Find your own tenant and save money

Wouldn’t it be nice to have an extra month’s rent in your pocket? If you decide to find a tenant yourself rather than pay a rental agent to place one for you, you’ll save yourself the placement fee – usually one month’s rent.

In a recent article we offered some pointers to take good photos of your property for your online rental advertisement. Now, what about the contents of your advert?

Step 1: Describe the property

Try to offer an accurate description of the property: if you are offering a cosy, shabby-chic cottage, don’t try to pass if off as a luxury designer pad – you don’t want to waste anyone’s time.

Here is a quick check list of information you can consider including:

  • Number of bedrooms
  • Describe the living area – is there a separate dining area?
  • Is there a study?
  • Does the bathroom have a bath and shower?
  • Is there a separate toilet?
  • What is the size of the dwelling and the property?
  • Is there a swimming pool?
  • Is there a balcony or deck
  • Does the property have a view
  • Are there any outdoor amenities such as built in braai area, jungle gym
  • Is the property furnished?
  • Are there any appliances included such as a stove, washing machine or fridge?
  • Parking: is there a garage/car port/off-street parking?
  • Are any additional services, such as garden or cleaning services included?
  • Finally, remember to include the monthly rental amount.
  • Proximity to schools, public transport & shopping centres
  • Security: Is in in a secure complex? Alternatively, is it properly fenced, in a well-lit area? What are the crime stats for your area? This is an important aspect for many people.
  • Quiet area, away from busy roads?
  • Is there a nice garden, established trees?

Step 2: Describe your dream tenant

Up to how many people may stay in the property?

Are animals allowed?

Are children allowed?

You could specify what kind of tenant you would prefer, for example vegetarian, but remember, you may not be prejudiced against people due to age, gender, sexual preferences, race, creed or culture.

You may want to state that tenants with stable employment are preferred rather than self-employed or commission earning tenants.​

Step 3: Be clear about the terms

Whether or not you intend to use RentMaster’s rental collection service, we recommend that you include the following in your advertisement:

Inform applicants that they will be required to show proof of income and affordability by tendering bank statements and payslips.

Applicants will be required to give permission to run a credit check.

The successful applicant will also need to pay the rent by debit order if Rentmaster is contracted to secure the rental collection.

Step 4: Make a date

Advertise the viewing date in your advertisement. This way, you will only need to make one viewing appointment. Most people prefer to view over a weekend. Remember to give yourself (and RentMaster) enough time to properly screen the applicant, so the middle of the month is better than the 28th!

How current water restrictions affect landlords & tenants

Times of scarcity often have the effect turning people against each other and Cape Town’s current water crisis is no exception, with many disputes regarding water usage arising between landlords and tenants. Here are some tips for landlords to help them navigate this difficult time with their tenant.

Level 5 restrictions in a nutshell

Residents may not exceed 87 litres per person per day of municipal water.

It is prohibited to use municipal water for any of the following:

  • Washing cars
  • Hosing down driveways & paving
  • Watering the garden
  • Topping up swimming pools.

Level 5 restrictions have also given the City powers to punish transgressors: residents who exceed the daily allocation will have water restricting devices installed in their water supply. What’s more, they will have to pay the R4500 for their installation. Repeat transgressors may also be liable for a fine of up to R10 000 – and even jail time.

In a recent practical article in the Daily Maverick, Western Cape Premier, Helen Zille, broke the daily 87 litres down for residents:

  • A shower for no more than 2 minutes: 20 litres
  • Drinking water: 2 litres
  • Daily hygiene: brushing teeth, washing hands, etc: 4 litres
  • Doing the dishes and laundry: 23 litres
  • Three toilet flushes: 9 x 3 = 27litres
  • Cooking: 4 litres

Total: 80 litres

Empower with knowledge

Take the time to explain the water crisis to your tenant, especially a new tenant who is not from the Western Cape and perhaps not au fait with the severity of the situation. Make sure she is aware of how many litres of water go into daily activities like showering and loo flushing.

Encourage her to save water by placing buckets in the shower to reuse grey water in the toilet and garden. Also let her know about social media pages such as Watershedding Western Cape on Facebook, where she will find a wealth of information and ideas.

Make sure that she also knows what she is not allowed to use municipal water for – see above.

