I have been involved in Real Estate for the last 16 years and not only is it a vocation but a passion. I have come to believe that the cornerstone of wealth is the ownership of property, not only to live and reside in, but also as a form of wealth creation and passive income generation.

 

My reference for this are the investors in real estate that I have the pleasure of meeting on regular occasions. It seems that those that have managed to invest in property and own a “Property Portfolio” seem to enjoy a rather comfortable lifestyle.

 

Owning investments property allows for two forms of wealth creation, passive income and capital growth. The focus of this article is the passive rental income.

 

In 2004 I purchased my first property, although I purchased it to reside in, overwhelmed by impending bond payment I decided to rather rent it out initially. After being introduced to a potential tenant (a friend of a friend), I let the property to her. Needless to say, after 8 months of lost income and legal fees I had possession of my flat back. A truly harrowing experience.

 

When we started our Rental Portfolio in 2011 the Tenant Vetting Criteria and Property Management protocols and procedures were based on lessons learnt from that experience and interviews with successful rental agents with more than 30 years of property letting experience.

 

A common misconception is that what happens if my tenant does not pay, the fact is that the challenge is a little more complicated and these questions need to be asked…

 

  • What happens if my tenant does not look after the property?
  • Who is responsible for paying rates and utilities?
  • Am I complying with the Rental Housing Act?
  • Am I complying with the Consumer Protection Act?
  • How quickly must I act on non-payment and what are my options?
  • Are regular inspections being done on the property?

 

The reality is that with the changing laws and acts being enacted on regular basis, the landlord needs to stay informed. Coupled with the rising cost of living – Can this tenant fulfil his financial obligations.

 

Many landlords chose the path of letting an agency to procure the tenant. The fee for procuring a tenant is normally between 6%-8% (and this can vary agency to agency). Essentially they are paying for a credit assessment, reference check and a entry inspection.

 

What many landlords fail to realize is that the management option can be negotiated and might end up costing the landlord marginally more.

 

Many owners/Landlords are very capable of managing their own properties if the tenant is in good standing. Realistically though a lot of our portfolio growth has been due to frustration felt by landlords when their tenants don’t pay. This is not only true for the rentals but sales as well when landlords decide to sell up due to the financial loss incurred either due to non-payment or damage to the property.

 

These factors can be avoided by taking the correct steps initially to ensure the correct tenant is placed and the legal aspects of the lease agreement are in place.

 

Considering property investment as an option, feel free to contact us for a no obligation discussion on 0861 007 671 or email us at info@realtyatlas.co.za

Foti Sousalis

Group Director  

Realty-Atlas Property Group.

 

 

 

 

 

Author: Foti Sousalis