Renting flat out: use agent or DIY?

[nic777]

Hi all,

When buying our house, the bank has allowed us to keep our flat (yay!) but this wasn't the original plan so in a rush now to rent out my flat by 1 Feb.

My biggest concern is getting a bad tenant: can't pay or doesn't pay on time.

The sending of invoices and monthly tasks is not a biggie but chasing up money and having a lawyer (I don't yet) is a small concern as well.

From your experience, would you recommend me using a agent (where they take 10%-15% off rental) or just doing it myself and using a credit check service?

Its only one property now but could grow in next 5 years to other properties.

Thanks in advance!

 

[Compton_effect]

Speaking from experience - my wife is a estate agent who handles rentals.
Get a agency to do the paperwork and the mundane stuff. And the messy stuff if it is needed.

You get good tenants, and you get nightmares. The good one, you might hear of once in a blue moon - if something breaks like a water-pipe. The nightmare tenant might look good, but could cost you thousands of rands in legal fees and repairs, sneak out in the middle of the night after owing 3 months rent and take the kitchen with them.

Just make sure to check up on the place at regular intervals - don't rely on the estate agent only.

 

[Zindaar]

Agent. get an agent. All the way!

They can handle the inspections and keeping track of the deposit and organise repairs and do periodic inspections and and and...

In my opinion they are worth every cent. Just make sure you get a decent Agent. I've even heard of some that will gaurantee income as long as there is a tenant (they will handle debt collection etc) although mine doesnt.

 

[The_MAC]

An agent is a very good idea, especially if you stay far from the rented property.

 

[AstroTurf]

Get a decent agent.

Speak to some of the agent's tenants first.

 

[theJonster]

Disagree with all the above.

Why pay someone monthly for something you do once a year?

Do a full background check on prospective tenants. Imagine you are a cellphone company giving away a phone on contract; get all the same documentation from them upfront. There are companies that do credit checks for you for a small fee if you want to take it that far. I just get a pay slip and make sure they can afford it. Bank statement is not a bad idea either. Call their work ask to chat to boss, ask questions.

Get a good lease together, sit through it with tenant. I visit the property every 3 months to "check up" and do any maintenance that is required.

Fact is, agent has just as much chance as you getting a bad tenant as you - probably more because they care less. Why pay them for that? **** goes sour, you're still the one who has to deal with it.

 

[JStrike]

Get an agent. Saves you a lot of hassle

 

[noxibox]

An agent is definitely less hassle, but I wouldn't pay more than 10%.

Getting a tenant involves showing the property, so that is time and petrol. You'll very likely get many replies. Of the people who ask to see the place you'll get a lot that fail to show up, but you'll have spent the time and money to meet them at the property. Once you have whittled it down to a few prospects based on whether they make an application to rent and your assessment after meeting them you then need to check up on each of them. So you might only have to do it once a year, but whether it is worth having someone else do it depends on how much you value your time as well as the actual costs.

 

[stixx]

If you are a hands on person who can do proper due-diligence on your would-be tenant, then do it yourself.

If you do not have the time or the patience to deal with the tenant, then get an agent.

If you choose to do it yourself, get all the proper documentation from then like salary advise, bank statements and a few previous landlords that you can contact as reference.
Call up the references to get a feel for the person and do a credit check on them (You can get an estate agent to do this for you for R100 or so).
Check that they can afford the rental by looking for their salary on the bank statements, and verify against the salary advise. There is no point in accepting a tenant who is earning R7500 when the rental is R6000.
Draw up a legally binding contract with all clauses, including penalty clauses, fully stipulated. Make use of the Rental Act to assist with this, as the Act will overwrite any contract that you may have. If you have access to a lawyer, ask them to have a look at it to make sure all legal requirements are met.
Once you have a person who is willing to be your tenant, make sure you have a copy of their ID when they sign the contract.
In my opinion, do not accept a tenant without first meeting them. This will give you the opportunity to get a feel for the type of person that the tenant is(whether he/she will present more hassles to you than you are willing to take).
Before the tenant moves in, you must make sure that you hand over the property in mint condition. Do any maintenance work required like painting, plumbing and electrical work before the tenant moves in.
Conduct a walkthrough with the tenant on the day he/she moves in to identify any problems. The tenant will also get a grace period (usually 7 days from date of occupation) to identify problem areas that the walkthrough has missed.

