Landlord Tips & Tricks

zerocool2009 said:
Interest all depends, my honest view.

If tenants want interest, will gladly raise my rent yearly.

So, do you want to earn interest? Or rent for 5 years the same price?

Its a no brainer for me
Click to expand...
No it does not depend on your or any other view.

Law requires the landlord to invest the deposit in an interest bearing account. Interest earned is for the tenant - no costs/deductions allowed other than for damages or rent arrears (and only after exhausting avenues specified in the contract).

A decent landlord will adhere to the law and also provide a good tenant with minimal rent increases.

Sticking to legal requirements is a no brainer for me.
 
Interest bearing account could even be your credit card account getting 0.1% but that is being a wanker.

If you had to open a savings account and that account generates 7% per year, and the cost of that account is R50pm then you would pay them their deposit + 7% minus R600 for the account fee.

As with everything, just be open and write facts and figures down.
 
Wrath of Khan MD said:
Interest bearing account could even be your credit card account getting 0.1% but that is being a wanker.

If you had to open a savings account and that account generates 7% per year, and the cost of that account is R50pm then you would pay them their deposit + 7% minus R600 for the account fee.

As with everything, just be open and write facts and figures down.
Click to expand...

And minus another 40%, if you pay taxes on the interest
 
Wrath of Khan MD said:
zero rental increase for 5 years is seriously generous, like on a biblical scale.
Click to expand...

Well ... that is what I am offering! And rent is very much below market as well! ;)

So, for the gent who said the law is the law. Will the law put bread on your table ?
 
zerocool2009 said:
Well ... that is what I am offering! And rent is very much below market as well! ;)

So, for the gent who said the law is the law. Will the law put bread on your table ?
Click to expand...
My rental income is more than sufficient to put bread on the table.

And yes, I have waived the contractual increase on many occasions for good tenants. And yes, I do keep the deposit in a interest bearing account. And yes, interest accrued is for the tenant's account.
 
muisnes said:
My rental income is more than sufficient to put bread on the table.

And yes, I have waived the contractual increase on many occasions for good tenants. And yes, I do keep the deposit in a interest bearing account. And yes, interest accrued is for the tenant's account.
Click to expand...

You are missing my point

If you rent, not from the landlord’s view

A tenant told me 14 years ago: the reason why I am successful, SARS carry my losses. And that was spot on!

Every year SARS audits me, asking me why aint I making profits

If I show them my books, then they ask for rental contracts.

They are speechless zero increases for many years

And SARS dont like that
 
zerocool2009 said:
You are missing my point

If you rent, not from the landlord’s view

A tenant told me 14 years ago: the reason why I am successful, SARS carry my losses. And that was spot on!

Every year SARS audits me, asking me why aint I making profits

If I show them my books, then they ask for rental contracts.

They are speechless zero increases for many years

And SARS dont like that
Click to expand...
I think I am also missing the point.

From your perspective
1) You pocket the interest on the deposit
2) you collect below market rental income due to no increases. This differential is far more then the interest.
3) You pay SARS less but also receive less income. And the loss of income is more then the savings from SARS

From the tenants perspective
1) They enjoy lower them market related rental
2) When they end their lease they demand their interest as it was pointed out it is the law so I assume the rental tribunal will side with them.

If you want to not increase rent as it is a good tenant and you think the risk of losing them is not worth it I understand. But I don't understand what not paying interest on your tenant's deposit has to do with your rent prices and trying to lower your income by X to get 0.4X back from SARS.
 
zerocool2009 said:
Interest all depends, my honest view.

If tenants want interest, will gladly raise my rent yearly.

So, do you want to earn interest? Or rent for 5 years the same price?

Its a no brainer for me
Click to expand...
Strange view this ^^. It's not your money, nor is the interest - it's also illegal. One doesn't open an interest bearing account solely for the renter's deposit either. If you choose to not escalate a rental for 5 years IOT keep a good tenant that's your choice, but you can't make up the diffs by keeping the interest accrued on the deposit (?).
 
The Darkness said:
Strange view this ^^. It's not your money, nor is the interest - it's also illegal. One doesn't open an interest bearing account solely for the renter's deposit either. If you choose to not escalate a rental for 5 years IOT keep a good tenant that's your choice, but you can't make up the diffs by keeping the interest accrued on the deposit (?).
Click to expand...

Ok, I opted when the lease was signed, do you want to pay rent A) R10 000 or B) R15000. A has zero escalation for 5 years, and zero intertest earned. So the tenant choose option A.

