Entering the business of property letting
Category Property
So, you’re thinking of getting into the property letting game? Well, let’s talk business. And make no mistake, letting a property is a business. It’s best to start thinking like a businessperson, seeing every aspect of the experience from a business point of view. Now, we’ve written down a number ... no, wait. That’s not right.
Letting a property may require you to get into a business mindset, but it’s an adventure, nonetheless. And not half as daunting as you might think. To help you off to the best start, we’ve compiled a few questions you should ask yourself to help prepare you for what’s ahead.
Is your property lettable?
This first question may be the most obvious, but it’s also the most important. Just like romance films have told us through the ages, the perfect partner is always out there waiting for us. Romance films have also taught us that it may take a long time to find them. Every property is lettable at the right time, in the right market, to the right audience. But you have to establish whether that time is now and whether there is a demand for your property.
While a five-bedroom house on a Winelands estate, complete with a view of the ocean, may not do too well as a long-term rental during an economic recession, it will be a sure-fire hit as a short-term holiday rental for large family getaways once the South African summer hits. A one-bedroom apartment, walking distance from a university, may set you up with a long-term tenant for a few years if it is on the market in January. By April, though, prospective clients may begin to peter out until the next semester begins. The key is to find the right time, and the right market, for your property.
Long-term or short-term lease?
This second question almost acts as part two of the first one. While both long-term and short-term leases may have a set of pros and cons, the two greatest factors to consider are price and stability.
The short-term rental market is aimed primarily at holiday goers, travelling business professionals, and tenants who need go-between accommodation in the middle of their own real estate transitions. What is most beneficial about short-term leases is that the rental price can be steeper than with long-term agreements, allowing the landlord to profit more when their property is in occupancy. The downside is that occupancy can be erratic, with months of vacancy in between tenants.
With long-term leases, the rent is usually lower and less profitable to the landlord, but the income is stable over many months and, in many cases, many years. Long-term leases also ensure more control over tenant choices. Depending on the popularity of the property, short-term rentals often require landlords to accept all types of tenants to stay up to date with the property’s down payments, rates, and taxes. It is easier to find reliable tenants who will offer you more financial stability with long-term rentals.
How do you choose your tenants?
This question leads us to a vital aspect of the journey for any long-term landlord: screening your tenants. It is important to thoroughly assess and check aspects such as your potential tenants’ credit scores, employment history and status, affordability , rental history, and references. These can (and should) all be confirmed and fact-checked beforehand in order to make the best possible decision on placing the ideal tenants.
A qualified and experienced real estate agent can bring much needed experience to assist you with vetting your potential tenants.
Are you ready to shoulder the responsibility?
No matter your answers to the questions above, you need to ask yourself whether you’re ready to accept the responsibility of becoming a landlord. Letting a property is not only there to help you turn a profit; it places you in the unique position of providing another person/family with a basic human right – the right to adequate housing. This means that the upkeep of the property, along with all the maintenance required to ensure liveable conditions, goes slightly beyond business responsibility, becoming a personal obligation.
Yes, yes...we know. At the beginning of this article, we told you to see this as a business. But as with most businesses, it is important to remember that your business directly influences people’s lives. At Meridian Realty, we use the term “rental relationship” to emphasise that fact and help you understand that this is a journey you and your estate agent will walk with your tenants. When it becomes nothing more than a letting transaction, both parties are losing out on the full potential of the rental experience.
If you think you’re ready to take the leap into landlord-ship, reach out to one of our trusted iAgents to help you assess whether you’re ready for the shift and to help you prepare for the journey ahead.
Facebook | Instagram | Twitter | YouTube | LinkedIn
www.meridianrealty.co.za
Thinking about becoming a part of the Meridian family? Find out how to become an iAgent.
www.meridianiagent.co.za
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
Letting a property may require you to get into a business mindset, but it’s an adventure, nonetheless. And not half as daunting as you might think. To help you off to the best start, we’ve compiled a few questions you should ask yourself to help prepare you for what’s ahead.
Is your property lettable?
This first question may be the most obvious, but it’s also the most important. Just like romance films have told us through the ages, the perfect partner is always out there waiting for us. Romance films have also taught us that it may take a long time to find them. Every property is lettable at the right time, in the right market, to the right audience. But you have to establish whether that time is now and whether there is a demand for your property.
While a five-bedroom house on a Winelands estate, complete with a view of the ocean, may not do too well as a long-term rental during an economic recession, it will be a sure-fire hit as a short-term holiday rental for large family getaways once the South African summer hits. A one-bedroom apartment, walking distance from a university, may set you up with a long-term tenant for a few years if it is on the market in January. By April, though, prospective clients may begin to peter out until the next semester begins. The key is to find the right time, and the right market, for your property.
Long-term or short-term lease?
This second question almost acts as part two of the first one. While both long-term and short-term leases may have a set of pros and cons, the two greatest factors to consider are price and stability.
The short-term rental market is aimed primarily at holiday goers, travelling business professionals, and tenants who need go-between accommodation in the middle of their own real estate transitions. What is most beneficial about short-term leases is that the rental price can be steeper than with long-term agreements, allowing the landlord to profit more when their property is in occupancy. The downside is that occupancy can be erratic, with months of vacancy in between tenants.
With long-term leases, the rent is usually lower and less profitable to the landlord, but the income is stable over many months and, in many cases, many years. Long-term leases also ensure more control over tenant choices. Depending on the popularity of the property, short-term rentals often require landlords to accept all types of tenants to stay up to date with the property’s down payments, rates, and taxes. It is easier to find reliable tenants who will offer you more financial stability with long-term rentals.
How do you choose your tenants?
This question leads us to a vital aspect of the journey for any long-term landlord: screening your tenants. It is important to thoroughly assess and check aspects such as your potential tenants’ credit scores, employment history and status, affordability , rental history, and references. These can (and should) all be confirmed and fact-checked beforehand in order to make the best possible decision on placing the ideal tenants.
A qualified and experienced real estate agent can bring much needed experience to assist you with vetting your potential tenants.
Are you ready to shoulder the responsibility?
No matter your answers to the questions above, you need to ask yourself whether you’re ready to accept the responsibility of becoming a landlord. Letting a property is not only there to help you turn a profit; it places you in the unique position of providing another person/family with a basic human right – the right to adequate housing. This means that the upkeep of the property, along with all the maintenance required to ensure liveable conditions, goes slightly beyond business responsibility, becoming a personal obligation.
Yes, yes...we know. At the beginning of this article, we told you to see this as a business. But as with most businesses, it is important to remember that your business directly influences people’s lives. At Meridian Realty, we use the term “rental relationship” to emphasise that fact and help you understand that this is a journey you and your estate agent will walk with your tenants. When it becomes nothing more than a letting transaction, both parties are losing out on the full potential of the rental experience.
If you think you’re ready to take the leap into landlord-ship, reach out to one of our trusted iAgents to help you assess whether you’re ready for the shift and to help you prepare for the journey ahead.
Facebook | Instagram | Twitter | YouTube | LinkedIn
www.meridianrealty.co.za
Thinking about becoming a part of the Meridian family? Find out how to become an iAgent.
www.meridianiagent.co.za
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
Author: Meridian Realty
