The Expert Landlord

Manage Your Residential Property like a Pro

David Beattie

• Verlag: Jonathan Ball
• Jahr: 2018
• ISBN:
  9781868428472
• Thema: Business
• Thema: Real Estate

You have a residential investment property. Perhaps you are already renting it out. But are you doing it like a pro and do you know how to maximise your return from it? In this book, property management expert David Beattie distils two decades of experience into easy-to-implement steps and shows you how to manage your property like a professional landlord. His goal is to help you make more money in less time and with fewer hassles, by showing you how to run your property investment like a business; navigate and comply with South African rental laws with ease; attract, screen, place and keep high-quality tenants; ensure successful and consistent rent collection; and maintain your property with the least effort and money. The book also includes templates for all the documents the prospective landlord needs.

Section 1

THE EXPERT LANDLORD BASICS

Chapter 1

You Are a Landlord

What you will learn in this chapter

• Choosing which type of landlord you want to be
• What it means to be a landlord
• How to give thought to your ‘why’.

A landlord is someone who owns a property and rents it to an individual or business (called a ‘tenant’ or ‘lessee’). Also referred to as a ‘lessor’, a landlord is responsible for the performance of a property.

The lease agreement is a contract outlining the terms of the rental, such as the price paid for the monthly rent, the penalties for late payment, the length of the lease and the responsibilities of landlord and tenant.

A tale of two landlords

This is a story about two landlords I know, Thabo and Sunette, and their experience with property management.

The unenthusiastic landlord

Thabo has two rental properties. One is a two-bedroom apartment in Randburg that he inherited when his father passed away three years ago. The second property is a cottage at the back of his home in Fourways. At first he was happy to receive extra income each month, but didn’t have much of a plan for his properties, and simply got on with the rest of his busy life.

A year or so back, a cousin of his asked, as a favour, if he could stay in the cottage for a few months. This morphed into his staying on after the initial period. Thabo was not too fussed; he was receiving rent each month, and besides, he was there to help his family. They didn’t put anything in writing – they were family, after all. His cousin had moved in over a weekend and Thabo hadn’t had the time to walk through the property with him.

The cousin always paid his rent on time, but over the past few months he had started paying late. In the past month, he hadn’t paid at all. Thabo was now becoming concerned, as he had heard from someone else in his family that his cousin had lost his job. Even more concerning was the fact that his cousin never seemed to be at the cottage when Thabo was at home, and was not answering his phone or returning calls.

Eventually, out of desperation, Thabo resorted to locking the door of the cottage when his cousin was out. Before he locked the door, he took a brief look around the property. He was appalled to see the state of the interior: besides being filthy and cockroach-infested, there were nails and holes in all the walls, there was mould on the bathroom ceiling and shower, the carpets were filthy and, although he didn’t inspect all the details such as fixtures and fittings, he noticed a door handle broken.

Fortunately, Thabo’s cousin vacated the property without too much more trouble, as he was going back to Cape Town to live with his mother. Thabo eventually got around to repairing, at least superficially, much of the damage to the property. But, because he had not collected a deposit at the start of the lease, he had to cover the cost of all the damage himself.

At last, Thabo managed to find a replacement tenant for the property. It took him longer than it should have because he didn’t include photos with the rather poorly written advertisement, which he only placed in the local newspaper (he wasn’t aware of internet advertising), and when he did receive enquiries from prospective tenants he didn’t respond to many of them.

Thabo’s other property, the apartment in Randburg, was occupied by a tenant who had been placed there by an agent 18 months ago. This agent did not send him a signed inspection form after the tenant moved in, and if the agent had taken inspection pictures, they didn’t find their way to him either. Thabo recalled that the agent had emailed him a lease agreement, but he couldn’t seem to find it.

Fortunately, the tenant seemed to be quite good. Although he was still paying the same rent 18 months after moving in, Thabo was okay with that with that because the rent came in every month (although usually a few days late).

But just this past month Thabo received a bill from the municipality for outstanding water, sewerage and refuse charges in the amount of R5 000. He was astounded, as he was not even aware that this was being billed to his property. He immediately sent the bill on to the tenant to pay. The tenant responded curtly, stating that he was refusing to pay as he had never been told he was responsible for these charges. To make matters worse, the tenant added to his communication that he was giving notice because the repairs he had asked for had not happened, and he was now fed up with living in a property in a bad state of repair.

The tenant vacated promptly at the end of the month, and sent Thabo a message that he could collect the keys at the apartment, further requesting that he settle his deposit as soon as possible. Thabo realised that he couldn’t ever recall receiving the tenant’s deposit from the tenant placement agency; he would have to investigate what happened there. He was also unaware of his right to hold the tenant liable for proper notice to vacate (according to the original lease, now running on a month-to-month basis).

After two weeks of not responding to numerous emails and phone calls from the tenant, who was following up to find out when he would get his deposit back, Thabo received a letter from the Rental Housing Tribunal directing him to appear at a hearing.

The expert landlord

Sunette had always worked hard for what she had. She had been fortunate to land a good job, but she made sure she saved any excess income over the years. She had lately started thinking about investing for retirement. Having recently got married, she was also thinking of how she and her husband were going to afford education for the children they were planning to have. After speaking to friends and mentors, she concluded that residential property investment was the way to go. She did extensive research into market trends and learned as much as she could so that her property investment journey would be the best it could be. She knew that this was a long-term plan, and was happy to be patient and simply to make sure that, as she built up her portfolio, each property maximised its potential.

When Sunette moved in with her new husband, she felt she knew enough to keep the studio apartment in Bryanston she had bought when she got her first job. Shortly afterwards, she also picked up a solid deal on a two-bedroom apartment in Midrand.

For her Midrand apartment, Sunette placed her own tenant. She knew that, with a little research and the right advice, she could very easily find and screen a quality tenant. She initially looked on the internet for some tips on taking professional-looking interior photos, so she had a store of great pictures for future advertising. She then looked at as many property portals as possible to find out how she should price her rental amount; she also knew some of the trustees on the body corporate and asked them what they knew of rentals in that block. Once she had some professional-looking photos, had written a compelling description of her property and knew what rental price she would be marketing at, she went onto the websites that she knew received the most enquiries and listed her property. From a timing perspective, she had given herself enough time not to feel rushed into choosing the first tenant who came to her, so she put up her advertisement a good six weeks in advance of the required occupation date.

As expected, her quality advertisement immediately paid dividends and she started receiving email and phone enquiries from prospective tenants straight away. Having anticipated this, Sunette had prepared a few things beforehand: she set up a few prearranged viewing appointment slots into which she could slot any tenant enquiries; she ensured that she kept a record in one place of all SMSes and emails, and also ensured that she was in a position to answer her cellphone promptly (for meetings, when her cellphone was switched off, she set up a specific voice message with clear instructions); and she made sure she responded to all tenant enquiries, and sent a reminder SMS before each viewing appointment to remind those who had booked a time to meet.

At the viewing appointments, Sunette had copies of her comprehensive tenant application form with her to give to those visitors who showed inter...