How to minimise the risks of rental arrears
If the tenant misses a payment, immediately contact them to understand why and discuss a possible workaround.
Landlords can face significant financial challenges When a tenant fails to pay rent on time.
Landlords should implement proactive measures to ensure a more stable and predictable rental income to minimise their risk.
According to Adrian Goslett, the regional director and CEO of RE/MAX of Southern Africa, proactive management, clear communication, and fostering good tenant relationships are vital to minimising financial risks and maintaining a successful rental property business.
“This is why it is crucial to involve a reliable rental agent who can help you manage your tenant relationships well,” he notes.
To help landlords avoid some of the pain of collecting rent on time monthly, RE/MAX of Southern Africa shares some best practices to implement across your rental portfolio:
Regular, prompt communications
A week or two before the payment is due, send the monthly rental invoice. You can use property management software to send automated rent reminders via email or SMS a few days before the due date. If the tenant misses a payment, immediately contact them to understand why and discuss a possible workaround.
Early payment discounts
Incentivise tenants to pay rent early through discounts or rewards. For those with consistent early payment records, the rewards could be anything from a gift card to the promise of no rental hike for the following year.
Build in some cushion
For peace of mind and stability, build a reserve fund to cover potential rental arrears. Allocate a percentage of the rental income to this fund regularly to ensure it grows over time. If you need the rental income to cover the home loan repayments, ensure you add enough time between when the rent is due versus when your home loan repayment is due.
As a final step, Goslett suggests landlords fully understand how to take legal action if necessary.
“The eviction process can be lengthy, so it is important to follow the correct legal procedures strictly from the very beginning to avoid complications and potential liabilities that could drag out the process any further,” he concludes.
For more real estate advice or to contact your nearest RE/MAX office, visit www.remax.co.za
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