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The profit is usually budgeted as an additional salary and there are countless examples whereby landlords are thriving financially in the property industry and have made that dream a reality! The success of this can be measured by a variety of factors, but the question that most prospective landlords ask themselves before plunging into their new role is almost always “how much can I make?” followed closely by “how will a tenant not paying rent affect my average expected income?”.
Guaranteed income for landlords
HouseME’s Rental Guarantee will give you the peace-of-mind that is needed when you have tenants staying in your property. The way the Rental Guarantee works is, if a tenant pays us late or even doesn’t pay at all, HouseME still keeps paying you on time for up to 3 months of non-payments (third month will be covered by the deposit). In other words, the risk of the tenant defaulting is now on HouseME instead of you. All of this at a cost of only 1% of the total lease price.
But, how do you know if the time is right to become a new landlord in an uncertain market? Well, that is where we have done all the hard work for you.
Assessing the market for new landlords
Using data produced by Payprop Rental Index, in 2018 we saw a downward trend in national rental growth ending the period on 3.9%, compared to 6.4% in 2017. Despite the trend, the average national rental was R7,610. So, let’s have a look at a few South African provincial statistics. By doing so, we can sum out the rental growth rates and make any projections or forecasts regarding a landlord’s average salary.
- Free State – The province has experienced high growth, with tenants spending a smaller percentage of their salaries on debt repayments. This has positively affected the individual’s ability to pay for rent in the province.
- Gauteng – The average Gauteng rental amount reached the R8,000 mark for the first time in 2018. Gauteng is expected to have continued growth projection in 2019, which is great news for all landlords in this province. This will allow landlords, especially those with multiple properties, to see an increase of a greater cash flow from their properties.
- KwaZulu-Natal – The province achieved the second highest rental growth for 2018, at 7.25%. At current levels – R8,129 – rentals in this province are the third highest in the country.
- Western Cape – In its current situation, it’s hard to believe that the Western Cape has experienced constant growth ever since 2017. This province is regarded as the most expensive to live in with the average rent surpassing R9,000.
Using HouseME’s database and its operations as a rental agency, the PlaceME® tool has been the least discriminatory and most impactful system in the rental application process. The PlaceME® tool was designed to improve vacancy rates and to ensure fairer rental pricing. It creates an environment whereby prospective tenants place an offer on the property they’re interested in – at, below or above the landlord’s asking price. The great part about this is that none of the offers made are not considered by the HouseME team and the landlord – no discrimination whatsoever!
How to place tenants faster
Now, let’s look at some factors that can help you find a tenant faster and how you can secure your monthly rental.
Let’s be honest, renters have a lot of choice at the moment. With the booming age of technology, landlords constantly advertise their properties on social media platforms and other marketplaces. What this means is that there is always a prospective tenant that is interested in a property, but this also means that a property that is priced too high in comparison with other properties in the area is simply skipped over.
The property’s location and its proximity to work, public transport routes, highways, schools, shopping and leisure facilities and other sources of convenience will have a big impact on its rental demand. Those closer to such sources are higher in demand.
Features such as off-street parking, 24-hour security, or CCTV cameras will add value to a property and increase the demand for it. Investing time and assets in managing the security of a property increases the value and thus the overall renting price should increase.
4. Layout and finishes
The majority of South Africans are looking for a low-maintenance home with a modern look and an open plan layout. In terms of whether to invest in an apartment or freestanding home, statistics have shown that rental returns are higher on smaller properties and it is often easier to find tenants for one or two-bedroom apartments than it is to find tenants for a four-bedroom house.
Technology can take out the hassle, cost and risk out of managing long-term rentals. HouseME offers an ultra-modern journey for both the landlord and the tenant with the obvious benefits of helping landlords find tenants faster, and at a fair price.
Ben Shaw and Kyle Bradley are the Co-founders 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.