 the expert landlord and as you can guess we'll be talking about everything a landlord probably needs to know about managing their property now you might be at home perhaps a residential property maybe it might even be rented out but you're still not quite sure how to best maximize your investment property that's where David comes in he'll be helping us understand the different ways that as landlords we can maximize our investment properties but also some of the things that we definitely need to know as we navigate our rental investment David thank you so much for joining me this evening the great pleasure to be with you so I mean David one of the things that a lot of us landlords you know do when we start off and and I'm going to confess that I also did this and as many viewers at home are probably picking up I've also made my fair share of mistakes along the way and I think many of us probably learn like that but you don't always have to make some of those mistakes some of them actually quite avoidable and that is to start off and not look at your investment property like a business I mean I started off you buy properties anything you want to own multiple properties and you want to rent them out but don't really look at it as a business you don't run it as a business you know David why is it so important to not only look at it as a business but also to actually run it like a business well I mean ultimately a business is a business is an organization that provides a product or service in exchange for money from a supplier to a customer and that's what you're doing as a property investor you've got a very expensive assets four hundred five hundred thousand a million rand it's a lot of money it's worth a lot and just on a stewardship perspective you would want to look after it to make sure that it's still worth something in years to come but a business perspective means that you're running it like a business means that you are the organization providing accommodation so you the organization of the property investor are providing accommodation to your customer who's a tenant for in exchange for money which is the rent and also you're also providing utilities and maybe a parking bay or something like that and it makes sense that the better service you give to your customer the tenant the better return you're going to get or better result you're going to get from your from your investment so yeah I mean and I think from a long term perspective a business perspective gives you the right attitude as to how to handle things and how to approach things it gives you a pragmatic view in you want to win the long-term war not just the not just a single battle so it helps you with negotiations it helps you look at the bigger picture that you need to treat your that your role players whether it's your suppliers your maintenance man with with professional with professionalism it also means that you want your administration under control every good runs good operations they run good administration is your paperwork in order have you got your lease agreement in writing with your tenant you know getting the basics in place and I must admit David I mean one of the things I'm quite terrible at is my admin and oftentimes when tax season comes my my accountant borderline wants to kill me because she she'll always be running after me about you know I need XYZ I know you did this on the property ways this you know invoice and oftentimes she she battles with me because I'd say this is the part that I'm not that great at so even keeping record of all the things all the money that she spent all the money that's coming in with each and every you know investment property that you have is so important and I know I've struggled I mean I've now created the the the Google form was Google Drive and you kind of put every property by itself and everything that I do every property I try to put it in there but even that admin just seems so tedious but retrospectively I see how much money I probably you know messed up on as far as my taxes are concerned likely I have a really brilliant accountant who is quite efficient and is able to help me with that process but if I didn't even have that I probably would have struggled quite significantly so I think one of the things is when you then begin to run it like a business you'll make sure that you keep tabs on all the administrative elements as well because you're not just going to look at it as oh there's that side thing that I have you know it's just one rental property was just to but you'll take it seriously from day one yeah I mean you won't be able to you won't be able to buy a third or fourth property beyond getting the basics right with your first property and that's a good business principle you learn to walk before you learn to run so I think the main thing is to get better at it over time like you have as opposed to think you're gonna get a perfect upfront and it took us our systems in our business up and running correctly but but from a filing perspective it's very simple I'm not the greatest filing person myself luckily I'm married to someone who is but it's simple you have all the information around your property a property and then separately to that or in the same big folder you have a folder on each tenancy so the tenant you put in that in that file and you just put all the documents for that one tenant in with that property file and that's that's best way to to you know to test to set up your framework so I'll make sure that I when I decide to get married I'll make sure I marry somebody who's more efficient because I'm here I'm not I've read I've accepted that I'm not going to win that battle it's it's just it's above me now I just keep it moving so I think I need to be partnered with somebody who's who's quite efficient in their administrative tasks but David you know to also then look at some of the other things that a landlord needs to be mindful of one of them of course is going to be tenant screening can you take us through tenant screening super important now I just want to say one thing we own I mean it's pretty obvious right that the reason why the quality of your tenant is going to determine the the the amount of money you're gonna get in consistently through the period of release and a good tenant is going to look up to your property but let's the one covered I just want to put in you know just put up front is that it's easy to say in theory while we sitting at home watching this this episode we can say of course we need to get a great