Property To Rent: How to Get Your Rental Property Ready for Market
A Quick Guide on Preparing Property To Rent
Property to rent? Whether you are new to the rental property market or are between tenants, exciting investment opportunities lie in property. Believe it or not, these periods of inoccupation hold potential too. They give property owners the chance to get the property ready for rental. These steps can mean the difference between long periods without tenants and the assurance of rental income every month once a new tenant has been secured.
The general trend in the rental property market shows vacancy highs as a result of COVID, unemployment, and last year’s civil unrest. However, Gauteng’s rental market demand is back to pre-pandemic levels at 57.1%. Whether competition for tenants is high or not, without a doubt, getting your rental property in tip-top shape is a vital step in securing tenancy. Follow our quick blog guide on getting your rental property ready for market and take a pragmatic approach to property to rent.
How Do You Determine if a Property Will Make a Good Rental?
A few different factors go into a good rental investment property. Firstly, do some calculations and research to see if the property you have in mind and your desired outcomes are aligned. Start by outlining your objectives. Different property types, areas, property conditions, and mortgage terms could have a bearing on what you can reasonably expect to get out of a rental property.
You could have received a property as an inheritance. Maybe your house has been on the market for a long time and you’re interested in pursuing its rental potential instead or as a stop gap. Perhaps you’re keen to explore the possibilities around your garden cottage or your graduated child’s sectional title unit. Whether you are on the market for a rental property or looking to turn your existing property into a rental, some basic principles apply to whether it will be a good investment.
Look into location, giving credence to factors like amenities, schools, and other value factors. Compare your rental property with other similar properties in the same or similarly-placed areas. Take the time to calculate running costs and estimated cost of any repairs or improvements.
The 1% rule is the general rule in calculating a rental amount that hits the sweet spot. However, this should not be viewed in isolation. Make sure you take expenses and projected returns into account in determining a final rental amount.
If you are on the market for a property to rent out, a property professional is a valuable source of information and knowledge. He or she will be able to tell you more about rental potential, rental vacancy rates in the area, and potential for growth in the suburb, as well as projected rental value.
How Do I Prepare My Rental Property?
Look Into Security of the Property
Security is a major concern for prospective tenants. Do a security assessment of the property and work on providing the best offering for the market. Additionally, the assurance of changed locks, pins, and gate codes after each tenant leaves is good practice.
Prepare The Paperwork
As a property owner, you naturally need to protect yourself and the integrity of your property throughout the rental process. The best way to achieve this is to come up with a rental agreement that fairly and effectively balances the interests of both parties. If you are unsure about what terms to include and what to contract around, defer to a property professional for advice or to take over the rental services.
There’s No Downside to Touch Ups
A property that’s as close to pristine as possible stands a higher chance of being snapped up by tenants. If possible, start your rental agreement with nothing on the defects list. While the property is vacant, give chipped paint, untidy outdoor areas, and broken fixtures a once-over and address any issues.
Put On a Preventative Thinking Cap
As a landlord, the property owner remains responsible for many fixtures on the property. While you are preparing your rental property for the market, give some thought to troublesome maintenance points and go over them one by one. If a water leak on a tap seems imminent or if you encounter any electrical problems, doing preventative maintenance now will save you – and your tenant – the hassle of taking reactive action.
New Tenant, Clean Slate
It is best practice to get your rental property cleaned between tenants. We would recommend getting this done professionally. On the one hand, this makes the property attractive to prospective tenants. This will eliminate any patches of mould, less-obvious dirt on the carpets, and serves as a strong marketable point for anyone with pet and other allergies. On the other hand, it keeps your property in good shape and sets the bar of cleanliness standards for new tenants.
Ensure Your Insurance Is In Order
Most property owners have homeowner’s insurance (especially if the property is under mortgage). However, don’t take it at face value that this is sufficient cover for every eventuality. Take the time to look into your insurance provisions, identify and eliminate shortfalls to cover yourself from liability. It is worth drilling down on provisions to identify exclusions and address limitations. It is not necessarily standard practice for these policies to cover all the losses that may be incurred from damage to the property. Make sure your insurer is aware that the property is a rental property and find out the status of lost rental potential in the case of an issue. Your options around policies may be limited in the sectional title space, but become au fait with the provisions to avoid any nasty surprises down the line.
If you are renting the property unfurnished, the tenant will be responsible for insuring their belongings. If you are renting the property furnished, however, it is worth taking out a separate policy to insure your movable property and equipment.
It is a good idea to talk to your financial advisor around issues of public liability and even landlord insurance. Many insurance companies view rental of a home as a business undertaking, which is grounds for rejecting a claim where this is not accommodated in the underwriting process. Your broker will be able to appraise you of the best options for your financial protection.
Screen Your Tenants
A bad tenant can spiral into a nightmare of unpaid rental or damaged property. Screening clients for consistent employment, credit information, and references goes a long way to eliminate risk of a bad tenant.
Long-Term Maintenance and Management
The long-term maintenance and management requirements of a property can become tiresome. Before renting out a property for the first time, seek clarity on the rights and responsibilities of landlords and tenants when it comes to maintenance and management to avoid disagreements down the line. If you feel you will not be able to keep up with your responsibilities, this is the time to make plans to outsource. This deserves special consideration for owners who live far away from their rental properties.
Working with a rental agent has the potential to alleviate the burden of this. By getting a professional to step in, you get the added assurance that everything is being done by the book. These professionals have the capacity to conduct everything from new tenant searches and lease agreements to routine property inspections and disputes with ease and expertise.
Is There Demand for Rental Property?
The vacancy rate of property in South Africa escalated off the back of COVID, unemployment, and civil unrest in 2021. This was exacerbated by low interest rates and a buyers’ market encouraging house sales over rental. However, this is showing signs of stabilising. With the repo rate expected to rise in 2022, it is anticipated that the demand for rental property will see an upward turn.
Is Owning Rental Properties Profitable?
Whether a rental property is profitable will depend on your personal circumstances and the property in question. You need to carefully assess the investment risk and its feasibility, matching the property in question with your required income. This calculation should also account for expenses on the property, tax, the condition of the property and the need for future repairs and maintenance.
Speak to a Rental Agent at Property.CoZa
Property.CoZa is a hub of property professionals for anyone dealing with property to rent in South Africa. Contact us to find out more about our agency offerings, with services that remove the stress and hassle of tenant screening, rental agreements, and many property management services. Whether you are on the market for a property as a rental property or need help with your existing rental property, we are here to help.
Our experienced and knowledgeable team of property professionals are also here to talk you through the different requirements and considerations around renting your property. This means you can go into the process well-informed
and prepared for the different experiences that lie
in owning a property to rent in South Africa.