Consider investing in some water-wise improvements

  • Plant indigenous flora and/or succulents in your garden and remove thirsty lawns.
  • Install a water tank to harvest the rainwater from your roof. This water can also be used to top up your pool. You will be amazed at how quickly the tank fills up!
  • Cover the swimming pool with a quality pool cover to limit evaporation.
  • Consider installing a well-point.
  • If your rental property is divided into several units, consider installing a water meter in each unit and not just splitting the water account by the number of units. Most people are only incentivised to do their part if they can see the direct benefit – or the punishment for not doing their bit.

These investments will make your property more attractive to prospective tenants, especially since it is predicted that water scarcity is here to stay in the Western Cape and that we can expect to pay more for water in the future.

If disputes arise…

Level 5 restrictions give the City the teeth to go after water abusers with water restricting devices, fines of up to R10 000 and even jail time. What happens if your tenant uses too much water and the city fines you as the property owner? We asked RentMaster’s legal officer, Sonja Wijnja.

“As with most tenant/landlord disputes, we need to look at the lease agreement. Any lease agreement worth its salt will stipulate that the tenant must observe the laws and municipal by-laws, even if the by-laws have been changed after the tenant has moved in.

“So in the case of water restrictions the tenant is obliged to observe the local by-laws governing the use of water – even if they have changed since signing the lease agreement. The municipality will fine the landlord, but the landlord will be able to pass the fine on to the tenant. The same applies to water restricting devices – if the tenant used too much water, they would be liable for the installation costs of the device.”

But what if the tenant is using too much water because there are leaks in the pipes?

“Maintenance is one of the most often disputed areas of landlord/tenant relations, but one would again start by looking at the lease agreement. In general, the landlord is responsible for the structure of the property, which would usually include the (unless the lease agreement specifically states that the tenant is responsible for this). One would also have to look at whether the pipes are part of the structure and whether the burst was caused (or could have been reasonably prevented) by the tenant.”

If the lease agreement requires the tenant to maintain the garden or pool, can the landlord hold her liable in the case of a drought?

“As far as water usage is concerned, definitely not, as he would be requiring the tenant to transgress the municipal by-laws. The tenant may still be required to perform other garden maintenance tasks such as weeding, mowing the lawn, etc. However, if the landlord has provided adequate water from an alternative source, such as a well-point or rainwater tanks, he would be in his rights.”

In summary, it is always best to prevent potential disputes by having a frank discussion about such issues up front to ensure that all parties are in agreement as to their respective responsibilities, and then to ensure that such agreements are properly recorded and included in or attached to the lease agreement as an annexure. The best attitude for tenants and landlords to adopt is to work together to overcome these trying times.

Watch out for deposit fraudsters!

As the silly season approaches we see the predictable increase in activity of scammers and con-artists defrauding the public of their hard-earned money. Deon Botha, CEO of specialist Rental guarantee company Rentmaster says “Scams to steal money paid across as security deposits to secure rental property is an old trick that can easily be detected and prevented with some basic security checks before paying across your money”.

Scam # 1: Hijack and sell what’s not yours

The scam works as follows. The scammer picks an area that is in demand, in other words where there are many people looking for a place to stay, typically more than there are available places. This creates competition, and people are frequently disappointed finding places taken by the time they make an enquiry. As such people have to move fast to secure a place as it becomes available.

The scammer then finds a suitable listing on one of the online market places, frequently Gumtree as anybody can quickly and easily create a listing with no security checks of any kind. He or she then uploads the photos of an existing listing, and creates a new listing with their contact details. They frequently also offer it at an excellent price to make it even more attractive.

When interested tenants make contact, either by email or by mobile phone, their story is usually that “Yes, the place is still available but there have been many enquiries. The first one to pay the security deposit secures the place”. When the tenant asks to view the place first, they are given the run-around, at times even arriving at a location only to have the appointment cancelled due to an “emergency” of sorts. The scammer also usually uses an application form from a reputable organisation they have sourced somewhere to lend them credibility.

Here are some warning signs to look out for:

  1. The person is vague when asked when you can view the place. They make excuses about how busy they are and how many people are enquiring. They offer viewing appointments at a time still to be confirmed.
  2. They keep telling you that there are other interested parties and that payment of the security deposit will secure the place.
  3. The bank account they provide for payment is in their own name, not in the name of the agency whose application form they offered.