tenant but let's think about the 30th of the month and you haven't yet found a property tenant for your property now what a tenant comes to you and a tenant is saying well you know what let's see how the first month goes and then we'll sign the paperwork after that you know and when you desperate then you've got a bond to pay the next day just be very careful to rather make sure maybe get a short term loan to cover the bond for that month but don't don't be pressurized by the situation to place any tenants I just want to put that caveat because it's easy to say in theory in practice we need to make sure that we are operating ourselves but screening a tenant it's basically what you a quality tenant I cannot just say what a quality tenant is and the tenant we look so we looking for a tenant you pays well and what you mean by paying well is a tenant that pays in full on time and every month so a tenant that pays in full every second month is not a good pair it must be and it must be in full so a tenant that pays a rent but doesn't pay utilities is not a good tenant so that's the first thing is that you want a tenant a good paying tenant and the second thing is you want a tenant that looks after your property well and those are the things in practice as you're speaking David it actually reminded me of one of our guests in our previous episodes who had highlighted that a bad tenant is actually more expensive than no tenant because oftentimes a lot of landlords think let me just get the person it's maybe going on my second month whoever comes along I'll just put them in and as opposed to perhaps sitting down and evaluating if for example your price point is at the right level perhaps you've overpriced your property maybe you should rather go down whether it's 200 or 500 runs assess whether you're marketing to the right people perhaps you're not posting your ads in the right places so you've got an apartment say in Santan but the places where you're placing your ads that target market doesn't actually go to those websites and that's where you know resources like private property that they come in handy because you're able to place whichever you know able to place your your property regardless of which area you actually have and when people search then they actually go to that specific area so you don't have to scrabble and think oh maybe I haven't placed it in the right place so using credible platforms like ours becomes so important and then assessing so you go into private property.co.z and let's say in Santan you look at Santan and let's say you're in in Rosebank in particular then you see okay the average two bid is going for 11,000 but you've placed yours at 15,000 the reason why you're not renting out is because there's quite a big gap or quite a number of properties from that 11,000 to 15,000 so being able to assess the other issues that could be the reason why you're actually not letting out your properties probably more important than putting in the first person that you find because trying to evict a bad tenant is such a costly exercise and it simply just doesn't have to get there. 900% by the way I'm talking about private property we get excellent results with private property by the way and I did a we did an analysis just this last week as to give us the best results and you know that private property hit the top of the pops and I'm genuinely saying that we did an analysis the other day and the guys my team gave me the figures so awesome stuff but I think it's really important that you the first point in placing a great tenant is to make sure that you do proper marketing and that the pictures you're putting up on private property are the best possible quality and that you're pricing it well. Pricing in this market is terribly important super super important and if you're overpricing your property the kind of tenant that you're going to attract tenants are pretty wise people and they're going to be put this way a professional tenant will not go for an overpriced property but a dodgy tenant will. Okay so they all actually ask questions so you also need to be quite careful of that. If you're joining us on at home this is of course the private property podcast I'm your host Zaman Donga Kumalo and tonight I'm speaking to David Bete who's the author of the expert landlord and we're looking at everything that every landlord should know about property management. Now if you have any questions you're more than welcome to send them and I'll be asking them to David and David will really have a few questions coming in and one of them was actually something that I wanted us to have a look at and it's coming from Michael Fanikar who's asking how would one screen a tenant post the pandemic? Their payment record would not reflect their true payment ability. Well I mean I think yeah I mean that the pandemic hasn't been that long even if we're looking at a month's time that payment record will show immediately from the end of March and in my view the end of March payment is for us it was 95% as good as normal because most people were paid a salary in March. You may have a bit of a challenge from the first payment but other than that the tenant's history is pretty much going to be well extended beyond the period of the of the lockdown and second of all a professional tenant will provide a data or a document stating that they didn't get paid during the period of the lockdown so to be pretty clear through your screening process that you will be able to get the right information about the quality tenants and I mean I actually saw TPN data coming in they're showing it today that I think it's 32% of residential tenants have not paid their April rent and they're possibly you know projecting that it's going to be more for me so we do realize that we in relatively unprecedented times right now and perhaps some of those tenants may have either lost their jobs I think we've seen over a million South Africans losing their jobs or having their pay being reduced so you almost need to take an informed decision when you're assessing tenants post the pandemic and of course we don't know how long this freight is going to last so even if lockdown you know ends when we currently think it's going to end or gets extended chances are they still going to be economic you know ramifications for other businesses so tenants are going to be affected so suppose as a landlord you're also going to be assessing other factors when you're screening a tenant but David actually want us to spend a little bit more time