Attracting and retaining desirable tenants

The July FNB Estate Agents Survey shows that demand for buy-to-let properties remains low compared to historical standards. However, the estimated pace of selling of investment properties is also slow. This suggests that investors are weathering the storm of low price growth and subdued rental escalations by holding onto their properties.

“Nevertheless,” says FNB Economist, Siphamandla Mkhwanazi, “the FNB Market Strength Index still gauges flats and townhouses to be moderately oversupplied, which in our view has contributed to relatively high vacancies and muted rental escalations. Overall, we expect excess supply in the property market to persist a little longer, thereby keeping price growth and rental escalations relatively subdued.”

To ensure ongoing returns on their investments, landlords holding onto their rental properties need to make them more attractive to desirable tenants and so avoid lengthy vacancies.

Two key factors in attracting – and retaining – desirable long term tenants are correct pricing and regular maintenance of the rental property.

Rentals

Correct market related pricing is vital to ensure a long-standing lease with tenants who are considerate and reliable when it comes to timeous rental payments.

Would-be tenants often place a premium on renovated and decorated spaces, so the more care you have taken with your property, the higher the rentals are likely to be. However, if tenants feel cheated because you’re charging a higher rental than the going rate for comparable properties, you run the risk of losing them as they will look for alternative accommodation. To establish the correct rental amount, scan the online classifieds and visit a couple of similar properties to let in the area to gauge their prices compared to the accommodation and finishes on offer. Reliable rental agents in the area should also be able to help you decide on the right rental for your property.

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Maintenance

When it comes to maintenance, investing in good materials and finishes upfront is advisable as it should result in fewer repairs. Frequent repairs can prove costly and may even mean your property is out of commission for some time.

• Walls should be unmarked – missing chunks of wall plaster from nails that have been removed will create an impression that will negatively affect the income potential of a property.
• White or other neutral shades are the best paints for interior walls in rental properties, and it may be worth spending money on updating kitchens and bathrooms if these are looking tired.
• Carpets should either be replaced or professionally cleaned before prospective tenants are invited to view.
• Gardens should be neat and should require little maintenance, because it can be expensive to restore a high maintenance garden to its original state when tenants leave.

Contingency planning

With any rental property a certain amount of wear and tear is to be expected, so you need to set aside a certain amount each month for ongoing repairs. You also need to plan for major breakages such as leaking roofs or toilets, so it is advisable to have an emergency fund to cover these.

Be sure to take out insurance to cover your liabilities as a landlord, which can be arranged through brokers who will advise on the correct insurance needed for the type of rental property. This will help avoid having to find additional money to cover unexpected contingencies such as burst geysers or water pipes, because it’s unacceptable for tenants to be left for days or weeks without hot water.

The paperwork

Lease agreements must serve the needs of landlords and tenants, so it could be worth your while to have an attorney look over your contract to ensure it meets the requirements of the Rental Housing Act and other legislation that may apply in your situation.

Tenant selection

Even if you have decided to manage your rental property without the help of an agency, it could pay you to appoint an agency to vet applicants on your behalf. Reliable agencies have access to credit checking facilities that aren’t available to private individuals, which should minimise the likelihood of signing up delinquent tenants who won’t pay their rent or may damage your property.

Keeping the good ones

Obviously, the higher the rental achieved, the better the investment performance, but that’s only true if your property is occupied. A property that stands empty is costing you money, so if you have good tenants who pay their rent on time and look after your property, you need to make sure they want to stay.

You can achieve this by keeping rental increases at reasonable levels rather than insisting on maximum increases each year, and attending to requests for repairs and maintenance as soon as possible.