You can identify these scams with some basic fact-checking up front.

  1. If they offer you an application form, call the company and verify that this person is an authorised agent. Make sure you’re speaking to the company and not an imposter, a friend of the scammer who’s briefed to answer a cell phone and put your mind at ease. Verify the agency’s contact number from their website or by obtaining it from a trusted source like directory enquiries,
  2. If they claim to be an estate agent, verify their membership with the Estate Agency Affairs Board. You can do this online at their website eaab.org.za where all agents and agencies are listed. Ensure that they have a valid Fidelity Certificate that protects your security deposit from theft and misappropriation.
  3. If they claim to be the owner, insist on viewing the property. Do not get pressurised into paying a deposit to secure the place before you’ve met the owner at the property itself.

Scam # 2: Sell what’s yours… over and over

Unfortunately, there’s an even more sophisticated and brazen variation on above. The scammer actually obtains a rental property, typically under a fraudulent or stolen identity. They pay the real owner a security deposit, and then promptly re-advertise the place as available. They then take security deposits from several parties at the same time, who arrive at the property, each one thinking they are the new legitimate tenant, having signed a lease and paid their deposit. The scammer invested one month’s rent to secure the place and then rapidly achieved a 5-times or more return by on-selling the lease illegally, disappearing into the night leaving behind a throng of angry people arguing about who actually has the right to move in.

This one is much harder to pull off and thus quite rare, but it does happen. It is also harder to prevent or detect as it all seems above board. The only practical way to prevent this is to make an effort to find out if the person offering the rental is in fact the registered owner or an authorised agent. Ask them to prove it by furnishing for example a rates bill from the municipality.

Botha advises landlords and tenants to: “check the credentials of all parties involved thoroughly before you hand over money or keys. If it smells fishy it probably is and if it sounds too good to be true, ditto”.

What happens when a natural disaster renders your rental property uninhabitable?

Have you ever wondered what might happen if a natural disaster – such as this past week’s floods in Durban – causes such severe damage that your tenant can no longer occupy the property? Are you obliged to find alternative accommodation for your tenant? Must they continue paying the rent? And is anyone liable for damage to property?

It is very important to ensure that your lease agreement contains a force majeure clause to deal with this eventuality. A force majeure is a chance occurrence or unavoidable accident that frees both landlord and tenant from liability or obligation when circumstances beyond their control prevent them from fulfilling their contractual obligations. Some examples include acts of God, such as an earthquake, flood or volcanic eruption or situations of war, strike or riot. For the duration of the disaster, a landlord would not be obliged to provide accommodation and the tenant would not be obliged to pay rent.

There are two main ways that lease agreements address such extraordinary events: either by terminating the agreement or by proposing a remedy, for example that each party insures themselves against loss or damage. By automatically terminating the agreement, neither party can claim for damages. Whether it appears in the lease agreement or not, we strongly recommend that both landlord and tenant insure the property and contents against damage or loss in the face of disaster.

It is important that the landlord initiates repairs to the damaged property as soon as possible to return the property to a habitable condition.

If the lease agreement does not specifically deal with these catastrophe situations, then normal civil case law will apply, and either party will have to pursue the other for their damages. The laws of damages and liability are very complex and proving liability and quantifying damages can be a daunting legal challenge, very expensive and time-consuming. It is best to avoid this through proper up-front agreement as described above

In summary:

  • Make sure your lease agreement contains a clause that deals with disaster situations
  • Make sure you have adequate insurance for your property and inform your tenant that she is responsible for insuring her furniture and possessions
  • Be sensible in time of crisis and remain calm and constructive in your engagement with the other party.

Tips for placing an effective rental advert

Step one: Pointers for taking great photos of your property

Since we don’t find you a tenant, we thought we would write a series of articles to help you to successfully find a suitable tenant for your property. If you plan to place your own advert in one of the many online property sites, it’s a good idea to start with some good photographs.

The better your photos are, the more prospective tenants you will attract. Conversely, blurry, poorly lit photos could put a lot of potential tenants off. Here are some pointers to help you take the best possible photos without breaking the bank.

Which camera?

You don’t need a fantastic camera or a professional photographer to take good pics. A good smart phone will suffice. If you are keen to experiment a bit, there are also some great free apps such as ProCamera that allow you to manually adjust the settings.

