If you own a second home as a property investment, or if you’re thinking of buying one, you may be wondering how to manage tenants, leases, and maintenance issues. There are two options available to owners of second properties – manage it yourself, or hand the job over to a property management specialist. To find out which option is easier, Northwood spoke to a property management specialist and learned more about the benefits and costs involved.
Why managing your own rental property doesn’t always work out
Many people buy a second home for investment purposes and assume that managing it will be easy. If all goes well – with an ideal tenant who pays their rent on time and looks after the property as if it’s their own – it may be possible to manage your own property. Unfortunately, many tenants are far from ideal.
If you have the bad luck of landing up with a tenant who pays late, damages your property, and finds every possible reason to lodge complaints against you with the Rental Housing Tribunal, the value of your investment and your own peace of mind will be badly affected. The time and effort it takes to manage a property – including finding a trustworthy tenant, seeing to maintenance issues, negotiating rentals and lease clauses, and collecting the rent – may just raise your stress levels for no good reason. If you’d like to avoid this, using a property management company is a great idea. But who should you use?
What services should a good property management company offer you?
If you’re going to pay a property management company to deal with the ins and outs of your investment property, you need to ensure that you get a comprehensive service. A good property management company should offer you the following:
- Advertising the property for rental and arranging viewings with prospective tenants
- Fully reviewing the background of each tenant who shows an interest. This includes:
- Background checks
- Verifying the person’s employment status
- Checking with previous landlords and agents to ensure that the person was a reliable tenants
- Credit checks
- Collection of deposits and rentals throughout the period of the lease.
- Communicating with you and your tenant when repairs need to be done or when a lease expires or is renewed
What should it cost?
Most estate agents and property management companies work on a commission basis – a commission of between 8 – 15% is considered normal in South Africa, and may vary depending on the agent and the total monthly rental. It may also be possible for the agent to increase the rental slightly to cover their commission, so that you still receive your asking price each month.