tenants not being able to pay the next deposit at their new premises, in turn, resulting in tenants being much less mobile and more likely to renew leases.

Rawson stressed the importance of the selection of tenants. He advised that estate agents and landlords should thoroughly check all references given by potential tenants. It is also wise to use agents with experience in this field.

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Tips to Negotiate Lower Rent

According to FNB’s Residential Property barometer, the rental market activity was above average for the first quarter of 2008, with the homebuyers market sitting at a mediocre level.

This proves that more and more people are choosing renting over buying, showing the importance of being aware of the negotiating power one has when looking at a rental property.

Would-be tenants should find out what similar properties in the area cost to rent. This can be used as a bargaining chip to negotiate lower rent. You can also page through the Junk Mail and other property listings to get a good idea of the market price.

Also find out how many units are standing open when moving into a complex or block of flats. If there are a lot of vacancies, it is the perfect time to negotiate a lower price.

Always let your landlord know how responsible you are by handing over references from work, or telling them about your qualifications. This will put you in a stronger position to negotiate.

Offer to sign a longer lease in return for a rent deduction and a guarantee that the rent won’t rise above inflation for this duration.

Find out how long a property has been empty. A landlord loses money every day his property is vacant, which means you can negotiate a good rent.

By offering to do some maintenance, like painting or maintaining the garden, you can also shave some money off your rent.

All and all it is important to negotiate. Offering 30% less is probably a bit extreme, but you should be able to get between 15-20%.

(The information in this article is courtesy of Karen Iten, “It’s a Good Time to Negotiate Lower Rent” Moneyweb, 15 September 2008.)

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Estate Agency Boss Issues Warning to Landlords

Landlords Beware

The CEO of RealNet Property Group, Tjaart van der Walt has warned that landlords looking to increase rentals could land in financial trouble. The current market has seen rental accommodation in strong demand, which has consequently placed landlords in a stronger position than in previous years.

There is anecdotal evidence however, that tenants are showing increasing resistance to the rapidly escalating rentals and that landlords should carefully consider the benefits of a long-term relationship with reliable tenants before pushing up the rental.

If landlords continue to hike the rent unreasonably, the reality is that tenants with good credit records will have no problem whatsoever finding alternative accommodation. While the tenant has to then go through the inconvenience of sourcing another unit and moving out, the landlord will be left with the prospect of finding a new tenant that may or may not be as reliable in paying the monthly rental.

Van der Walt goes on to say that landlords should keep in mind the costs involved in sourcing new tenants. For instance, costs may include advertising, cleaning, repairing and perhaps even repainting the property. A second consideration is that there will be no rental income while the property is being prepared for new tenants and even at an increased monthly rental for the new tenant, it will take a good deal of time before the lost income is made up.

There is a third factor that might prove worrying is the danger of vandalism when properties stand empty and the cost of temporary security measures should be considered. In short, van der Walt suggests that landlords are likely to find that once all the costs are added up, they might well have been better off had they given their initial trustworthy tenants a break.

The information in this article is courtesy of Tjaart van der Walt (“Tenants resist rising rentals – estate agency boss”, Realestateweb, 13 September 2008).

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