Property management is divided into two main components: tenant placement and rental management. Mastering these activities will dramatically improve your property investment success.
Property management is the key to maximizing the return on your property. And doing property management effectively and efficiently is even more important. Property management is the process of managing a rental property by attending to the day-to-day activities centered around the property. Property management activities include finding, screening and placing tenants, collecting monthly rent payments and maintaining the property.
We look at tenant placement and rental management in more detail below:
1. Tenant placement
The success or failure of your property investment begins with the placement of a quality tenant. To achieve this, you will:
- Value your property’s rental amount. Compare your property with other similar properties marketed for rent in the same and surrounding locations.
- Prepare your property to the required standard to attract a quality tenant. This includes cleaning and completing the required maintenance.
- Advertise your property to prospective tenants. Take quality listing photos, put together an attractive property description and place this in applicable advertising media, such as internet property portals like Wonderlist Property, printed and online classifieds, or whatever media are best suited for your property in the area it is located.
- Manage inquiries from prospective tenants and arrange viewing appointments. Your property advertising will attract prospective tenants who will want to view your property before they decide to rent it or not. You will need to arrange access to the property and agree on times for individual or group viewing appointments.
- Preparing your rental agreement and other required documents for signature. Your qualified tenant will need to sign a contract listing the terms of the lease. You will prepare this lease agreement and meet with your new tenant so that both parties can sign it (once the tenant has perused the document and has agreed to all terms). Where applicable, additional documents, such as Joint Management Body (JMB), will need to be signed by the tenant as well.
- Onboarding your tenant. Once your tenant has signed their lease and paid the required monies, such as their security deposit and first month’s rent, you will hand over the keys on the agreed date of occupation. This is known as ‘onboarding’. A professional tenant onboarding experience will include a joint inspection of the property and the handing over of a comprehensive welcoming pack, including the required documents.
2. Rental management
Once you have placed a quality tenant, your next key to property investment is the consistent management of your tenant and your property (‘rental management’). You will:
- Bill rent, utilities and any other charges to the tenant each month. The rental amount billed is in accordance with the amount stipulated in the agreement. You will raise utilities and other charges according to bills you receive from the JMB and/or the local municipality.
- Receipt the rent and other monies billed. You will usually receive notification of receipted funds from your bank. If the rent and other billed amounts are not receipted by the first of the month, you will follow up these late payments according to your predetermined late-payment procedure. Where outside assistance is required with debt collection or eviction, you will generally approach legal counsel.
- Attend to tenant complaints and queries, and enforcing lease compliance. There may be complaints about, or from, your tenants every now and then, which you’ll need to attend to. Sometimes you’ll receive communication from the JMB, which you’ll need to forward to your tenant. Where applicable, you may need to enforce correct tenant behavior in terms of the lease agreement.
- Property maintenance. Property maintenance is both reactive and proactive. Actions you’ll take here include communicating with contractors, arranging their access to your property, approving quotes and quality-controlling work done.
- Inspections. You should schedule inspections at least every six months. Inspections include reporting to your tenant and maintaining records of each inspection.
- Your tenant move-out. Between eight and ten weeks prior to the end of a rental, you’ll communicate with your tenant about whether or not they would like to extend their lease period. If your tenant wishes to vacate, on the date of moving you’ll conduct a joint move-out inspection. Compare the move-in inspection with the move-out inspection, and deduct the cost of damage caused by the tenant, if it exceeds legitimate wear and tear, from the tenant’s security deposit. You’ll return the remainder of the deposit to the tenant in accordance with the agreement. Finally, you’ll arrange repairs or cleaning, if required, at the property as soon as possible.