Terrible tenants?

2010-12-01 14:23

Not every investor has happy tales of property ownership. Astute investors have made their wealth through property and swear by it, but many others have been burnt by property bubbles and rapid rises in interest rates.

Property can also be very ­illiquid, in other words it is not as easy to sell as an investment in unit trusts for example.

It also becomes more difficult to sell property during difficult ­economic times which is usually when people become forced ­sellers, so it is important that property only makes up a portion of your overall financial plan.

Always make sure you have other investments you can cash in more easily if you run into financial ­difficulty. However, it is usually the ­horror stories we hear about ­tenants from hell that frightens most people away from buy-to-let property.

First of all the number of defaulting, problem tenants is tiny when ­compared to the total number of residential properties that are ­being rented by good, law-abiding individuals and families.

You just need to do your homework carefully, get references on the tenants and have a valid lease agreement. Also take action as soon as a tenant defaults.

You can use an estate agent to find a tenant and also manage the property for you. But be warned, here you also need to do your homework as not all agents are ­experienced or trustworthy.

Dexter Leite, rentals director for Pam Golding Properties in the Western Cape, says that some agencies don’t refund tenants’ ­deposits or hand over rental collected from tenants.

As an owner, you don’t want this kind of headache, so when you look for a letting agent make sure they have a Fidelity Fund Certificate and are registered with the Estate Agency Affairs Board.

This proves they have the legal knowledge necessary to do the job properly and are also accountable.

“Don’t be afraid to ask detailed questions – how many properties have they let in the past two months, what rentals were achieved, how do they go about vetting potential tenants?” says Leite.

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