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May 27 2012 11:21
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May 28 2012 07:53
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May 27 2012 13:09
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Johannesburg - If a home owner is offered a contract in another city or country, he must carefully consider whether to sell or let his
property, a property group advised on Wednesday.
"The benefit of selling is that you make a clean break, while renting out your property means that you will have a home to come back to when the contract period is up - and that hopefully that home will have appreciated in value in the interim," the Harcourts Africa Property Group said in a statement.
For home owners with a large bond outstanding on the property, selling is arguably a better option, said CEO Martin Schultheiss.
"The costs associated with a rental property can swallow a large portion of the rental income, leaving the owner to make up the
difference between real rental income and the costs of servicing the bond."
This could be onerous if he still had to pay his own rent or service a bond on another property.
Schultheiss said landlords had to pay costs including municipal rates, advertising to find a suitable tenant, regular maintenance, comprehensive insurance and management fees of about 10% of the monthly rental if an agency was appointed to manage the
property on their behalf.
"It is also prudent to take into account unplanned vacancy contingencies and to set aside enough money to cover all costs while finding a new tenant."
However, where the outstanding bond on the property was small, the picture looked very different.
"In such cases, owners can confidently expect that rental income will cover the costs and contribute to their own living costs and
they may benefit from capital growth during their absence," Schultheiss said.
Owners who decided to rent out their properties should choose managing agents with care.
"Agents should have a solid track record in property management and should be able to ensure the home is properly maintained in
order to protect its value."
Schultheiss said agents should also be able to advise on realistic rental levels and be able to vet prospective tenants properly for creditworthiness and reliability.
- Sapa