So Why use a Managing Agent?
Now obviously one doesn’t see the three words in the heading grouped together that often, but ask any house owner, about tenants, and I can assure you they are all too familiar with sweaty stomach pains and diarrhea, oh the diarrhea – in other words, the lots of sh*t, associated with some tenants.
So why the problems with tenants? If you have ever met with prospective tenants during the viewing stage of trying to let out a unit, you will know that they all appear to be model citizens.
A nicer bunch of people you will not find together except perhaps on a Sunday school picnic! So, you choose the one you like the best, or you give it to the single mom to help her, or the young couple with the puppy – and then when all hell breaks loose – and you act surprised – well duh.
Managing Agents are never surprised. I have been a letting agent for a number of year now, so I wasn’t surprised when, for instance, during an inspection we discovered 8 people in a 1 bedroom flat, nor was I surprised when the Asset Forfeiture Unit told a client that they were moving to attach his house because his current tenant was a drug lord – a drug lord, with a Maltese poodle, who lives with his mum, (any way that’s what the owner was told at the time!)
You see tenants are, if anything, absolutely predictable and will, without fail, behave like tenants. Most tenants will eventually land up doing one or all of the following, (this list is not exhaustive, nor is it in order): Break a law or break a lamp, not pay rent, sublet to their brother, (sister, cousin or uncle), even all of them, even all at once, break the toilet, steal the toilet or, in a puff of marijuana smoke, disappear without a trace, as if summoned back to a distant planet by alien masters – you’ll notice paying rent wasn’t mentioned, not even once!
At this point ID numbers and leases are useless and even the very cell number that they used to call you on so enthusiastically at 3 am, just the week before, about the noisy geyser, next door, is suddenly, “no longer available on this network”, WHAAAAAT?
Now spare a thought for the average managing agent, a family man with strong community ties and a lovely wife and 2.4 children! They’ll be looking after maybe a 100 residential units, with tenants, for owners who have decided to follow a more harmonious and peaceful path, (think lush daisy covered hills, waterfalls & peaceful pools – Mike Oldfield’s – Tubular Bells, if you will.)
But strangely enough their lives are not filled with tranquilisers and heavy drinking and the reason is that they are not emotionally connected to the property or to the tenants. Their relationship remains professional and arm’s length, so it’s easier to evict or demand performance without guilt or remorse.
If you’ve ever been cornered by a non-paying tenant, (usually sporting a sudden limp and/or black eye) begging for, “just one more week’s grace”, you will know what I am saying.
Managing agents, however, are unswayed by tenants looking for favour – if they don’t qualify they’ll tell them, “YOU DON’T QUALIFY – NOW BUGGER OFF” and not, “of course it’s ok to pay me the deposit over 37 months, and keep 9 pit bull’s and 3 bags of, ‘green tea’ on the balcony.”
Lately, as the economic times get tougher, better agents have adopted slightly stricter criteria on rentals, in order to prevent tenants fleeing to the aforementioned distant planet without paying rent. Some insist on 2 months deposit, plus a cleaning & key deposit, while others get everyone involved in the unit to sign the lease, even their parents if they are students or newly employed.
Sometimes it may take a little longer to get a tenant but it’s always better to wait a month or two than have a non-paying tenant breaking your unit and thumbing his nose at you through your smashed lounge window as he lights up a 3 foot long joint!
With proper deposits you can apply the excess funds to repairs and when the tenant doesn’t pay the last month’s rental, as they are wont to do, you are covered. This also gives you 2 months to react to non-payment and delinquency, so we can evict before you start losing money.
Aside from that, agents also undertake regular inspections of the property, so any problems are sorted out immediately. They can have the blood stained carpets cleaned, mid-lease, using the tenants cleaning deposit, evict and still have change to pay for the removal of crime scene artifacts and bits of flesh.
Just as importantly, they find out quickly if the tenant have gone inter-galactic and maybe sub-let to a charming man with 11 sisters and lots of short-stay visitors, don’t laugh – it happens!
Agent’s generally don’t charge you an upfront finder’s commission for tenants, but rather take a percentage of rental collected for this service. This means if the tenant doesn’t pay you, they don’t get paid, and, as you can imagine, this also means they get just as excited about the prompt payment of rentals as you do.
Know another thing; the financial pressure on tenants is real and growing fast. The rental market appears to have flattened out a little as tenants have less disposable income to live with.
Also know that if you let your rental slip just one month, you can consider it gone forever! Tenants traditionally use overtime or bonuses to get rental backlogs up to date – but these are scarce these days so arrear rental rarely gets caught up with, and certainly not without a great deal of effort that is. Something you should really not be wasting your time on, unless you also want to get,” down-sized” by your over zealous boss.
So leave the rental stuff to the professionals, they really do it well and even have lists of potential tenants, (good ones). Remember, after all, even one skipped rental costs you more than the entire year’s fees you’d pay the rental agent… and of course, its never just one payment, the breakages and non-payment just goes on, and on, and on, and on, and on, and on… until your peaceful Nirvana grows teeth and starts biting and you finally decide to sell and tell all your mates at the pub that property is a rubbish investment.
Anton is a Property Broker at Big Bay Properties and a senior Debt Counsellor for the DEBTSMART group. He consults as a debt counsellor a training provider and develops systems for the debt counselling industry.
http://www.becomedebtfree.co.za or http://www.debtsmartsa.co.za for franchise help.