Renting flat out: use agent or DIY?

[saturnz]

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

it effectively comes down to having to pay tax on the property or spending the money. Generally people run rental losses on second properties and this loss is offset against their salary and they in turn get a refund, this is especially effective when the rented property is bonded.

As for using an agent, if you have multiple properties it may be better to use an agent, but a flat is extremely low maintenance and I can't really see the need for agent here.

However recently agents have approached me to find tenants for my property and they charge the tenant the finder's fee, if this is the case it doesn't hurt to have them search for a tenant.

 

[bromster]

Agents are expensive and generally want to do the bare minimum for the maximum profit. I am renting from the owner at the moment. I pay every month on time, Phone the owner directly to sort any issues. Having a personal channel of communication with the owner usually results in me fixing leaky pipes, fittings etc on my own. Quick and painless for me. Cheap for her. Win win.

Might be looking on the east rand in the next few months for what it's worth.

 

[SamCasey]

I have a property in Bloem that I've been renting out through an agency for the last five years. Paying 6.4% commission.

Way less hassle then DIY. They have lists off pre-approved tenants.

 

[Hemi300c]

The good thing is they handle all the k@k and don't get commission if rent not paid.
I would recommend agents.

 

[Greg C]

it effectively comes down to having to pay tax on the property or spending the money. Generally people run rental losses on second properties and this loss is offset against their salary and they in turn get a refund, this is especially effective when the rented property is bonded.

As for using an agent, if you have multiple properties it may be better to use an agent, but a flat is extremely low maintenance and I can't really see the need for agent here.

However recently agents have approached me to find tenants for my property and they charge the tenant the finder's fee, if this is the case it doesn't hurt to have them search for a tenant.

On the button with the tenant paying now. Let it be said that whilst this makes a lot of sense for you the owner of the place. For the tenant it is complete cheek having to pay this fee. It makes the rental situation not worth the effort and capital outlay. The other issue is the loyalty. Theagent will continue to have the "Back" of the owner as this is the source of their income where at the end of the day, making it extremely unpleasant and poor management loses a good tenant who could if properly managed sign into a longer term lease and guarentee income to secure maintenance and bond repayments depending. I find it rather distasteful. In a simple summary. If you can buy a place at a reasonably equal MONTHLY payment of rent levies etc then buying will be better option. This will also include the increases in Inflation, interest rates and overall living. Tenants tend to move depending on jobs but the place grows in value or holds it. Long term investment, this isnt a quick buck

If I had the opportunity of a pla;ce I real;ly liked and had the c
ash flow for registration and transfer costs I would buy in a heart beat. Its not the monthly cost,its the Levies,rates and taxes,water and lights(changes like my underwear in winter), maintenance,insurance that makes a monthly cost of the pl;ace double

 

[saturnz]

I would have actually refused to pay the the finder's fee because the agent approached me. Had I approached the agent asking to find a tenant then the agent would be acting on my behalf. This is basic business sense and I do not think from the tenants perspective it is a complete "cheek" especially if the tenant approaches the agent to find a suitable premises, the same principle applies when buying and selling a property.

On your other points, I feel I manage my property pretty well and I have no intention of making it extremely unpleasant for my tenants, unless they make things extremely unpleasant for myself- the other upshot is that the house is not bonded so I will wait until I find a suitable tenant.

Just to clarify the above point further, I do not think agents make good managers of properties, I've yet to see that but they do provide value when it comes to seeking tenants or landlords.

 

[Other Pineapple Smurf]

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

....!

Always expect to get a bad tenant and understand what you're getting into. And most important, never rely on the rental income, never. If you cannot afford your flat without the extra, you're better off selling it.

The seller of my house ended up in a financial pickle as he had a tenant that did not want to pay and he ended paying him a large settlement amount to get him out.

This is a story repeated constantly by close family members and a good friend who is a rental agent, who have all told me the same story - never rely on the income.

Its a pitty because we wanted to buy our first rental property next year with the goal of having 3 in the end (a house/flat for each kid when they start out in life) and until we can be in that financial situation it will have to wait.

