If you are looking to invest in a property with the view to renting it out, you need to ensure you invest smartly by doing thorough research otherwise you might be left disappointed, says Samuel Seeff, chairman of the Seeff Property Group.
There is a big difference between a home that you want to live in versus one that will be rented out. Your own home will usually have lots of customised finishes and fittings which would not be suitable for a rental and will not contribute to a higher rental. It is best to remove these and store them, especially if they hold special meaning.
Tenants usually prefer unfurnished properties, especially for residential purposes. It is therefore best to clear out and store your furniture. The tenant will need the exclusive use of the property which means you cannot store some of your stuff or furniture in the unit or home.
Each suburb has its own parameters in terms of which properties are popular for rental and at what price ranges. To ensure you are able to fill your unit, work with a local rental agent to assess your property and provide the right price guidelines. If the price is too high, it will limit the tenant pool so it is best to keep to the suburb averages.
The property must be fit for purpose and well-maintained and cleaned before it is listed as a rental property. All maintenance and repairs must be done and everything fully functional and in working order. Security is an important feature for rental properties.
Aside from the monthly rental, the tenant is usually responsible for extra costs such as basic usage of utilities including water, electricity and refuse removal. Property taxes and sectional title levies must be paid by the landlord.
The tenant deposit must be invested in an interest bearing account for the benefit of the tenant. It is best to create a maintenance fund for emergencies as the landlord may not dip into the deposit for maintenance and repairs.
To ensure the property is well maintained, it is advisable that the landlord contracts a service provider to look after the garden and swimming pool. The costs can be built into the monthly rental. The landlord should also undertake periodic inspections of the property to ensure it is being looked after by the tenant.
Seeff says proper vetting of the tenant is important. Ensuring you place a good calibre tenant who will look after the property ensures your valuable asset is protected. Working with a local Seeff rental agent can add significant value in that regard.
Seeff also recommends that you enter into a watertight lease agreement with the tenant which covers all the various legal aspects before the tenant moves in. Ensure all processes are followed including formal incoming and outgoing inspections to ensure there is a written agreement on the condition of the property.