Risk management now vital for landlords

Risk management now vital for landlords

Category Rentals

While property investments can be hugely rewarding for landlords, it does not come without risk, and poor decision making or assuming that all legalities are in order could leave a landlord out of pocket.

Understanding the risks and making use of important strategies to combat these can ensure that you not only achieve a good return on your investment, but that the property is well maintained and continues to appreciate in value. Some of the risk factors involved in rental properties include:

Market risks - this is the most important and directly impacts the rental and yield that the landlord can earn. An economic decline can result in lower growth and incomes, and landlords should ensure they have a financial buffer or are insured against such risks where possible. Working with an experienced rental agent can provide vital market insights and advice.

Tenant risks - nothing is more important than securing a tenant who is trustworthy and committed to paying their rent on time and looking after the property. It starts with ensuring proper tenant vetting and credit verification, again an area where an experienced rental agent plays a vital role as they are skilled at finding the right tenants.

Negligence risks - although claims from tenants tend to be rare, it is not without risk. Landlords should therefore have adequate general liability insurance. Regular maintenance and inspection is always recommended to mitigate against any potential incidents. The property should obviously be fully compliant with any municipal regulations as well.

Insurance risks - the property must at all times be adequately insured against all risks. Landlords should also insure any special features where necessary, such as solar installations, a swimming pool and so on. It is also important to review the insured value annually. Again, installations should be regularly checked, especially in older properties to mitigate against potential risks.

Legal risks - rentals are now highly regulated with numerous obligations for landlords, from maintaining the property to investing the deposit in an interest bearing account. Here too, the help of an experienced and well-resourced rental agent and a comprehensive rental agreement is vital to protecting the interests of the landlord.

Physical property risks - the physical property will be exposed to wear and tear, especially older properties, but also breakdowns such as the geyser or a swimming pool pump for example. Landlords should keep a maintenance fund so that they are able to quickly attend to repairs. Regular inspections should also be done.

Administration risks - rent collection, receipts, following procedure regarding late or non-payment, etc. is vital in case a problem arises. Documented incoming and outgoing inspections are also crucial should the need arise to deduct damages from the rent deposit. This is another area where a rental agent provides vital services to ensure compliances and the protection of the landlord's interests.

Rental agents stay updated on market trends and rental laws and have become vital partners to enabling landlords to leverage maximum returns on their investment. Seeff Properties offer the latest Proptech systems to assist with the entire process from marketing the property to screening and vetting tenants, drawing up of a legally compliant lease agreement, and managing the entire process on behalf of the landlord.

At Seeff, we open thousands of doors to new homes and property aspirations for our clients each year. As a leading rental property agency with many years' experience combined with legal and technology expertise, Seeff is ideally placed to provide landlords with the best advice and service solutions. If you would like to know more about opportunities in the market, or discuss your property needs, please contact us today!

Author: Gina Meintjes