With the uncertainty around when the travel industry will reopen, many property owners of home stay accommodation (such as Airbnb) are considering securing longer leases.
According to Chelsea Viljoen of Just Property, many landlords who focused on very short-term rentals in the past have entered the long-term market due to the impact of Covid-19 on the short-term rental market.
“The supply is higher than the demand at this stage and many landlords have had to reduce their rental asking price. Landlords are hesitant to sign for longer than six months in hopes that the short-term rental market will improve”.
But there is an opportunity cost to offering six-month leases. Moving is often expensive and always disruptive. Tenants may be disinterested in the shorter rental periods which could lead to extended vacancies.
Most tenants would prefer the premises be unfurnished. Remove pieces such as vases and paintings but leave the more practical items like fridges and beds: “If the tenant insists on having all furniture items removed, you will then have to store or sell these. If they want it fully furnished, do a thorough inventory and be clear about who will be responsible for repairing/ replacing items in the inventory.”
Any subscriptions that were provided for home stay guests, for example, Netflix, DST, security etc. might work to attract a tenant. If they do not want to take over the subscriptions, cancel them.
Evaluating the correct rental
“When you post your listing, you will find out within a week if the rent is reasonable. If there is no response for days, it is almost certainly due to the rental being too high. Don’t list above the going rate, thinking you can negotiate if you need to,” Chelsea warns. “Tenants do not search for properties above their budget and then negotiate but rather tend to search only for properties within their budget.”
Drawing up the lease
“It is very important to customise your lease agreement according to your specific property and tenants,” Chelsea notes. The relevant laws and case studies with regard to the Consumer Protection Act and Rental Housing Act need to be taken into consideration.
“If you bind yourself to a standard online lease agreement, you open yourself to risk,” she says. “Rather work with an experienced rental agent who knows what to include and how to tailor it specifically to your property and your circumstances.”
Marketing your property
“The first thing a prospective tenant looks at when viewing an advertisement online is the pictures,” Chelsea points out. “Include as many high-resolution pictures as possible and try to show all angles/rooms/the interior/exterior etc. Ensure the beds are made, cupboard doors are closed, lights are on and toilet seats are down.”
Many people are still wary of viewing properties in person, so we recommend filming a walk-through of properties. Making a few clips instead of a very long video allows us to easily share these via WhatsApp, email and on Social Media.
In your advert, include as much information as possible, says Chelsea. “If your property is connected to fibre Wi-Fi, including that in the advertisement could lead to a tenant choosing your unit above another similar one.”
Choosing a tenant
An extensive vetting procedure is the only way to ensure that you are placing the right person in your property. Chelsea insists on the following:
- Credit check. Study it carefully.
- Pay slips, bank statements, employment contracts etc. to verify income.
- References from friends, family and previous landlords.
- Copies of an ID or passport and visa, if applicable.
Character traits that in Chelsea’s experience can give you an idea of the applicant include how responsive they are and whether they’re good with communication; whether they pay rent on the same day every month; whether the rental amount paid varies; their spending habits and whether money being saved. Most of this can be deduced from bank statements.
“Another good idea is to check out their profiles on social media,” says Chelsea. “You can tell a lot about a person by their online presence.”
If you are a home stay host hoping to become a landlord, you should really consider teaming up with a passionate and astute property professional who intimately knows the market and your area.
Source: Propertywheel.co.za | https://propertywheel.co.za/2020/06/home-stay-rentals-consider-securing-long-term-leases/