It has nothing to do to keep a tenant or not.
 

TiredPlatypus said:
I think I am also missing the point.

From your perspective
1) You pocket the interest on the deposit
2) you collect below market rental income due to no increases. This differential is far more then the interest.
3) You pay SARS less but also receive less income. And the loss of income is more then the savings from SARS

From the tenants perspective
1) They enjoy lower them market related rental
2) When they end their lease they demand their interest as it was pointed out it is the law so I assume the rental tribunal will side with them.

If you want to not increase rent as it is a good tenant and you think the risk of losing them is not worth it I understand. But I don't understand what not paying interest on your tenant's deposit has to do with your rent prices and trying to lower your income by X to get 0.4X back from SARS.
Click to expand...

Any tenant can run to the rental tribunal. But as everything in life. Think of the bigger picture. Did you gain more on interest or on lower rent ?
 
zerocool2009 said:
Any tenant can run to the rental tribunal. But as everything in life. Think of the bigger picture. Did you gain more on interest or on lower rent ?
Click to expand...
Not paying interest is not legal. Maybe you have signed documents and contracts which the rental tribunal will accept your deal otherwise the tenant is going to get their interest in addition to no rental increases it is not either or.

But that was just a minor point in my post it does not change the bigger question on why you are doing this. From your comments about SARS it sounds like you're goal is to lose money which is confusing me.
 
zerocool2009 said:
Ok, I opted when the lease was signed, do you want to pay rent A) R10 000 or B) R15000. A has zero escalation for 5 years, and zero intertest earned. So the tenant choose option A.

It has nothing to do to keep a tenant or not.
Click to expand...
I just don't understand why you would do this? The interest on 1 month's deposit vs a modest rental increase it works out in your favour to rather increase the rent. If market indicates an 8% yearly hike, even a 3% hike and letting your tenants know they're being looked out for has equal good-faith attached to it.
Not trying to tell you how to run your things at all, I've read and enjoyed all of your posts and just trying to understand the thinking here.
 
TiredPlatypus said:
Not paying interest is not legal. Maybe you have signed documents and contracts which the rental tribunal will accept your deal otherwise the tenant is going to get their interest in addition to no rental increases it is not either or.

But that was just a minor point in my post it does not change the bigger question on why you are doing this. From your comments about SARS it sounds like you're goal is to lose money which is confusing me.
Click to expand...
The more you entertain this, the more the financial guru will school you in how successful he's become by doing amateurish weird things...
 
TiredPlatypus said:
Not paying interest is not legal. Maybe you have signed documents and contracts which the rental tribunal will accept your deal otherwise the tenant is going to get their interest in addition to no rental increases it is not either or.

But that was just a minor point in my post it does not change the bigger question on why you are doing this. From your comments about SARS it sounds like you're goal is to lose money which is confusing me.
Click to expand...

Why would it confuse you to lose money ?

If you make a loss, the losses are subtracted from your overall income, as it all in my personal name.

So if I make a lose, I have less to pay in, and my losses bring my overall profits down.

The point I am trying to make : I try to make my tax bracket as small (lower) as possible.
 
The Darkness said:
I just don't understand why you would do this? The interest on 1 month's deposit vs a modest rental increase it works out in your favour to rather increase the rent. If market indicates an 8% yearly hike, even a 3% hike and letting your tenants know they're being looked out for has equal good-faith attached to it.
Not trying to tell you how to run your things at all, I've read and enjoyed all of your posts and just trying to understand the thinking here.
Click to expand...

Why not, as SARS see it as a loss. The result, I am in a lower tax bracket.

I must say, my way of thinking is working like a charm. All I want i happy tenants (that's the bottom line)
 
Mike Hoxbig said:
The more you entertain this, the more the financial guru will school you in how successful he's become by doing amateurish weird things...
Click to expand...

Not really. Its not about entertainment. If you see the power of SARS when you make a loss, then you will understand.
 
Not sure if I have posted here

Had 4 rental houses and 2 flats since 1992.

The first one purchased for R130k in 1992, sold in 2021 for R2,2m. Had to pay R165k Capital Gains. The house was in fair condition but a series of tenants caused accelerated wear and tear. Fitted steel gates, gate motor, well-point pump, alarm and fixed up the garden several times.

Of the above, only had very small bond on 2 of the houses and 1 flat, which was cleared in a year

Kept the rental increase below 8% every year

SARS seems to accept the figures, which I present on a spreadsheet,

Had good tenants, most stayed on for 5+ years. No issues with payments. Always made sure to fix any faults promptly
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X