select
|

Tenants in mid-rental properties still the best payers

The latest Rental Payment Monitor report on the second quarter of 2012 shows that an impressive 81% of tenants are in good standing when it comes to paying their rent every month.

This figure has improved over the last few years, from 74% (with only 54% paying on time) which was recorded four years ago when the residential market plummeted.

The second quarter figures show that 68% paid on time, there was 8% who made partial payments and 13% paid late (but, he commented, at least they did still pay their rent).

"The recent reduction in the second quarter of this year of 50 basis points, I believe, has contributed to the positive rent collections," said Michael Bauer, general manager of IHFM. "What many landlords forget is that tenants often have large debt to income ratios and make substitution choices when it comes to paying their bills and maintaining their lifestyles. If the interest rate drops it frees up cash to pay bills."

The National Credit Regulator has warned that the credit bubble will eventually burst, mainly in relation to unsecured personal loans, credit card debt and revolving credit from retailers, he said.
"I have always found the R3 000 to R7 000 rental bracket to be the most reliable payers but now there is an improvement in the R7 000 to R12 000 bracket as well. In fact, the figure in this bracket of people in good standing is 1% better, at 85%," he said.

The key here for landlords is proper screening of potential tenants, said Bauer. Remember that there needs to be a proper credit check and referral letters from previous landlords.

"My advice is, if you're going to invest in property to rent out, make sure you invest in the right bracket. You may have a higher turnover in tenants but the selection of tenants in R3 000 to R12 000 rental price range is bigger. The bulk of Government employees tend to be in this range of rental payable and, we all know, their salaries are reliable and they should, therefore, be reliable payers.

"Find units close to public transport and, if possible, find units that have parking bays, security and two bedrooms (this size is very popular for small, younger families). The best price range to achieve the right rental return is R400 000 to R700 000," said Bauer. "One thing to remember when buying to let is that if you buy too far from the CBD there is the likelihood that the unit will not be popular because of the higher cost of travelling to and from work and also the time and distance away from amenities needed."


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 24 Apr 2018
      The thing about the property ladder is that at some point in our lives we all have reason to want to climb a rung or two higher. Sometimes, it’s because we’ve outgrown our previous dream home, or because we want to be in a better neighbourhood that’s closer to work or to schools. Sometimes it’s because our circumstances have changed, and we’re taking care of elderly parents or relatives. Sometimes, it’s just because we want a property that reflects the financial status our hard work has won.
    • 20 Apr 2018
      Whenever changes in the political ecosystem of a traditional property market create uncertainty, smart investors begin to look elsewhere for new opportunities. Property experts at IP Global have analysed the trends and crunched the numbers to find new markets to explore in Europe and the United States.
    • 20 Apr 2018
      Energy and water self-sufficiency are increasingly important factors in home buyers’ choice of property – especially in Cape Town where the extreme drought of the past few years has made municipal supply costly as well as uncertain.
    • 19 Apr 2018
      During the last decade, rampant development has progressively transformed Cape Town’s property landscape with densification being the order of the day, but there are still one or two hidden gems like Scarborough which have retained their original character, offering an inimitable lifestyle and an attractive investment opportunity.
    • 19 Apr 2018
      The rental market is a cut-throat sector of the real estate market that waits for nobody. According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, first-time renters need to be fully prepared before they even start the process of looking for a place to rent in order to avoid the disappointment of losing out on their ideal property.
    • 19 Apr 2018
      Choosing to buy your first home instead of continuing to rent is a big decision that will usually take some time to put into action, but the sooner you can save up a sizeable deposit, the closer you will be to reaching your goal.
    • 18 Apr 2018
      Selling your home is no small task and as you will quickly find out, there are a lot of misconceptions about the process. Gerhard van der Linde, Seeff's MD in Pretoria East lists the top 5 misconceptions when you are selling your home.
    • 18 Apr 2018
      The Cape Town municipality is now installing water-management devices at properties that have been non-compliant with the new level 5 water restrictions and there are talks of fines between R5,000 and R10,000 for households that use too much water.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK