With so many people unable to afford to buy their own homes, there remains a big market for rentals in South Africa. For those who are in the position to buy to rent, leasing property can be good income and a sensible way of paying off a second or third mortgage.
However rental income should never be considered a passive income. If you're just entering the game, don't rush in blindly. There is some work involved in being a landlord. For instance, you as a landlord have the obligation to provide a safe, properly-maintained home for your tenants. This includes ensuring that plumbing, wiring and other household maintenance is up to scratch. So, be prepared for the odd dinnertime phone call requesting a fast response to problems such as burst geysers, break-ins and plumbing issues. You will also have the responsibility of advertising the property, interviewing tenants and hosting tours of the property. You also need to approach your rental property as a business. If you don't, and you don't have the time or temperament to be a landlord, it's not going to work for you. It could also end up costing you money. Unless you've got experience in renting out homes and managing the trials that come with managing tenants, the legalities and financials, it would be in your best interest to outsource the letting of your house to a professional property management company. The new Consumer Protection Act also has ramifications for landlords which anyone thinking about entering the buy-to-let game should be aware of. The Consumer Protection Act offers landlords very little recourse against tenants and virtually no way out of leases. As such, it makes it very difficult for landlords to get rid of undesirable tenants. This makes tenant screening and credit history analyses all the more important. You will want your tenant's full identity, rental history and accurate picture of their credit standpoint before going any further. A professional property management company is in a far better position than the average person to manage this. A qualified rental agent will also be better-informed to navigate the provisions of the Consumer Protection Act and any other pieces of legislation applying to the property rental industry. The property management company will also assume the role of mediator between you and your tenants. This is particularly valuable when it comes to addressing sticky issues such as renegotiating leases, raising the rent, behaviour and misconduct, breaches of contract, and damage and maintenance to the property. There are risks involved in renting out a property, even with a water-tight rental agreement in place with who you believe are ?decent' tenants. The key to making a success of your property as a business lies in managing these risks closely and carefully. You must have the stomach, and the time, for it otherwise it can be more trouble than it's worth. *Ya'el Geffen is the Executive Director of Lew Geffen Sotheby's International Realty