Renting out property – Avoid Delinquent Tenants

hey guys so it's manacle atma Sheila and today I want to talk about property rental business or having an investment property which you're renting out and how do you foolproof yourself from delinquent tenants and I call them delinquent and cuz I really feel like they're bad people anybody that is a tenant that intentionally moves into your apartment with the idea or the intention of not paying you for some months really is a bad person yes we can definitely feel sorry for and has empathy for anybody who is befallen by a financial crisis and all of a sudden they cannot pay but they are people that purposely go into properties that they know they cannot afford because psychologically they cannot let go of the idea that they actually can no longer afford certain places and then because they also know the law which is generally the Pi Act they will use that against you as the landlord to stay in your place without paying rent you are paying utilities you are paying levies and it just goes downhill from there because they know that the law at some point to some level always tips towards them right because if African law is very empathic to people housing issues in general so the law will be done in such a way or is done in such a way that it won't feel like when you are the landlord that it's protecting the tenant more than its protecting your rights as the landlord but remember that none of my videos constitute as financial advice if you are looking for financial advice please speak to somebody who is certified and registered with the FSC egg so I let me give you a story about how my last difficult tenant how I actually got them and that would be a clear indicator of the number one rule when you are getting tenants so I had just lost a tenant somebody was no actually I just bought a property I had not lost a tenant it I just bought a property in one of the estates in Douglas Dale and I so what people do is that when they when there isn't exactly a for rent board at your apartment they will speak to the gods and they'll ask the gods is there any apartment here that is vacant right so this lady was told that my I had just bought a property the place is standing vacant and I'm probably going to need a tenant right right okay not a problem so I'm now looking for a tenant I'm in a distance situation because I want to put a tenant in as quickly as possible this girl apparently is being kicked out of her apartment in the same estate because the seller the owners of that specific place wishes they want to sell right and I don't want to solve with a tenant in place so we kind of by fate of her or by calls that she created meet up inside the estate while I'm coming from my unit so she burns centimeters is hi hi I heard that you've got a place that is opened up I've been living in this estate for so long I think she told me she's been living there for like 12 years and unfortunately her landlords them give her enough notice and she'd say she's got to move out because they are selling to a new person and she desperately needs a place to stay so in my excitement to get this new tenant I mean she's been living in the state for 14 years why not you know she's got a son she's I've got a son you know I'm responsible I pay my ray Mighty Mite my rent every single month and I'm like okay this sounds like a great idea so I'm like you know what let me actually instead of using a rental agency because that's gonna cost me like one month rent to place this person all I need to do is just go to a CNA and buy myself a lease or Google Elyse or take my old leases when I was renting and just adapt those edit them and put in her name big mistake probably one of the biggest mistakes that I actually made two years ago right okay shaft not a problem so we finally get at least drafted we agree on how much is gonna pay how much the deposit is gonna be and this girl moves in I mean she moved in softly she didn't even have issues because obviously she's already in the system at the estate she doesn't need a lot of things to be changed right she moves in I hand over the key we do an inspection when she moves in not a problem yeah guys this woman became a nightmare for me and it was such a bad night me because she had a young child it was very devoted just evict her so you couldn't just evict her and what she would do is that when she sees that you are close to the eviction to the end of the eviction process she would pay in some money and then look according to this African law if they pay in the money and you don't return it it's almost like you're restarting the entire process so she kinda knew the law I mean there were a couple of times when she said to me straight up that you can't kick me out cuz I've got nowhere to go where do you want me to go you know so she would use words that would be in the pie ad to get at me and you know what eventually I got her out I got her out by begging her to basically have to beg her to basically leave my house because she had not been paying rent so how do you spot these kind of people number one do not rent out to somebody who's desperate I can tell you this in actual effect the sort of the second time I got screwed by somebody who was desperate to move in the first time I moved some people in they moved in like I had said that the house was available from April they wanted to move in early in March because the era era they were being kicked out and you know half of the time you sometimes have to ask yourself why a person has actually been kicked out of their place and it's worth picking up the phone and calling the previous landlord to get a better understanding of what actually is a situation here so a lot of people will say yeah your biggest mistake was trying to manage these apartments yourself I don't think so I don't think it's such a bad thing to manage your own apartments why because you you you you learn a lot it's a crash course literally in rental business as quick as possible so that when you do put in other people that are going to be managing these things for you they to do not scam you because let me tell you I've also been scammed by a real-estate angels agency right so the first thing that I would say is do not move in tenants are very disparate I'm gauge they're disparate level or their desperation level also managed emotionally have emotional intelligence to manage your own desperation levels with my third apartment I literally set for six months with no tenants because I was like I'm not going to rush this because when I rational they'd really get into trouble so my apartment set for six months straight up I rejected I think at least fourteen prospective tenants because I was like no I don't like them I don't like their desperation I don't like the fact that they want they've got stories of why they want to move in so and I know that may sound as horrible as possible but at the end of the day I'm running a business guys and I don't want my properties to now become financial liabilities for me where I'm feeling the pressure because I'm not breaking even though I'm not working towards breaking even with my properties because I did put in money to be able to buy these things right and you've got to realize