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
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
        
    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