Is a rental property still a good investment?

Is a rental property still a good investment?

Category Rentals

According to Pieter Jordaan, Seeff’s licensee for the area, the past few years have seen an upswing in rental property prices, driven by demand and influx of families to the Garden Route. The current rental yield in George for residential properties is between 8% and 10%.

He says further that if a property is bought for the correct price and managed properly it is a great investment. A bonded property can show a positive cash flow in a short period of time with the correct guidance and assistance.

Finding a rental agent that you trust is important when it comes to investment property. It is very important to confirm that both the agency and the agent are registered with the Estate Agency Affairs Board.

You should further ensure that your agent is using reliable systems and is informed about the latest legislation regulating rental property. Invoices and statements need to be supplied to landlords and tenants reflecting the current status of accounts, deposits and interest earned by the tenant. When an agency operates without proper systems there is a delay between the time the tenant paid to the time that the landlord is paid.

Rentals are governed by the Consumer Protection Act and the Rental Housing Act. It is important that your agent has sufficient knowledge of these acts in order to properly manage your property. Certain aspects of the law, for example, timeframes on renewal of lease agreements could cause the landlord a loss if not correctly administered.

A decent application and credit vetting process of prospective tenants is also very important, as certain behavioral patterns can be seen during this process and can assist in limiting your risk. The wrong tenant can turn a good investment into a nightmare.

During the last 12 months Seeff George averaged a 99,2% success rate in terms of good standing tenants. We care about our clients by doing things the right way.

Ensure that you sign a mandate with the agency. The mandate is the agreement that governs the relationship between the landlord and his agency. The lease agreement is between a tenant and a landlord, the mandate cannot be included as a clause in the lease agreement.

The Estate Agency Affairs Board Code of Conduct expressly states: “No estate agent shall offer, purport or attempt to offer any immovable property [for sale or] to let or negotiate in connection therewith or canvas a purchaser or lessee therefor, unless he has been given a mandate to do so by the [seller or] lessor of the property” and that “all terms of such mandate… are in writing.”

Your mandate is precious and important. Landlords should be careful who they entrust it to; agents should take measures to protect it. Yet both often ask whether a signed mandate is absolutely necessary. The answer is ‘Yes!’ says Peter Mennen, Head of Legal at TPN.

When choosing a rental agent, choose an agency like Seeff which has an established rental book. As an investor it is important to choose an agency who is already established, not only in the real estate industry but also in the rental market and can prove their success. Numerous companies are starting to handle rentals, but with no prior experience in the field and this may lead to issues in the future.

At Seeff George we have an entire team dedicated to providing you with the best service at all times. Our Licensee and Managers are actively involved in managing your property.

Please feel free to contact us to arrange a meeting for more information.
Pieter Jordaan, principle and licensee, of Seeff George - pieter.jordaan@seeff.com | 044 871 5195

Author: Seeff Head Office