that property investment especially if you're doing rental income is a business that you've got to treat it that way so as I said the first thing is do not move in a very so do not move in a desperate tenant because you're not gonna get anything especially if you have not done the background checks and the background checks do include picking up the phone and speaking to the previous landlord or an agency where who was renting out the place to them um the the last apartment that I had to put a tenant in I got a real estate agency to help me out and they kept giving me people that I just didn't have a good feel about them um I couldn't specifically spot certain things but I could feel that there was something man about these tenants that was off for me the one guy that one thing I could really remember was that he had moved so many times in less than three years and I was like why does he move so many times and I couldn't get a straight answer you know so that for me was a little bit problematic that you've moved so many times why are you not a sustainable tenant right the other thing about him is that he apparently had more than two accounts and yes it's normal for people to have two accounts but if you want to showed me that you can pay rent would it not make sense to show me the bank account where you actually pay your rent where you're living now from so that I can believe that you can actually afford the rent it makes no sense for you to try and show me a bank statement that looks spotless and doesn't have a lot of deductions yet you are not showing me how you're going to be able to pay rent and all your money is getting finished like he was earning a certain amount of money and all of it was getting finished but none of those deductions who were going to rent and I was like nah something something is not right yeah ha getting scammed right so gut feeling is very important but also I think psychologically don't rent out to people I mean I'm young right so I have a very bit of a problem because I end up having to rent out to people that are far older than me and when they meet me immediately you can see they've got that thing about you know having a younger landlord so what I try to do not rent people who are maybe closest to my age I don't like renting out to very old people even though people are saying they are very sustainable the the realities that I'm gonna have some psychological barriers and psychological restrictions to be able to speak to these people so I don't want to rent out to those people it for me it goes with age of course gender I know that I don't like renting out your bin primarily because I'm a woman and I don't want to get I don't know psychologically feel like I'm putting myself in a situation where I'm going to struggle when it's time for me to tell you good at you're not paying your rent you gotta pay your rent the other thing that I love I love renting out to mothers because I feel that they're very responsible they're very sustainable look I had a bad experience with a mom but currently I'm just like I don't know what it maybe it's because I didn't do a tepee and check that's the other thing that you've got to do you've gotta do those TPN checks affordability and those TPN check reports also have probability of defaulting on paying the rent and it will give you a soaring of this person so a TPN check is almost very similar to your credit report it literally checks your tenant as history in terms of their finances and all those things so do a TPN check I think the other thing that you I mean that's the best way you can fool proof your source is by making sure that from the beginning from the onset you are getting a good tenant right the other thing I've asked my if I use a real estate agency to do is I've asked them now to double up on the deposit I won't actually require it for you to pay it but I want to see if you are willing to pay the double deposit for me it's a good sign and I know it might be flawed it's a good sign to know that this person is not about a money issue they probably can't afford this place and you know they will probably pay their rent the other thing that I do is I really do try and create a very solid relationship between myself and my tenants so when you move in I want to to be they you know bring you some flowers for those tenants or I have imports flowers I'm sorry but I will go to undulant to do things for you you know if you need something done quickly I will get it done because I just feel like you've got to try your best to make us person comfortable tenants at the end of the day are part of your business and they're part of the growth of your business and having a sustainable client is it sustainable tenant is very very important but I think if you are going to be running a rental business the other thing you need to do is to equip yourself with the law you've gotta understand the housing and rental tribunal active gotta understand Pi Act you've gotta understand eviction processes what you are allowed and what you are not allowed to do you've got to understand how to treat your tenants what you can and cannot do what you can and cannot fail so I have got this thing that I used to do which I now found out that it's wrong right I've got this thing off when I visit one tenant I think it's okay to visit the others without giving them prior notice because my properties are all in one place and that is wrong you can't just out of the blue in jail arrive at the door because it's your house no you've leased it out to somebody so you've got to be careful of those kind of things so you've got to know and understand what the PI Act is what it says what the PI act isn't what it says what the housing and rental tribunal access and what are the recourse processes if you do find yourself in trouble with one of your tenants or your tenant is giving you trouble I think that is also important but last but not least being able to make sure that you read a proper lease is also very important because remember that if the list is actually unlawful it becomes void that is important for you to remember if any part of the lease is actually unlawful either that part of the entire list gets thrown out o the entire list will get thrown out and will be seen Oh ruh-roh full lease so you've gotta look out for those things and the last thing that catches a lot of people out is the fact that people don't keep up with that maintenance especially of the different acts you've got to keep up with the amendments of the different acts and you've got to know what it's actually happening again you are running a business you've also got to understand the tax implications of running a business so the thing that in dangers your rental business the most obviously is ever a good tenant somebody who's good take care of your place somebody who's who feels good about taking care of your place but most importantly also the legislation you've got another legislation and the thing is a lot of people go get away with a lot of things because tenants generally don't know the law so they don't know what their rights are most tenants but one day you're gonna meet your maker you're gonna meet somebody who knows the law and you don't want to be caught off that

