Property Management 101
03 November 2017
So you want to rent out one of your properties, but you’re scared that you might not find the right tenant, or that your property will get damaged. The questions maul through your mind. What if the tenants don’t pay you on time? How do you build a positive relationship with your tenants? But not to worry, there are property management experts out there who are more than willing to handle such queries for you. If you’re an Absa customer, your luck is better than ever, because we’ve just secured a partnership with Trafalgarto ensure that you get the best property management at the lowest possible rates.
Still unsure about what exactly this entails? We asked the CEO of Trafalgar, Andrew Schaeffer, a few of those burning questions that’ll hopefully help give you the clarity you need to make informed decisions.
First things first. Why should owners of rental properties consider property management?
Outsourcing the property management will save homeowners time, ensure that the right procedures are followed, and achieve legal compliance. They will also have a managing agent available during working hours, as well as after hours support to help deal with any issues that might arise. It basically comes down to convenience, legal compliance, and effectiveness.
How and when did the partnership between Trafalgar and Absa start?
We were approached by Barclays Africa some time ago. I think they were looking at this proposition to add to their value rewards platform as an incentive for their clients.
Which services does Trafalgar offer?
Two of our foremost services are residential letting and full management. While both involve services like advertising for new tenants, trying to fill vacancies as soon as possible, doing the application screening, and making sure that people applying for a rental unit are able to afford the unit, the duration of these services differ. (once-off versus longer term)
We also facilitate the lease training and arrange viewings, as well as providing monthly statements, collecting rent, debt collection where necessary, paying creditors (e.g. rates and levies) and sending a financial report and reconciliation to the owner at the end of every month.
How can Absa customers specifically benefit from Trafalgar’s services?
They (Absa customers) get significantly discounted management fee rates. It gives them a huge pricing advantage. We offer them a full management service at a fee of 7%, whereas the market norms are 10 – 12%. We’re willing to do this because of the communication platforms and visibility that we’ll get exposed to.
Which misconceptions have you come across around property management?
Some of the common things are:
- Whether the rental is guaranteed or not. A property manager does not typically guarantee the rental as part of their service and management fee. There are however rental insurance products available that will guarantee the rental, but those typically cost about 2 – 3% of the monthly rental per month.
- The owner is the one who is responsible for billing the body corporate for the rules and compliance of rules. One of our other challenges is when the tenants do not comply with the rules, for example, noise, pets or parking in the wrong areas. It can prove very difficult to get the tenants to comply with these rules. This could also lead to the lease being cancelled.
- Rent is payable on the 1st in advance. Some tenants forget or don’t fully understand that.
- Maintenance is often a challenge as well, because according to the lease, the tenant would typically be responsible for breakages and damages, where the owner would be responsible for the wear and tear maintenance. Because of grey areas, this can be challenging, so we assist in the process of deciding who is responsible for what, to make sure that the unit stays in a decent condition and also help the homeowner when a new tenant needs to be sourced.
Which benefits can the owners of rental properties enjoy when they obtain the services of companies such as Trafalgar?
Owners who are challenged with time and availability would typically benefit from an outsourced managing agency because they’re the ones who don’t have the capacity to deal with some of the rental operations themselves. It does take time to make sure that the rent is paid and collected on time, to deal with maintenance, quotes and contracts and to make sure that work is done properly.
The other point is proximity. Sometimes it makes a lot of sense for an owner to go and inspect the unit, pinpoint what the problem is and suggest how it should be resolved. At other times, the owner lives far away from the unit, so it’s not practical to get there quickly or even cheaply. In this case, it’ll be a better option to get a local property management agent, who’s close by and able to travel to the site quickly in order to make decisions and recommendations. Ultimately, rental units work best when there’s consistent service delivery to the tenant in terms of water and electricity, maintenance, and efficient billing.
Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.