Managing rentals is tedious and often involves Marketing rentals, Collecting rent , Pursuing evictions, responding to tenant complaints among others.
Source [Nation Media]
In January last year, Dr Kevin Omondi finally achieved his dream of becoming a landlord. He had just finished building a residential building with 65 units in Gwa-Kairu in Ruiru Constituency and was determined to play a hands-on role in its management in order to make maximum profits from the rentals. However, six months later, the day-to-day management of his building was bogging him down, and he found dealing with tenants extremely frustrating.
“I belonged to a school of thought that believes that if you want to do something well, you must do it yourself. I had imagined that the role of a landlord to be a walk in the park. How wrong I was!” exclaims Dr Omondi. The don, who lectures at a nearby university, soon found himself overwhelmed by tasks such as marketing his rentals, collecting rent, pursuing evictions and responding to tenant complaints.
“It got so bad that I would miss some of my lectures at the university and rush to solve simple problems arising with the tenants. I was basically tethered to my property, and the building that I had put up for financial security now imprisoned me,” he told DN2 via phone.
DIFFICULT TO GIVE UP REIGNS
In July last year, Dr Omondi was approached by Mrs Dorcas Wanjiru, the founder and CEO of Dorothy Agency, who made him an offer: for 8 per cent of his rental income, Dorothy Agency would take over the management of his property.
Constant repairs on your property will not only keep you constantly preoccupied with your building, but can also cause you a considerable amount of stress. You will be required to deal with things like broken windows, clogged toilets and pipes, and leaking roofs. PHOTO| FILE| NATION MEDIA GROUP
“It was difficult for me to give up the reigns of my new property, but it is by far the most prudent business decision I have ever made because it has saved me a lot of time and worry,” Dr Omondi says.
“For landlords who lack experience in dealing with tenants, it can be detrimental for them to try their hand in managing their property,” says Dorcas Wanjiru, who has been managing property on behalf of landlords for more than a decade; her company has branches in Rongai, Ruiru and Naivasha.
She says landlords should not be afraid to entrust their investments to property management agencies since the agencies are well versed in managing property.
The distance between your home and your rental property should be the most important factor in deciding whether to place the management of your property in the hands of an agent. Ms Wanjiru says that from she has learnt from experience that problems that affect tenants have a way of cropping up unexpectedly and failure to act on them straightaway can cost a landlord money, and even their tenants. Therefore, if you cannot travel to your property regularly and be on call 24/7, it is best to hire a property management company.
Constant repairs on your property will not only keep you constantly preoccupied with your building, but can also cause you a considerable amount of stress. You will be required to deal with things like broken windows, clogged toilets and pipes, and leaking roofs. How experienced are you with regard to repairs and maintenance? If you do not wish to spend your time looking for plumbers and electricians, then it is advisable to seek help.
“At Dorothy Agency, we have in-house plumbers and electricians who are always on standby to solve problems as they arise,” says Mrs Wanjiru.
A property management company does not necessarily mean diminished revenues. When Dr Omondi signed up with Dorothy Agency, he had problems getting and retaining tenants. The agency suggested minor aesthetic improvements to his houses, which made them more appealing to prospective tenants.
“Since property agencies know how rents within a region compare, we usually suggest optimum rental pricing for maximum tenant profit and tenant retention. That way, the property doesn’t stay vacant for long because of extremely high rents and the landlord does not lose revenue due to abnormally low rates,” Mrs Wanjiru offers. She adds that property agencies usually go the extra mile of advertising the property, thus ensuring shorter vacancy cycles.
As a landlord, dealing with tenants who default on rent and damage your property can be a harrowing experience. So when selecting tenants, you should be able to identify the ones who will not only take good care of your property, but are can also consistently pay rent on time. “Prevention is better than cure. Getting the right tenant will save you the money, time and stress of evictions. As an agency, we have years of experience in “reading” people and can tell a serious tenant from a potential troublemaker from a mile away. Nevertheless, we put all thoroughly screen all potential tenants,” Ms Wanjiru.
