Written by Tamira Gunzburg, at HouseME, Smart Property Rental for Landlords and Tenants.
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There’s never a good time for a pandemic to go on a rampage throughout the world. But having your tenant’s lease come to an end in the middle of lockdown? That’s a scary prospect. Like many people who have had to scramble to put in place a plan B or C to secure their livelihood, you’ll need to adapt quickly.
Don’t despair quite yet though – the recent emergence of “prop-tech” on the real estate scene means there are more digital property management tools available than ever before. At HouseME, South Africa’s main proptech player in the residential rental space, we’ve been helping landlords rent digitally for years.
Here are some of our top tips to help you secure your investment in the coming weeks and months:
1. Extend your current lease, if you can
If your tenant’s lease is coming to an end soon, try your best to secure a renewal from your tenant. Even if that means not escalating the rent as much as you would have this year, or agreeing to that repair that the tenant has been asking for, now’s the time to hold on to good tenants.
If your tenant can’t or won’t stay for another full lease, consider negotiating a temporary extension. For example, you could extend the lease by three months. Since your tenant might have logistical trouble finding a new place or moving out themselves, this could be a win-win solution to tide you both over until the worst of the pandemic is over.
2. Turn your property advert into a masterpiece
Although in the USA real-estate has been named an essential service, this is not currently the case in South Africa. That means you won’t be able to host viewings until the lockdown ends. You’ll have to rely on the one thing tenants searching for a new home can browse: the internet.
Whether you’re creating your advert on Gumtree, Property24, Private Property or HouseME, it’s more important than ever to include high-quality photos and pick a stunner for the cover photo. 96% tenants say that photos were the top reason they booked a viewing, so check out our tips for how to take professional-looking property photos.
You’ll also want to make the description very detailed, including what floor the property is one, what facilities are nearby, and other details that a prospective tenant would otherwise have noticed or asked during a viewing.
3. Make a video-walkthrough to bring your property to life
Tenants have oodles of time now to browse the online marketplaces, so you’ll really need your property to stand out from all the others that are listed. Consider making a video-walkthrough to bring your property to life.
Although it may sound like a lot of work, tenants really appreciate the extra effort. Think about it, they’re needing to make a pretty big decision (where they’re going to call home for the next year of their lives) without being able to check out the place first.
Before your current tenants move out, ask them to make one for you. You can send them our recent blog post on how to create the perfect video walkthrough in a few easy steps. We have already started showing digital walkthroughs of our rental properties which have been a hit with both tenants and landlords.
4. Host viewings over Zoom
One of the things that have unexpectedly become clear during the Covid-19 crisis, is what generation “Z” stands for. Zoom! Join the digital generation if you haven’t already, and get your video conferencing game on. You can download Zoom for free here.
Next, set an appointment with your current tenants and the prospective tenant for a virtual viewing, and send them the link. Your tenant can be the ‘cameraman’ while you do the ‘voice-over’ from your own home, and the prospective tenant can ask all their questions then and there.
You can also use WhatsApp or Skype for three-way video calls. There are even apps to help you schedule a meeting time between three parties (try Doodle, my personal favourite) so there is not too much back and forth.
5. A bird in the hand is better than two in the bush
If the prospective tenant seems interested but wants to negotiate, don’t play too hard-ball. It’s better to take a small knock on the monthly rental than risk having your property stand vacant for a month or more.
You can always suggest a shorter-term lease, so that you can renegotiate the rent after 6 months or so.
6. Use a professional vetting service, especially now
But that doesn’t mean you should take in just any tenant without checking their financial standing. Given the economic fallout of the lock-down, you want to make sure that your tenant is in a strong financial position at the start of the lease, and that they will be able to take a knock and still meet their rental obligations.
Run your checks – see our blog post for things to look out for – or consider paying for a professional service. HouseME, for example, has a 99% collection rate on the tenants that pass our vetting. We offer a professional tenant vetting service included in our flagship package.
7. Use a digital lease and a watertight one at that
Since you won’t be able to meet the tenant in person, but don’t want to wait until after the lock-down to secure the lease, you could make use of a digital signing tool. I love Docusign, which is a free service that will let you upload your document and collect legally binding digital signatures on it.
However, that doesn’t mean the lease you upload is compliant. With the latest amendments to rental law, and the unprecedented circumstances we’re seeing today, it’s more important than ever to make sure your lease protects you from surprises later on. HouseME’s lease is digital, crafted by established real estate lawyers, and fully compliant with the latest laws. And the best part? You can download a free copy of our lease agreement here.
8. Don’t forget to hold the deposit in an interest-bearing trust account
Since banking is considered an essential service, the one thing you will be able to do during lock-down is go to the bank to set up an interest-bearing trust account. This is where you’ll need to keep the tenant’s deposit, as required by the Rental Housing Act.
The law is quite strict about what you can and can’t do with the deposit, so to avoid legal issues later on, don’t skip this step. You could make it the excursion of the week, or if you’d rather not emerge from your hibernation spot, consider using an online service like HouseME that collects the deposit for you.
9. Set the moving date for after the lock-down
Although having a roof above one’s head is a basic human necessity, real estate has not been classified as an essential service and is therefore not explicitly included as one of the permitted reasons for leaving your house.
To avoid legal trouble, we, therefore, recommend to start the lease and arrange the ingoing inspection for on or after April 17th wherever possible.
10. Cover your risk, just in case.
Even tenants who are in good financial standing now could experience unexpected difficulties later on in the lease due to the economic fallout from the Coronavirus. And if they end up struggling to pay rent on time or in full, even if through no fault of their own, you might end up in a financial pickle in turn.
Especially if you have a monthly bond to pay on your investment property, you may want to consider taking out a risk mitigation product on your new tenant. HouseME offers a Rental Guarantee at only 2% of the value of the lease, and it covers you in two critical ways: it pays out rent on time even if your tenant pays late, and it pays out up to two months’ rent (on top of the deposit) in case your tenant can’t pay rent at all.
Now is the time to show solidarity and compassion to our fellow citizens who are struggling, so rather protect your investment via a third party so that you can take on your new tenant with total peace of mind.
Have anything to add?
These are the top ten tips we’ve learned over three years of digital renting, and in entering this lock-down alongside our current landlords. Here’s to hoping that they help you, too, in finding a new tenant swiftly. And that they help house-hunting tenants find a suitable home in these difficult times.
Comment below and let us know how you come along, and if you have any tips of your own. After all, we’re all in this together, after all. And if you looking for some expert advice, contact our team, and we’ll try and assist the best we can.
Ben Shaw is the CEO and Co-founder of Proptech Company, HouseME, Winner of Seedstars World’s Best Start-Up Company in Cape Town.
To Sign up with HouseME as a Landlord or Tenant, Click Here.
HouseME’s Co-Founders, Ben Shaw and Kyle Bradley.
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