with the tenant screening because some people for example you might want to do it alone suppose as a landlord or you might outsource it to a rental agent who's helping you and you're probably going to pay them whether it's that six or seven percent or that one month's rental what are some of the things if for example you're doing it by yourself what are some of the things that you're looking at so of course you ask for the payslip finding out where they work but what are actually some of the factors that you look in that help you make an informed decision about whether or not somebody could potentially be a good tenant or not so you're looking for the to go back to the criteria of a good tenant you first of all looking for a tenant that has the ability to pay so what you want to do is look for first and foremost look at their incomes there is income at least three times what the rent amount is if it is you can go to the next stage and now you can check the salary slip and that the money that the salary slip says is going out every month is actually arriving in the bank account so you need to check the bank statements and you check that the money is actually going in on this bank statement you want to check that the expenses going out is not more than that income and typically a tenant is renting prior renting another property prior to renting yours so you can in see a monthly rent payment going through and you can see when that rent payment is actually being made so that would give a pretty good history the last three months back statements just on why we talking about documents and cannot just for private landlord is to go in with open eyes and expect that there is fraud we reckon about one out of four to one out of six applications has got fraudulent documents in it so really don't I'm the kind of person that typically expects the best of everyone I meet but when you do a tenant screening kind of take those filters off your your eyes and really screen expecting the worst and then you can in see what are fraudulent documents and what are not and then lastly you only phone the the employer to confirm that in fact they work at that proper at that company the second thing you want to do is check the behavior of the tenant and you're going to do that by phoning the previous landlord and landlords prior to the previous landlord or to the existing landlord so you're going to phone two or three of the previous landlords for references number one did they pay on time and hot and number two how did they behave and how was you know how did they look after the property about just on the one point going back to the the payment ability obviously you'll do tpn tenant profile credit bureau check and any private landlord can do that just as much as an agency can do it and I'm sure then working that answers the question of a game what honey had actually asked a very similar question around the best way to go about screening your tenant now David another thing then that's important to screen your tenant you've got your checklist and you're now sure that perhaps this is the right tenant they sign you you you having a conversation with them they want to move in what should the landlord be doing next I know one of the things that's important is to always have everything in writing it's not good enough after that person has met the criteria to say okay so you'll be moving in and here's your know here the keys why is it so important to make sure that all the paperwork is done and done properly so you want to set your tenancy up for success so the better foundation you lay at the beginning at the tenant moving the better chance you have of success for the remainder of the lease and when the tenant moves out so a couple of things you want the lease agreement in writing that's the agreement and the contract between the landlord and the tenants and if you got that and you need it in you must I would highly recommend it you put it in writing you've then got a neutral document which both parties are obligated to fulfill so it's not only you going to the tenant and say you need to pay my rent you need to do this and this and this you also can say to the tenant but I've also committed as a landlord to a variety of things which is listed on the lease agreement the second thing you want to do is make sure that the money is in your bank account before you hand over keys make sure it's in a bank account there is a lot of stress that your tenants about to move in they've got the moving truck outside the premises and but you haven't got your money yet please don't be pressurized in handing over keys until the money is reflecting here in your bank account you once you've made that mistake once you will never make it again you speak like you're speaking from experience yeah I'm sure I'm talking about making mistakes I think we've joined the weed but we all part of the same club yeah and then and then a very important thing is to do a joint moving inspection with the tenant now and the way you do it is that you've got a document which lists every room in the property you go through the property and I tend to do it on myself before the tenant is there I do it prior to the tenant arriving and I write down all the marks and issues with the walls the floors the roof the the ceiling etc etc and I listed on this so the reason why I'm doing that is because that is my master kind of copy on the tenant move out whatever doesn't reflect whatever is over and above normal wear and tear and what is over and above the marks and issues that are already shown in the property I can then charge the tenant damages of the tenant's deposit so and it's important to do a joint moving inspection so now that the tenant arrives you walk around the property with the tenant and going through all your comments and while you talk going around the property with your tenant you want to talk about your expectations this is what I expect from you as a tenant this is about the property this is how to do the refuse this is this is how the utilities are charged and and mr. tenant this is what I'm going to provide for you as a landlord at the end of that inspection you wanted you want a the tenant to sign the that inspection report so both parties on the that inspection report and in the next day I would send a copy of that inspection report to the tenant for their records now you've got a document at the end of the lease agreement which means that there's there's much less chance of arguments the number one issue that the rental housing tribunal