Before you snap away, list all the nicest aspects of your property (of course, it helps if you’ve lived there yourself). There might be a beautiful morning view from the bedroom window or perhaps the sunset from the verandah. When capturing these shots, try to frame them through a window or doorway so that the viewer can see that it’s not just any old sunset but actually viewed from the property.

Clutter, be gone!

Before you even take out your camera, work your way through the property and remove knickknacks and clutter. Keep surfaces clear, with just a touch of homeliness – a bowl of fruit, flower vase, artwork, etc.

Include a photo of all the rooms – each bedroom, the lounge, kitchen, bathroom and any other rooms that your property offers. If there is a garden, include a photo. One photo of each will suffice – you really don’t need more than 10 photos for your listing.

A note about lighting

For interior shots it’s a good idea to bump up the natural lighting by switching on the interior lights. If you find your photo still has some gloomy spots, bring some extra lamps in from other rooms. Ideally you want to take the interior shots late morning on a sunny day. Switch your flash off but make sure your camera/phone is very stable when you take pictures – if you have a tripod, brilliant. If not, rest it on some books on a table or make sure you hold the camera with a steady hand.

Your camera should automatically adjust the lighting so move it around a bit and decide which view casts your room in its best light.

If you are taking exterior shots of the property, early morning is usually the best time, ideally with the sun shining on the façade and not behind it. Alternatively wait for dusk, switch on the interior lights and take some photos of the property from the outside – you can often achieve a dramatic effect in this way.

Do you have a floorplan of the property? It’s a great idea to add this to the listing’s photos.

Now that you have some good pics, we will delve into the contents of your advert in our next article.

Beware the debt mule

 

 

At RentMaster we have seen an increase in couples living well beyond their means and duping landlords by keeping one partner’s credit rating “squeaky clean” while allowing the other’s credit rating to become besmirched. 

When applying to rent a a property, Mr Squeaky-Clean supplies his details, but it’s actually Mrs Besmirched who signs the lease agreement. If the landlord does not pick this up, she’s probably in for a very bumpy tenancy!

Of course, if you’re signed up with RentMaster, that’s not your problem, because your rent will be paid on the 1st. Guaranteed. We’ve been in this game since 2003 and we’ve learnt to spot the chancers a mile off.

Landlords, these are the best performing rental markets

While it might all seem like doom and gloom with regards to the economy, savvy property investors who target the right areas can still get excellent returns.

We all react to economic stress in a different way. Some of us avoid reality in an attempt to ride an invisible wave above what is while others feed off the fear and uncertainty that invariably exists. There is a third option, however. One that looks beyond the obvious to seek out the information needed to transcend the current climate. Michelle Dickens has access to precisely this kind of information as MD of TPN, a property specialist credit bureau, and her most recent research reveals astoundingly high performance in what she terms as ‘pockets of excellence’ in the current rental market.

Landlords should target rentals in this price range

“There are 2.1 million households in formal rental accommodation in South Africa. Of the 1.4 million lease agreements that TPN profiles, 22% pay below R3000 a month, 59% are positioned in the R3000 to R7000 rental bracket and 14% are in the R7000 to R12 000 bracket. Only half a percent are paying above R25 000 a month. So really, we are sitting with almost 80% of tenants paying below R7000 per month. The sweet spot in terms of rental collection is the R3000 – R7000 bracket with the most challenging tenants paying below R3000 a month.”

Best performing suburbs

Dickens further explains, “Besides these broad figures, it is critical to determine exactly which suburbs perform the best in terms of average yield when planning your property investment strategy. This is where the results are surprising! 9 out of the top 20 suburbs that offer the highest yield in the country for sectional title schemes are in the city of Tshwane, with the top performing suburb Philip Nel Park in the west of Pretoria averaging a yield of 20.1% over the last five years. With 92.3% of tenants currently in good-standing on their rental payments, that is a pretty impressive return on investment. In terms of full title properties, the highest yield in the country is to be found in Cosmos City in Johannesburg with a good-standing rental payment percentage of 91.2%.”

How landlords can mitigate risks

Deon Botha shares his experience in mitigating risks in the residential property market as CEO of RentMaster, a South African company specialising in guaranteeing rentals, “While there is no doubt that we are still seeing the results of the 2008/9 banking crisis adversely affecting the property sector, there is more good news than just the Western Cape bubble for those who look.

