Do you really want to be a landlord?

Stories of landlords and tenants may sounds like the stuff of urban legends, but they are very often true — and enough to scare off the buy-to-rent brigade. So, what does it take to be a landlord these days?

There is still a huge market for rentals in South Africa as so many people can’t afford to buy their own homes. Theoretically, leasing property provides a good income and it’s a sensible way to pay off a second bond. But rental can’t be considered passive income. It’s a fairly high-maintenance activity.

According to Ya’el Geffen, executive director of Lew Geffen Sotheby’s International Realty, a landlord has an obligation to provide a safe, properly maintained home for tenants. This means paying attention to plumbing, wiring and household maintenance. Plumbing problems, burst geysers and break-ins are all the responsibility of the landlord.

It’s your job to advertise the property, interview tenants and give tours of the property, too. As such, you need to have time and you need people skills as well as business skills. If you don’t get it right, the whole enterprise could cost you money.

The new Consumer Protection Act will also affect landlords, who will have little recourse against tenants, and almost no way to get out of leases. If you don’t screen your tenant, check his or her rental history and get a picture of his or her credit standpoint, you’ll run in to trouble.

The alternative is to outsource the letting of your house to a professional property management company, which essentially mediates between you and your tenants. This is especially helpful when it comes to renegotiating leases, raising the rental, dealing with misconduct and breaches of contract, as well as damage and maintenance issues.

Geffen says that even a water-tight rental agreement with “decent” tenants can go awry, so risk management is essential. Think carefully about that rosy idea of earning passive income — and if in doubt about your ability to be a hands-on landlord, rather outsource the job.

Read more news, blogs, tips and Q&As in our Smart Money section. Post questions on the site for independent and researched information

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