“Collecting rent on time every month is the only way to ensure a consistent cash-flow,” Mrs Wanjiru says, adding that the way a landlord handles the collection of rent will determine whether he/she succeeds or fails as an investor. Noting that many landlords condone late payment of rent, Mrs Wanjiru warns that this tendency could mean a death blow to one’s enterprise. She insists that tenants should know that the agreed time for paying rent every month is not negotiable.
‘NOT RUNNING A CHARITABLE ORGANISATION’
When her firm took over the management of Dr Omondi’s apartments, Ms Wanjiru later learnt that there was a tenant who had not paid his rent for three months, under the pretext that his sister was sick, and that he was spending all his salary on her treatment.
“I had to explain to the tenant that we were not running a charitable organisation and stood by my decision to evict him. Eventually, he backed down and paid up when I threatened legal action,” she recalls.
“For a landlord to make profits, he/she needs to enforce tough rules even if it means evicting a single mother of four who has just lost her job. If you allow them, tenants will form the habit of mercilessly walking over you. When you use a property agency to collect your rent, you put a buffer between you and your tenants. The agency, which can claim that it’s only doing its job, is the one that is tasked with listening to excuses and evicting bad tenants if necessary.”
Managing property comes with its fair share of legal responsibilities, so a landlord needs to be conversant with the current laws governing his relations with the tenants. Mrs Wanjiru notes that there are some tenants who have perfected the habit of not paying rent and every time the landlord plans to evict them, they threaten legal action. In order to safeguard yourself from potential law-suits, she suggest that you get a property agency to manage your rentals since the agencies are skilled in navigating legal issues such as evictions, inspections, handling security deposits and terminating leases.
“On a few occasions we have had to sue tenants at the Rent Restriction Tribunal and hence managed to recover unpaid rent legally,” she reveals.
Unless you are ready to employ a qualified accountant, the financial aspect that comes with managing the property might just overwhelm you. “We prepare monthly profit and loss statements for our clients and even file tax returns for them,” she says.
Questions to help you determine whether You need a property management firm
1. How far you live from your property; can you visit it on regularly?
2. Are you willing to give up control of your property?
3. Your tolerance for dealing with tenants; can you cope with the stress that comes with it?
4. How well you understand the laws on landlord-tenant relationships?
5. How many rental properties do you have?
6. Are you struggling to fill your vacancies?
7. Are you experienced enough with regard to repairs and maintenance?
8. Are you capable of dealing with remitting taxes and accounting of your property?
9. Are you willing to be on call 24/7?
10. Are you prepared to confront and evict tenants who don’t pay their rent on time?
Tips on choosing the right property agency
Looking up a prospective property management enterprise on social media before signing them up can go a long way in helping you avoid future problems,” Ms Wanjiru says.
If you decide to engage the services of a property management company to take care of your investment, getting a reliable agency can still be quite a challenge.
Mr Eliud Kipkorir, a Nakuru-based real estate agent with Daima Prime Agencies, notes that there the property management scene is flooded by such a huge number of firms that it is difficult to separate genuine players from unscrupulous ones.
“The property management industry has a low entry bar, and this makes it susceptible to dilution by unqualified businessmen masquerading as professionals. Some of the people who set up property management firms are only out to make a quick buck from a landlord’s investment,” cautions Mr Kipkorir, who advises property owners to be vigilant in order to avoid dealing with agencies that are only out to cause trouble.
“When choosing a property agency to hand over your investment to, you should bear in mind that this is an important partnership that can either either allow you to swim or sink. Thus, you should vet prospective agencies as thoroughly as you would any potential business partner, and you should be on the lookout for factors such as organisation, honesty and length of experience,” he continues.
While searching for a property agency, the first step, Mr Kipkorir says, should involve speaking to real estate agents and other property owners within the area in order to get referrals. While speaking to fellow landlords, ask them what they like most about their current property managers
• Property managers are experienced in the business and are, therefore, better able to deal with wayward tenants as well as ensure that any necessary repairs are done quickly.
• A property management company does not necessarily mean diminished revenues. When Dr Omondi signed up with Dorothy Agency, he had problems getting and retaining tenants.
• The agency suggested minor aesthetic improvements to his houses, which made them more appealing to prospective tenants.
• “Since property agencies know how rents within a region compare, we usually suggest optimum rental pricing for maximum tenant profit and tenant retention.