Surviving as a landlord in 2021
PUBLISHED 9 FEB 2021
2021 is being touted as the year of recovery after the COVID shock that rocked the entire world - and with the right strategy you could make this an excellent year from a rental property point of view.
The past year has been a challenging time for landlords, with some tenants unable to pay their rent while others opted to take advantage of low interest rates and purchase their own homes.
In this article we’ll go through a variety of strategies and practical steps that landlords can implement to secure tenants, improve rent collection, and prepare for the year ahead.
Hope for the best, prepare for the worst
Two scenarios that every buy-to-rent owner dreads are not having a tenant and having a tenant who doesn’t pay or damages the property.
Advertising your property effectively (ideally with the help of an experienced agent) and screening prospective tenants can help mitigate both of these risks, but it’s always a good idea to prepare financially for periods of vacancy, payment delays and unexpected repairs.
If you haven’t done so already, you may want to build up a reserve fund by investing at least 15% of your rental income on a monthly basis. This can provide much-needed funds for repairs or to cover your bond payment, rates and taxes if your property is vacant or your tenant fails to pay on time.
You can secure existing tenants through clear, empathetic communication, meeting them halfway on requests for maintenance and renovations, Keep annual rental increases as low as possible for good occupants who take care of the property and pay their rent promptly.
Estimates for repairs, insurance quotes, and even prospective rental income should be adjusted by 10%-20%, erring on the side of caution. This means you’ll need to plan to pay more for expenses and prepare yourself for a lower rental income than your estimates might suggest.
Is it still profitable to be a landlord in 2021?
The current market is certainly moving in the buyer’s favour, and as a current or prospective landlord this could be a great opportunity to invest in a rental property.
As interest rates increase in the coming years and as Cape Town continues to grow, there is likely to be a steady stream of tenants - especially in sought-after areas.
Whether you’re in the market to buy, sell or rent out a Cape Town property, our team is ready to assist you. Contact us today to discuss your property rental needs.
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