 

[soload00]

Good advice from others, I can recommend TPN and Tenrisk (for rental insurance)
One of the biggest risks is a tenant who cannot (or won't) pay, if you cannot afford to go without several months rent, then rental insurance is a must.
Advertising via privateproperty.co.za is free for first time renters, and it is preferable to Gumtree.
An agent is useful for screening prospective renters, and showing them the flat, even if you have to pay their fee.
You do not have to use them to administer the flat on an ongoing basis, once they have introduced the new tenant and signed the lease.
An incoming and outgoing inspection of the flat is required by law.
Bear in mind rental income is taxable, but bond repayment and maintenance, advertising etc is deductible

 

[nic777]

Hi everyone,

Thanks for all your advice. I went for Rentmaster and busy with them now to setup our new tenant for 1st March. So far so good but will post here again after a few months.

I went with Rentmaster based on the good offer they had (low fees with awesome guarentee) and mostly because of the people who have been using them.

 

[surface]

Thanks to OP and others. This thread helped me. We will be using rentmaster soon as well and will post experience.

 

[mmacleod]

Can anyone report any experience with using rentmaster and running into a problem tennant?
It is all very well that rentmaster works well when things are going well, and maybe with their more stringent tennant requirements things usually just do go well? But I am curious if they actually come to the party properly when things do go bad, anyone used them to e.g. evict etc.?

 

[Billy]

I have never had a problem, but I believe that they have had problem tenants, but I don't know what has transpired.

I would be interested in any input from members.

You could of course ask Rentmaster directly.

 

[mmacleod]

Thanks Billy.
FWIW I see only one complaint on Hello Peter, and it does seem like it might actually be the fault of the person complaining.
I don't see much point in asking Rent Master themselves as you can't really trust a company to be truthful about such things, perhaps I could ask them for a reference or something, but it would be great to get a completely independant story.

If anyone out there has such a story please share it would be greatly appreciated!

 

[minty203]

If you have just one, you can handle it on your own if you're up to it. You will stumble at first, but once you get done in a couple of times, you will learn from your mistakes, and will get the hang of it.

Some tips for you if you decide to manage it yourself (I speak from experience)

• Marketing your property is not as simple as putting an advert on olx and gumtree. Put up correx boards in the area, advertise in local papers.
• Check credit records, criminal records. Remember you need to obtain permission from the prospective tenant before you can do either. Get a credit app type form for prospective tenants to complete.
• Get a lawyer to draw you up a lease agreement. You can draw them up yourself once you familiarise yourself with the pertinent clauses to include in a contract.
• Take a deposit, and increase it in line with your escalation percentage.
• Get yourself a decent camera, and take photos of the place before you give it to a tenant. Save them to cloud storage. Five years down the line, you dont want to look for the photos you stored on a hard drive or PC that crashed.
• Make the effort to do scheduled inspections of the property.
• Make sure your rent is paid on time. Dont let the tenant slip behind, otherwise it becomes a habit.
• Dont change the utilities billing address to the tenants address. Keep the billing address as your own. Rather send them the account monthly in arrears. Because if the tenant doesnt pay the account on time, you will be responsible for arrears. Dont soften when the tenant tells you it will be easier for them to pay this by themselves.
• If you can get a prepaid electricity meter installed, all the better.
• Keep a ledger type book with accurate records of incomes and expenditures for the property. Income is taxable, and so are expenses deductible.
• Renew the contract when it is due for renewal, dont become complacent on this.
• Get all discussions and agreements in writing. This is especially important when a dispute arises later on.
• Get your insurance in order.
• Get a separate bank account for the rental venture. If you can, dont use the surplus funds generated for your daily cash flow. If you're serious about property investment, accumulate the money, and put it towards the purchase of a new property in the future.

And that all I can think of now. Good luck.

PEACE

 

[minty203]

Oh ya, one more thing. Try getting a friend or family member to be present when you meet with prospective tenants or tenants. It helps big time if you have a he said she said fight later on.

I have never heard of this rental income insurance the other guys are talking about. But it sounds good and prudent to check it out. I am going to look into it.

While I am at it, if anybody knows of anybody who is looking for industrial/ commercial property to let in Klerksdorp, North West, let me know.

PEACE *again*