27 thoughts on “Renting out property – Avoid Delinquent Tenants”

  1. Did this happen after or before the scenario where you were renting an apartment for your younger sister?? I have a few lessons fro the two videos which i wanna confirm

  2. Hi Nicolette thank you so much for making this video i'm also learning and i relate so much with the renting process. keep at it Sis

  3. In Cape Town, this double deposit is very common. It is painful lol hahahaha. But business is business

  4. Wanted to ask you something important. I've just bought 2 developments for rental purposes only. I've accepted the bank offers. I've deposited the initial agreed deposit and it's held my the attorneyd as both properties are still in the building phase and not complete. I asked and could not get an answer. Under circumstances as mine, when will the first installment de deducted? Does the signing of offer means the bank can now charge interest although the buildings are incomplete? I'm told occupation will propably be in 2020 and I'm hoping by then I will add on to the deposit. Possibly pay half of the finance amount as a deposit. Please advise

  5. Just rented to someone who was desperate, (i was also desperate for a tenant). They are already giving me stories😥

  6. Hi Nicollete. Can you please do a video on tax, the different tax brackets, who should file for returns and these firms/ people who assist with tax filing. Some are scammers and how do we see such scams please

  7. Yoh! Rental business is stressful shem. I got a real estate agency to manage my property the first time, the tenant didn’t pay rent for 3 months and she couldn’t kick them out until I had to cut out the middleman and deal with the tenant myself. After this tenant moved out I got a tenant from the security guards at the gate 😁. The tenant was desperate. 🤨 Yeyi I almost saw flames there. A Nigerian guy and his South African girlfriend. They paid deposit and the first months rent and that was it. I gave them a notice to terminate our contract. They took me to the rental tribunal saying I’m evicting them illegally but luckily I was on the right side of the law. I was not evicting them yet, I was terminating our contract. They also said they have nowhere to go so I can’t kick them out, I told them I have another property in Madinyane in the Bundus, I can put them there while they sort themselves out 🤣 I won the case at the tribunal and they had to move after a month. Properties get hijacked. We need to be extra careful in this business.

    But thanks for this Nicolette, definitely enlightening 😘

  8. Thank you, Nicolette. The advice to evaluate the level of desperation of a potential tenant and/or real estate agent as a pressure point is spot-on. I too am learning to evaluate my reasons and motivations as I engage with potential tenants. (There is a three-second sound glitch at 12:48 as you clap your hands for emphasis.)

  9. True! We get scammed from not just the front but the back end too! Thanks for covering this sisi, we need to protect ourselves!

  10. Great Video!!! many gems here! Managing your emotions is very key & not so easy hey. Where does one do the TPN check (did I spell it correct)? Please advise on the issue eyeLease cos I also use a copy & paste document.

  11. great info, i wanted to rent out my house but i was clueless on where to start. I'm still researching

  12. Ugh, I had a cousin who took major advantage of me and my home. A cousin-in-law who took advantage of renting my car through a rental service. It pulls at your heart cause you want to help but it's also business, cause bills have to be paid and you don't want your property degraded. I'm not sure its for me. BIG props to you for continuing on in greatness!

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