For property investors, a buy-to-let property is the most favorable strategy. Before executing other strategies, new investors often think it’s an easier choice. However, investing into a buy-to-let requires a lot of hard work. Apart from being a property investor, you now are also a landlord – which is a role that comes with a whole list of responsibilities and possible headaches. So how do you treat a headache? You take painkillers for relief. In this article, we’re giving you painkillers through some useful tips. “Finding a good tenant is like searching for the best avocado.”
Finding good renters
In all honesty, if only it were as easy as marketing your property and renting it out by the ‘first-come-first-serve’ approach. Regrettably, it doesn’t work like this. Just like finding the best avocado, you need time and patience to find a good tenant that is right for you. What characteristics does an ideal tenant have? Firstly, you need to get someone who’ll be able to pay the rent on time. This person should also maintain your property well even in your absence, and they should just generally be decent. This sound easy, right? You would be surprised how many landlords get this step wrong. The best way to ensure you find the right person is to perform background checks (legally), get character references from previous landlords and definitely check their pay slips to establish their employment status.
Complex lease agreements
Obviously, you need to have a lease agreement ready when you hand over the keys of your property to your new tenant. Usually the mistake that investors and landlords make is setting up unclear lease agreements that don’t contain sufficient information. In this case, having basic information is not enough. Instead, you want to make sure that you cover all the details, from rent payment to maintenance projects such as plumbing. Once set up, get a legal professional to have a look at your agreement to give guidance and help you on what you should and shouldn’t include in your agreement. The purpose is so that your tenants don’t find gaps and take advantage of you. “In the lease agreement, set a safe date of the 2nd or first Friday of the new month.”
Getting rent money timely
Getting the rent on time is perhaps the biggest headache. When your tenant experiences trouble being paid their salary on time, it throws a curveball on your plans. For this reason, it will be a good idea to communicate openly and have a written agreement regarding month-to-month payments. Include, in your agreement, a payment condition that is accepted by you and your tenant. A majority of South Africans get their salaries between the 25th-31st of each month. For your peace of mind, assign a safe date of the 2nd or first Friday of each new month in the lease agreement. This sets an expectation for you and your tenant to follow and if there’s non-payment, the penalties need to be specified in the agreement. If you do discover that you’ll be losing out on rental income, have insurance to cover yourself. “What most investors do is partner up with a handyman and it’s their job to maintain and repair the property on a monthly basis.”
Continual repairs and maintenance
For long-term success, you need to run your rental like a business. This means getting involved to see that each employee and department is doing the work required of them. With your rental property, you also need to make sure that each aspect of the property is operative – electrical, plumbing etc. If you really prefer doing this yourself, then go for it. However, we advise you to partner up with a handyman who will help you. Working with a handyman is what most investors do. While investors work on their property businesses, the handyman is responsible for maintaining and repairing the property every month for a certain monthly fee. This is included in the rental fee and if there’s other specific work that needs to be done, the tenant foots the bill.
They appeared to be the perfect tenants on paper and you were certain about accommodating them after meeting them. A few months down the line, you’ve been dealing with complaints from neighbors constantly calling you about the messy state of the property or noise levels. Even though the pre-screening process does help, human behavior is unpredictable. If you ever find yourself in this pickle, get together with your tenants and talk about the problems. Alternatively, you can also contact the Rental Housing Tribunal, which is one of the resources assigned to help investors and landlords.
Anticipate a headache-free tenancy
Though rewarding, being a landlord can consume a lot of your energy – particularly if you’re new to the property space. For this reason, we provide new investors with an opportunity to learn from common mistakes and be off to a good start with their investing. Connect with us at our FREE property investment webinar, where you’ll be guided step-by-step on how to start your property business.
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Images and article courtesy of Riches & Beyond.