Rental notes: The benefits of professional management
Category Rental Advice
According to the latest General Household Survey released by StatsSA, about 3,4m households in this country (out of a total of 16,7m households) are currently living in formal rental accommodation.
That is a lot of rental units - and we would venture to say that the vast majority of them are in private hands and not owned by big property companies or developers. In fact, in our experience, most landlords only own one or two rental properties, with a few avid buy-to-let investors having a portfolio of 10 or more units.
However, managing any number of rental properties - and tenants - is becoming ever more complex, not only because of the current tough economic circumstances but because of the ever-increasing amount of legislation relating to property rentals.
And there are not many private investors/ owners with the specialist knowledge or time to get on top of all this. More and more are realizing that they need help from properly trained and qualified letting agents who are already compliant with the provisions of all the relevant legislation and regulations.
Depending on optional services and matters related to maintenance, a letting or managing agent is usually paid around 10% of the monthly rental, but most landlords find that this is not a high price to pay for the peace of mind that comes from knowing that there is professional property practitioner in charge of their leases, tenants and, if necessary, the maintenance of their rental units.
The two major advantages in working with a letting agent are undoubtedly better tenant selection and better rent collection. Professional letting agents have access to systems and information that enable them to pre-qualify tenants properly so that there is a much lower risk of you ending up with a tenant that is a bad payer or likely to damage your property.
In addition, by hiring a letting agent, you put a buffer between yourself and the tenant in the event that there are problems. You don't have to listen to excuses, chase down rent, or be the 'bad guy' if it becomes necessary to evict the person living in your property. Agents also have an advantage because tenants usually realize that they, unlike the owner, are just doing their job and are obligated to enforce the lease terms.
The real question then becomes not if you should appoint a letting agent but how to select a good one? A personal recommendation is always great, but if you have to decide for yourself, you should preferably choose an agent who already manages a portfolio of rented accommodation and can provide references from other landlords.
Next, you should make sure your agent is registered with the Estate Agency Affairs Board, has a trust account for clients' money and only takes commissions from landlords (not from tenants).
It is also preferable that the agent or agency is a member of a national real estate group like RealNet, as this improves the chances of the agent using tried and tested rental property management systems, and being able to keep up and comply with new and changing laws and regulations pertaining to rental property. The fact that there is a "big brother" organization behind the agent will also be to your benefit as it significantly lessens the chances of any unethical behavior.
Once you have made your choice of agent, it is likely that you will be asked to sign an agency agreement or "letting mandate" that covers the agent's right to let the property on your behalf and manage it during the tenancy - and you must make sure that you read this, and sign it only if you are sure that you understand and agree with every part of it.
Similarly, you should check out the lease agreement your agent will be using and make sure you are comfortable with it - bearing in mind that the agent will be your legal representative in all his or her interactions with your tenants.
However, once you've done this and everything is in place, it will be time to "let go" and let the agent do what you are paying them to do. An experienced letting agent will know how to find and vet a suitable tenant. They will ensure that an adequate deposit is paid before they all the property to be occupied and will also react quickly and correctly if the rent is not paid promptly or if repairs are needed. In addition, they will keep you properly informed of all relevant matters and be able to propose quick and legal solutions to any problems.