If everything was done well, you should not have too many problems. In my experience, I have found that doing everything myself is more rewarding, and you do not have to pay an estate agent to do next to nothing.

Another option available is to get an estate agent to the tenant for you. They will take a fee (3 months rent for example) and then the tenant will become yours to manage.

Hope this helps

 

[KeganFinder]

Your in the property market to make a return. If you commit to abit of Due diligence and semi-regular communications with your tenants (Just to let them know your there...waiting for that rent) you will be rewarded with a proper return. 10-15% is honestly worth the effort.

Plus! if you do it right then you can build a great Tenant-Landlord relationship which means they will respect you and your property.

 

[chrisc]

Having had several instances of (well-known) rental agents showing extreme dis-interest and laziness about what they are paid to do, I have managed my own rentals since 1989. However, I am a hands-on person and also do not take nonsense from tenants - water not hot enough, lost my keys, please help me at 03h00, things like that.

Having had drug addicts, sick people, doctors (the worst) and engineers as tenants, as a generalisation, young Muslim couples make the best tenants. Not short of money, clean, honourable, nice parents and are grateful for what you supply them.

 

[pboy]

stuff the agents.

use www.tpn.co.za for the profile checks you do yourself ( and bill the client for)
and then process your monthly accounts yourself.

maximum 5 minutes of your time per month!
the thing i've learned with being a landlord: every 4th or 5th tenant is a problem. agent or no agent. just keep it no nonsense, and as with any parasite: act quick to stop infestation!

 

[Mr K]

Best of both worlds.
Find a tenant by your self and use a rental guarantee company. I am using www.rentmaster.co.za.

They charge 4% of your rent and your rental is guaranteed. They pay you on 31st and collect the rent from tenant on 1st.
All the risk goes to them except for any repairs which you will to do by yourself.

 

[chrisc]

I have a friend in the SAPS Commercial Branch who does checks for me. He found that the "Doctor" I had as a tenant had been struck off the register for malpractice. He had also made 2 girls pregnant and the father of one came round and they had a fight in the flat, much to the horror of the neighbours

But TPN offer a good service, but I would not bill the tenant. You can also use Netcash,

 

[nic777]

Wow, thanks everyone, solid advice all round.

I am going to consider everything said and actually note down what my needs are as can see, there are different solutions depending on what a person needs.

I must say rentmaster looks like a good service although they don't physically meet people or do inspections. I guess I can do that because I lived in the flat and can talk to the people. Anyone else using rentmaster?

Regarding agent option, I must say I am suspicious of some of them as they tend to both sell properties and rent properties so not sure how really committed they are to the rentals.

So far I have approached Rawsons, Tryskal and Just Letting

 

[noxibox]

Don't forget that under the CPA you can cancel your contract with the agent if they fail to perform.

 

[Billy]

Best of both worlds.
Find a tenant by your self and use a rental guarantee company. I am using www.rentmaster.co.za.

They charge 4% of your rent and your rental is guaranteed. They pay you on 31st and collect the rent from tenant on 1st.
All the risk goes to them except for any repairs which you will to do by yourself.

I have been getting my own tenants and using Rentmaster for 5 years. Never had a problem.

I used agents for two years previously, with multiple problems.

Private Property for advertising. Rentmaster for vetting, rent collection and deposit retention. You can't go wrong.

 

[ele33]

I'd say use an agent, as you get a tax deduction.

 

[chrisc]

Recommend Rentmaster, particularly as it is not long-term

 

[droidx]

I'd say use an agent, as you get a tax deduction.

Why would you want the tax deduction when you can save the cost altogether?