Buying and renting out accommodation is an increasingly popular way for South Africans to generate income.
Claire Cobbledick, Head of Core Business at Gumtree SA, says the site is seeing massive growth in rentals of all kinds: “For some, it is a primary source of income but, for many, it’s what’s called a ‘side hustle’ – a way to make some extra money out of a room, a cottage or a holiday home.”
Obtaining property to rent out is quicker done by purchasing property from auctions, refurbishing it and renting it out. When bidding for a property on auction, first find out what properties are available and put away a 10% deposit for your potential bid. Remember that all auction deals on property are credit deals, and you will be required to pay the remainder of the amount once your bid is secure.
The property you’re purchasing may have outstanding taxes and rates, which will fall upon the buyer; this is something to be cognisant of. Once you’ve obtained full ownership of the property, you can look into renting it out.
Cobbledick points out that being a landlord can be tougher than most realise. “There is the worry about being defrauded in some way and there’s always maintenance, which can be expensive and time-consuming. And, for short term or holiday lets, there’s a constant management requirement and cleaning.”
Cobbledick has a ten-point plan to make your life happier as a landlord.
1) Have a clear written contract for your accommodation which spells out your requirements, including payment terms, and what is included and excluded in the rental sum. Common areas which need specific mention are Wi-Fi, DStv, security system, garden and pool maintenance, and cleaning. Spell out your conditions in terms of damage to the property of contents.
2) If the potential renter cannot meet your required terms, do not accept their booking without specific agreement and a re-written contract.
3) Advertise your property accurately. Any over-promise or omission of a critical fact can lead to aggravation and non-payment later on.
4) Check a renter’s references and details. Verify their phone number and e-mail address. A professional agent should have access to the Tenant Profile Network (TPN) for this purpose.
5) Have a complete and updated inventory of what is in the property, and its condition.
6) Leave clear instructions for renters – written in a friendly manner – inside the property on any obvious issues e.g. security, Wi-Fi password, idiosyncrasies which might require explanation, and contact numbers.
7) If the property is far from where you live, employ someone locally to oversee the property for you.
8) Either you, or the property manager, should meet the renter in person to admit them to the property. Then inspect the property as soon as possible after a renter’s departure and check for damages.
9) Have a readily accessible list for emergencies – plumber, electrician, roofer, security service, locksmith, cleaner, police, and ambulance.
10) Deliver good service. It might be just a side hustle for you but, for the renter, they’re paying good money to receive clean and reasonable accommodation that offers all advertised amenities. If something is wrong, move quickly to fix the problem and be prepared to refund rental money if the issue is substantial.