Turning your home into a rental
Category Rentals
One of the advantages of owning property is the ability to rent it out and to earn a sustained rental income, but you also want to ensure the property is looked after and maintained. Insight into the nuances of the rental market and how that may affect the rental income that you anticipate, is therefore useful for anyone looking to turn their home into a rental.
Some important aspects pertaining to rental properties include:
Location and potential - not all areas and property types enjoy the same level of rental demand.
While almost any property can be rented out, location and the type of property plays a role in determining sustained demand from tenants, and the rent that can be charged.
Rental rates - regardless of how big the property is, or how many extras it has, there are caps on how much rent tenants will pay. A skilled rental agent is best placed to advise on the appropriate rental. Unfurnished is usually preferred, except for short-term rentals.
Short-term vs long-term - long-term usually provides a more secure return on your investment while short-term tends to provide higher income, but requires more time and cost to provide extras, and higher maintenance given the rate of turnover of occupants.
Preparing to rent - the property should be in a good condition, thoroughly cleaned and cleared of any stored items. The tenant should have access to all areas. It is also advisable to remove any valuable or special items or fixtures such as fancy mirrors and the like.
Legal and compliance - legalities around rentals are complex with a slew of duties and obligations on landlords, and restrictions on what landlords may not do, even if the tenant does not pay, or refuses to move out. A watertight lease agreement and legal advice is therefore vital.
Who pays what - the tenant pays the costs incidental to preparing the lease, the monthly rent and utilities used. The landlord is responsible for the rates and taxes, levies (if applicable) and maintenance and repairs not due to tenant damage or negligence.
Insurance and security - landlords must have adequate insurance to cover the property and all fixtures including extras such as solar panels, as well as the contents in the event of a furnished property. If unfurnished, the tenant is responsible for insuring the content.
Deposit and maintenance - funds should be set aside for maintenance. The deposit must be held in an interest bearing account for the tenant and may not be used for maintenance. Only on termination, if there is damage attributable to the tenant, can it be used to cover the costs.
Inspections and oversight - incoming and outgoing inspections must be undertaken with the tenant to verify the condition of the property and any damage on termination of the lease. Periodic inspections can be done, but only on prior arrangement with the tenant.
Finances and tax - landlords should have reserve funds available in case the need arises. Rental income is taxable, but certain expenses can be claimed. Check on the SARS website, or speak to a tax consultant.
Before getting into the rental market, always do research about the local market and how much rent you could realistically expect. If you have a mortgage, you may need to fund any shortfall on top of other financial requirements noted above.
Working with a credible local rental agency such as Seeff can take care of finding the right tenant, and the legal and compliance matters as efficiently as possible. We are a top rental agency and manage thousands of rental properties annually. We offer a full suite of rental solutions aimed at simplifying the challenging legal and procedural landscape pertaining to rentals.
Seeff opens thousands of doors to new homes and property aspirations for our clients each year. If you would like to know more, or have a rental property, contact us today!
Author: Gina Meintjes