experiences is disputes over deposits and in my view that's more than 99% of the time should not happen if you've done a proper moving inspection and that's such an important one I think I luckily that's the one mistake I haven't made I think of all the mistakes tonight that I am you know confessing to that's the one I can assure people I haven't actually made and that was because I used a rental agent and they created that snag list and in the event where they first actually inspected the property themselves and say we are seeing that these are some of the issues that might come up so as the landlord they advise that I probably fix those first before a tenant moves in just so the way and it doesn't get just so it doesn't get more damaged and so that the next person who moves in moves into a place that doesn't have issues and then by the time a tenant comes in they essentially isn't anything wrong and there's no snag list and they do an inspection they move in we sign and by the time they move out they also do an inspection and in the event where something has broken they actually notified the tenant that this is what's happening you can fix it or if you want the landlord if you wanted to fall in the landlord then likely your deposit will be affected so that really is quite an important thing to be mindful of when you are a landlord. Now David there are questions that our viewers at home are sending of course if you want to send any questions to David do send them through and we'll be discussing them. Now we've got one again from Ova Gang Mohane who asks I've previously done credit screening but still had a problem with the tenant paying what other things can I look out for? Well I think I think I think it still comes back to the tenant screening I mean you need to look at is there consistency in that income if they if they earn if the rent is three and a half thousand rand and they earn 12,000 rand for one month but the next month they earn 6,000 rand you know how consistent is that income. Also I would really look at the history the history is what provides the best information for the future so you need to be making sure that you're doing proper reference checks on that tenant. We find that a good tenant you're also sometimes a tenant good tenants go through tough times I mean you're going to get the classic experience going through it now. We're predicting very heavy times going forward for the next three to six months and we're going to have some really good tenants that are going to struggle over the next period. So when you go to your screening history or the tenant look through you might find that on the TPN record that there's a whole lot of or two or three credit issues on one month in 2016 that's might have been when they lost their job. Whereas if you look at the tenant history and you look at there's a default every six months now that shows habitual behavior versus a once-off losing-your-jobs so look at that kind of thing look at context delve deeper into that tenant. Bear in mind you've got a 500,000 rand or a million rand asset if you go to the bank and get bond finance. The bank is going to ask a lot of questions and you need to provide a lot of paperwork for the bank. You're no different as a landlord you've got to make sure you're doing your screening very carefully. Our credit department in our in our company I think they're worse than the bank sometimes. It's not frustrating but it means in the long term well it's frustrating in a good way and I've learned not to put my finger in that pie when it comes to our credit experts because in the long term it means that we have very few evictions. We have in fact we highly know what an eviction is because your screening is that important. And so David another question coming in this time from Bopilo Sita is my tenant only notified me through WhatsApp messages that she's not getting her April salary what should I request to prove that she's being honest? Look the first thing is that tenants are obligated to pay their rent and the president has been very clear on that and all of us need a professional. However some tenants argue the difficulty and if they can prove that they're going through difficulty then I think the landlord should work with a tenant and make and work out a plan other to maybe use a deposit and that's that's a decision I don't want to go too technically into that legal side of things but otherwise have a payment arrangement with the tenant but what we provide is and you can get it there's a free rental relief pack on the TPN website and I highly recommend that. Super important super useful and you provide you send that document to the tenant and you send them as a tenant or miss tenant if you fill these documents out and I get documents from your employer that's proving you got struggling with your income then we can then talk but until that point I am holding you liable for the rent. And I think you know I'm actually going to reiterate that David because we did speak to Michelle Dickens the MD of TPN I think it was episode 2, episode 3 so I mean if you're listening at home do check out that particular episode and that was really when we were talking about some of the relief that both tenants and landlords can seek during this COVID-19 crisis and she did highlight how TPN has released have done really great work even with SLLR where they've essentially come up with this rental pack for landlords to have a conversation with the attendants in the event where they're not able to either pay their full rent or pay any rent at all so essentially now going to be getting into we'll say a new agreement whether it's going to be staggering the rental payment or you're going to make use of the deposit and all of this is professional written down it's an actual contract both parties must sign so that you know that after the crisis is over or in the next few months both sides have this legally binding document that can help them and have recourse for each other because I think it's also safe gotten both parties and not just the landlord I think the tenant as well it's important for them to also have that documentation because you don't want your landlord in three months time who said actually it's okay you can only pay 50% and you'll pay the remainder after three months to come back and say actually I agreed that you're going to add 10% extra because of the late payment so the terms and conditions then off will say the new agreement or an agreement in place talking about that particular period becomes