“TO LET OR NOT TO LET, THAT IS THE QUESTION……..”
Apologies to William Shakespeare.
In a recent newspaper report, Warren Buffet , one of the richest men on the planet, was quoted that “now, if ever, is the best time to invest in buying property-to-let out ”. According to Mr Buffet, buy-to-let property in the USA is currently the best investment you can make.
The current South African market is also proving to be a viable buy- to- let investment opportunity in comparison with four years ago, according to John Loos of FNB. However, he is of the opinion that the South African market has not reached the bottom of the downward cycle.
Magnus Heystec of Brenthurst Investments agrees that the best time to buy-to-let property investments are when the market is in a downward spiral. Only 8% of purchasers according to FNB bought buy-to-rent properties in 2011. A drop in the bucket compared to the 25% purchasers in the same category in 2004. However, the time is ripe to look into this now.
( Rapport Sake24 of 18 March 2012 )
The MD of TPN Credit Bureau, Michelle Dickens says that apart from the overall state of the buy-to-let market, the biggest losses in the rental market result from the lack of precautionary measures taken. An accurate screening process of potential tenants is most important, while good administrative measures for rental collections must be taken. “TPN’s national average shows conclusively that tenants placed without a credit check have shown a significantly higher rate of default than those tenants profiled prior to entering rental lease agreements.” She also states that there is a direct correlation between tenants receiving a monthly statement for rentals, to payments received on time.
TPN’s report for 2011 shows that the national average of good standing rentals to be at 80%, thus suggesting a gradual increased financial pressure. With 20% of defaulters, the question to rent or not to rent should be carefully considered.
Should I rent my property on the Dolphin Coast?
With the property market in the greater Ballito area flooded with holiday homes and apartments for sale and many property owners feeling the pinch of keeping a second- or holiday home, the question of whether one should rent out one’s property to help carry the expensive holding costs is a serious consideration. With so many horror stories about bad tenants, how will you know what will be the best for you?
Neels du Plooy, principal of RentalsDotCom Dolphin Coast has the following advice to landlords:
1. Start with a legally registered and certified company. Ask to see the EAAB ( Estate Agents Affairs Board ) Fidelity certificates of both the agency and the agent. Many back-yard agents do not comply and are acting illegally and you will have no recourse should anything go wrong.
2. Ask to see all their legal contracts and agreements and make sure that you read and understand the contents, and make sure that it is in line with the new Consumer Act.
3. Insist that the tenant be checked out (with their consent). Here TPN and ITC credit bureau checks can be of great value to determine the suitability of potential tenants.
4. Insist on deposits to be paid upfront and invested in legal trust accounts. Recent scandals around trust accounts took the media by storm in 2011. Take care and check out your letting agency with great care.
5. Do a thorough pre- inspection of your property with the agent. Here a photo portfolio can be valuable for future reference and damage claims.
6. Insist on excellent accounting and monthly statements.
7. When holiday letting your property, make sure that all of the above is in place and that regular inspections are done before and after every occupation.
8. A personal relationship with your agency and agent is essential. Ask for references from other landlords.
There are great success stories of happy tenants and happy landlords. You can minimise risks and bad situations with tenants, if you follow the correct process and choose your agent with care.
Our mission at RentalsDotCom is to “ Create clients for life through the finest service” – Neels du Plooy
“To let or not to let? “ That is the question…..
The answer: If you cannot ask Warren Buffet or look into a crystal ball, make sure you use the best qualified agency to take care of all your rental nightmares.