Renting out your property is one of the many options available to make some extra money, and with the economy putting extra strain on us all, a lot of people are only able to afford to rent, which gives rise to high demand for properties to rent out.
If you’re considering renting out your home, it can be a lucrative opportunity, but there are some things you should think about first – particularly as times get tougher economically.
It is essential to have thorough credit checks done on prospective tenants – and that includes every tenant. When renting to a married couple, a credit check should be performerd on both parties, in order to avoid defaults on rent.
Correctly screening tenants can be done effectively through the help of a rental agent. Be aware that if a tenant is happy to shortcut a rental agent’s fees and rent from you directly, they may also be happy to later short change you on the rent.
Once a tenant has given permission for a credit check to be done, it means they can be checked again at any time during the lease period. Tenant profiles can change monthly. With times getting tougher, continuous credit checks show whether or not a tenant is keeping up with personal bills, and if accounts are suddenly not settled, it can indicate that the tenant is in trouble.
By being aware whether or not tenants can continuously afford both the rent and their lifestyle, it is easier for landlords to make informed decisions about renewing leases, or if it comes to it, making sure they serve notice accordingly.
There are also insurance products that landlords can take out to mitigate the risk of a tenant defaulting. One option, for example, involves the landlord paying a nominal fee for a policy providing access to three months of rental income, as well as to funds and resources if you need to pursue a tenant in court. An eviction process can cost anything in the region of R25 000 to R100 000 and can take six weeks to six months to settle, so it can be very useful having a policy like this to protect your pocket.
Quality over quantity
Keep in mind that by taking a slightly lower rental and securing a quality tenant will mean more money than holding out for your desired price. It is important to weigh up the risks: keep an existing, good standing tenant paying a lower rental increase, or wind up with an unreliable tenant that could lead to your home sitting empty for months.
By Natalie Muller
Natalie Muller is the Head of Rentals for Jawitz Properties Western Cape and Gauteng. With a career in real estate spanning 22 years, Natalie started as a conveyancing secretary for a top legal firm in Namibia, discovering her passion for property that saw her joining her family’s boutique property business in the Cape’s Hout Bay, to being a real estate coach, upskilling and educating 1500+ property agents in Namibia. It was when she was managing an agency in Hout Bay that Jawitz Properties head hunted her to head up their regional rentals division. She has found her niche in rental property citing the legislation and opportunities to assist and educate clients and agents alike, as her true calling.