so important so if you did miss that episode you can go to our YouTube channel and we've created a playlist with all the past episodes like I said I think this episode 2 episode 3 of the private podcast where we did speak on this so if you're a tenant you if you're a landlord and you're already having issues with some of your tenants I think do reach out to them it's free so it's downloadable online I actually went onto the tpn website to have a look at it and it's very easily accessible even the language that they've used is actually quite easy it's just a matter of filling in you know your figures and obviously your your details and then you've got a new contract in place now David another of course important thing that every landlord needs to be mindful of and I see that they actually quite a number of questions coming in and I'll go through them right now is of course the issue of then sticking to the rules and this is the one that we essentially just covered now with you know we've got a new agreement in place if you have an issue with your tenant but the importance of actually sticking to the rules we've got this rental agreement this lease agreement in place and both parties essentially need to stick to the rules can you take us through that bit for a moment I mean I think sometimes where some landlords fall down is that they're not professional in the way they treat their tenants they're not consistent they're not they're not accessible to the tenant for the issues and so forth so as my mom would always say you've got to you know wipe your own nose first clean your own nose first so I just want to make that caveat is that we find we find the professional landlords who are professional tend to have less of the tenant issues than non-professional landlords so just bear that in mind but other than that is question is to communicate well with your tenant if the tenant is reaching the lease which which means that they are going against some of the terms of the lease agreement and not acting in accordance with the lease agreement then our as a landlord would should act very quickly and communicate professionally in writing to the tenant that they have preached a particular clause in the lease agreement and in terms of this agreement they've got X number of days in which to rectify their breach but act quickly and again we have thousands of tenants and most of these kind of issues are not you know they dissipate so some of the issues do become large issues I'm not saying that don't but a lot of it comes down to putting the right foundations in place acting professionally acting quickly and then you find say eight or nine out of ten of these issues tend to be sorted now another another thing you know that becomes quite important with with property management certainly as a landlord is the importance of being consistent because property management really is about getting those things right month after month what are some of those things that essentially need to be consistent about every month as a landlord the first thing you want to do is make sure you're billing your tenant consistently say around the 25 or 26 of every month make sure that you're billing the correct rent amount and then billing any utilities that may be a charge in arrears etc and then the second thing you want to do on that is you want to check your bank statement on the first of the month to check that your your amount is in and then if the amount is not in you starting a debt collection process conscious and religiously from the second of the month so that's the first main thing that's a pretty much the main thing you've got to do for months the month the other thing I put in the diary is every six months or so is to go by the property pop up the property and to do an inspection every single day I would say every six months or so six months oh you can go there every month or two but three months go by very quickly and to make it sustainable we found that's trying to get in inspections too often it's just not sustainable so rather invasive I mean if we're trying to go into I mean every month I think is a bit of a stretch perhaps once a quarter that made sense so if it's a year-long lease you at least going to be seeing the place every quarter and like you said it does go by relatively quickly I would suggest realistically for a long term if you've got three or four five properties I would suggest if you die rather for every six months you're actually going to get it done if you two you know one or one property every quarter that's fine but for five properties every quarter I just don't think it's sustainable yeah now David before I let you go any other tips that you think that every landlord should be aware of as they manage their rental property I think you've been I think you've been exceptional in touching all the main points can I just leave them with the one last comment and if we can remember the word care C a R E now those are the four main land needs of landlords that we've all got the first need is C for cash flow we want to make sure that we get the maximum money in and that's done through making sure that we have strong occupancy levels and good collections the second thing is a for asset we want to make sure that our property is looked after and that is through good maintenance and through inspections remember we go to the four main needs of land or the C's for cash flow which is your main need your first need your second need is a for asset which is a condition of your property and the third thing is reconciled which is a the administration around your property making sure especially utilities bills and rates bills up to date that your filing is up to date and the third fourth thing a landlord once we have used the word exclusive if we're exclusive is peace of mind we need peace of mind you're not going to buy a second third fourth property if you don't have peace of mind as to how your first property is being run so remember C a R E for the four main needs of landlords and every landlord has got these four main needs and that's cash flow asset reconcile and exclusive David thank you so much for joining us this evening that is David BT who is the author of the expert landlord you can get his book if you want to find out more about how you can be a better landlord thank you very much for joining us for this episode episode 9 of the private property podcast I've been your host is a month of Kamala here's to staying at home and staying safe and we'll be back again tomorrow evening good bye