If you are experiencing issues with getting your property off the market then you should consider renting it out instead.
High interest rates may deter buyers from buying property which means that sellers will have to deal with their properties staying on the market for longer.
This may pose a dilemma for those who want to move while those who are who are struggling to keep up with their bond repayments may also consider renting out the property until their financial position improves.
According to Seeff, the ability to rent out your home in part or in full, while still keeping the asset is one of the benefits of property ownership.
However, it is important to follow the correct procedures before you put your property on the market for rent.
Getting the right price
Before you make the final decision, your first step should be to investigate how much rent you could charge.
Each area generally has price bands. The more expensive the rent, the harder it can be to find a tenant. Therefore it is best to price your rental to fall within the price band of other rental properties in the area.
According to Seeff, having the correct price for your rental property, will allow you to attract more tenants but will likely be able to keep it occupied with a lower risk of tenants wanting to move out to find cheaper accommodation.
Be prepared
Seeff advises property owners to set aside some funds and have property insured to be prepared for an emergency or unforeseen circumstances like a floods and fires.
If you are renting it out as a furnished, then you must insure the content as well. It is recommended that you remove any valuable or sentimental items or fittings.
Do the necessary checks
It is crucial that property owners do tenant verification this means that credit and affordability checks must be done.
According to Seeff, it is advisable to do background reference check so you can have some idea of the person who will be occupying your property.
Security deposit is vital
These days anything upwards of one to two months is the norm when it comes to the security deposit.
According to Seeff, the security deposit must be invested in an interest-bearing account to the benefit of the tenant.
Seef said that property owners cannot use any of the funds during the lease. The fund can only be accessed at the end of the period to cover any rental arrears or damage.
Seeff warns property owners to be careful of tenants who offer to pay rent in advance for a number of months so that they can circumvent the recommended verifications.
Many scammers use this to gain access to rental properties, and it might be the last time you see any rent, according to Steve van Wyk, licensee for Seeff Centurion.
Know how you the long should be
According to Seeff, you can rent the property out for any period but short-term rentals tend to be financially more lucrative.
However, it can risky because there might have periods where you won’t have a tenant. The property will also need to be furnished, and stocked with basic necessities.
Long-term tenants usually look for unfurnished so f you are not taking your furniture with you, you may need to store it.
Sort out the rental agreement
A solid rental agreement will protect your interest, and sets out the duties and obligations of the landlord and tenant, as well as outline breach of lease conditions and procedures.
The agreement should be drawn up and signed by both parties even if you are only renting out part of the property.
The contract must set out:
– the duration of the lease
– the rental amount,
– when and how it must be paid
– conditions of use of the property.
If it is a sectional title or estate property, then the tenant must be given a copy of the rules of conduct and be sure to point out specific arrangements.
An incoming property inspection must be done which details any damage or defects and must be signed by both parties.
It is advisable to inspect the property during the lease period, but this must be done by prior arrangement with the tenant. At the end of the lease another inspection must be done and compared with the incoming inspection.
Tax
Speak to a tax consultant because the rental income will be subject to tax as the income must be added to your normal income. Certain expenses related to the property can, however, be deducted. Check the SARS website for more information.
Giving notice
In terms of the CPA (Consumer Protection Act), the tenant can vacate the property before the end of the lease, as long as they give the property owner proper notice as set out in the Act.
According to Seef, as a landlord, you are entitled to charge a reasonable amount to cover the costs of sourcing a new tenant, any loss suffered, as well as any repairs needed.
Managing the property
Check that the rent is paid timeously, and must provide certain paperwork to the tenant including a copy of the signed lease, rent invoices, etc.
You should act immediately if the rent is overdue and to follow due process. Evicting a delinquent tenant can be a nightmare in terms of time, stress and costs.
Getting the right agent
If you are thinking of using a rental agent, which Seeff recommends, make sure you choose an agent with a track record and knowledge of the area.
The agent can only handle the sourcing of the tenant, the incoming inspection, or even manage the property which can be useful if you are not living in the area or are very busy.
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