Why rental management makes sense
Category Property Management
Being a landlord means having a lot of balls in the air at once; managing the physical property, tenant details and rent collection, alongside all other business interests and personal concerns. Hiring someone else to take care of it all can prove to be well worth the expense, resulting in fewer headaches and anxiety, and a greater return on investment.
“If you calculate all the hours, conversations with tenants, repair work and mental effort you’ll be spared by having someone else handle the job. You will discover that a rental management company is well worth the cost,” says John Roberts, CEO of the Just Property Group – holding company or rental management experts, Just Letting. “But good results can only be expected if a rental management company is competent, trustworthy and a good fit for the property; a poor choice of a management company can produce many headaches of its own.”
Should the property owner find himself living overseas or quite far away, the help of a rental management agent becomes pivotal. “A local company with ready access to your rental property will save you the time and effort of going there yourself, especially if you live out of town. As a hired ‘risk-avoider’, a rental property consultant will ensure regular maintenance and catch issues before they become more costly. The consultant will also be the frontline should an accident or act of nature occur which damages the property,” explains Roberts. Wouldn’t it be nice to have someone else receive late-night emergency calls?
Good maintenance and repairs keep tenants happy and preserve the value of the property which makes them a very important part of land-lording. By hiring a rental management agency the landlord gains access to their network of reliable, licensed contractors who have already been vetted for good pricing and quality work. This can translate into significant savings compared to going through the yellow pages and hiring a handyman from there.
A rental management company can also perform a task that many landlords would rather avoid — dealing directly with tenants. The consultant can field all complaints, handle issues and maintenance calls, and collect rent. Since they are hired to interface so closely with the property and its occupants, they can easily identify any problems with late rent payment or lease violations so that appropriate action can be taken.
One of the most notable benefits of using a rental management company is the fact that they offer additional products, created specifically to safeguard the landlord’s investment. “Most landlords depend on their rental income to pay off bonds etc. and there is no need for them to be held captive by a defaulting tenant,” says Roberts. “That is why we brought the RentSecure product to market.”
Landlords signed up on Just Letting’s RentSecure product will receive their full monthly rental when a tenant defaults on their rental payment, or even just makes a payment late. The landlord will also receive the full rental for the first month after a tenant has been evicted or absconded, should the property remain vacant. Even legal fees incurred during an eviction process are covered by RentSecure and an additional 35% of the monthly rental will be paid to the landlord to repair any damages, should that be necessary.
Furthermore, RentSecure provides coverage of up to R100 000 of the total rental amount over the duration of the lease. Once signed on as a Rentsecure landlord, no further vetting is required. “The product is underwritten and when it comes time to claim, there are no lengthy claims forms to be filled out. It really is a no-fuss process designed to protect the landlords’ rental income,” adds Roberts.
While it’s easy to see the effects of lost rent, there are other equally serious problems with a high tenant turnover rate. The turnover process involves a thorough cleaning, changing the locks, possibly painting the walls and buying new carpets or effecting small repairs, not to mention all the effort associated with marketing, showing, screening and settling in a new tenant. This is a time-consuming and expensive process that can often be averted by keeping tenants happy and well cared for.
However, according to Roberts, the way rent collection and late payments are handled can be the difference between success and failure as a landlord. “Collecting rent on time every month is the only way to maintain consistent cash-flow, and your tenants need to understand this is not negotiable. By hiring an agent, you put a buffer between yourself and the tenant, and allow them to be the bad guy who has to listen to excuses, chase down rent, and when necessary, evict the person living in your property.”
The vigilance of a rental management agent who keeps the rented property and its tenants under scrutiny assures that landlords will get the highest return out of both. The money saved by having a dedicated set of eyes and hands keeping repair issues from turning into major expenses and poor tenants from occupying a property can be significant over time.
“Time is money, and for many investors, their time can be more profitably spent in areas other than servicing and overseeing their properties,” concludes Roberts.