Residential property is a critical socio-economic driver and there will always be demand for housing. With so many millions living in informal settlement but starting to enjoy the benefits of economic empowerment, there will be increasing demand for incremental housing closer to the workplace.

Property as an investment has always had a broad appeal, especially to the less sophisticated investor distrustful of the intangible nature of other options. As the old people always say, “Safe as houses”. Do your research properly and residential property can be a very rewarding investment. The risks of bad tenant behaviour are easily mitigated. Proper screening, professional collections and sound overall management practices are required. Make sure you work with professional service providers and stay on top of things at all times.”

How investors can identify the best areas for rentals

Dickens reminds us that “it is easy to be caught up in the elaborate prophecies of doom in a recession. The wiser option may be to gain insight into the market on a level that allows you to hone in on the pockets of excellence that exist.

Naturally, you want to take a look at the yield in that specific area but there are other important factors to take into consideration as well. How are tenants paying their rent in that suburb? What are the vacancy rates and property expenses as well as the ratio of tenants to landlords? An area where the occupiers are mostly tenants is not always upheld as well as where a large portion of dwellers are home owners.”

While many may flounder at the ‘impending doom’ that awaits us all, the rest of us gear up for a challenge knowing that with the right support, magic is made in times of adversity.

This article was originally posted on Private Property’s Advice page on 7 August 2017.

 

How long does it take to assess prospective tenant?

Unsurprisingly, the answer to this question is: it depends.

If a landlord has provided us with the tenant’s complete and up-to-date information and we are able to contact all their references, we are usually able to conclude the profiling and vetting within 24 hours or less. Delays are most often caused by incomplete or outdated information supplied by the tenant or the landlord. Another hurdle that can add time to the vetting process is non-co-operation of the tenant’s employer. We are often unable to reach the relevant HR authority to verify employment and salary, or if we are able to contact them, they are reluctant to disclose any details due to privacy concerns.

So, if you are in a hurry to place a tenant, the good news is that there’s a lot you can do to expedite the process:

  • Check that you have supplied all the information required:
    • Certified copy of the tenant’s ID
    • Tenant’s last 3 months’ bank statements
    • Tenant’s last 3 month’s pay slips
    • Rental application form, completed and signed by the tenant.
  • Ask your tenant to inform her employer’s HR department that they will be receiving a call from RentMaster and that she gives them permission to answer any questions. If she can supply you with a contact name and number, even better.
  • Remember to send the application to applications@rentmaster.co.za to ensure prompt processing.

I already have a tenant. Can I still use your services?

RM-Q&AThis is a question we are often asked and, as is often the case, there is a short answer and a much longer one that contains a lot of “ifs”.

In short, of course we can help you…

if we have had a look at and are happy with your current lease agreement or the tenant agrees to sign a RentMaster lease agreement;

if we have drawn a credit report for the current tenant (to which she must agree) and we are satisfied that she can afford the rental amount. (We will not need a credit report if you have been maintaining your tenant’s payment history on the Tenant Profile Network (TPN) database);

if the tenant signs a debit order authority.

Since the tenant has already occupied the property and probably there is an existing agreement in place, she is under no obligation to agree to these requests so the ball is really in your court as a landlord.

Another question we often get: Where have you been all my life?!

Prescreen your tenants and save time and money

When we screen a potential tenant, our first step is to draw a TPN report to assess the tenant’s historic payment profile.

TPN is a registered credit bureau, a company that provides consumer credit information on individuals which helps you to assess a tenant’s credit worthiness.

If you’re in a hurry to place a tenant – and want to save yourself a bit of money in the process – you can prescreen your prospective tenant by drawing this report yourself.

To do this, you need get the tenant to sign the Rental Application Form, which gives you the tenant’s written permission to call up the report. Registering with TPN is a simple procedure and once you have entered the tenant’s details, you will receive a report which will offer you a lot of detail including a Credex score of between A and F. A is an excellent credit profile and F is poor. If the applicant gets a C or better, you can submit their details to RentMaster for further assessment. Anything below C will probably not get approved.

(To find out more about the basket of assessments we do at RentMaster to asses the suitability of the applicant, read this article.)