Getting off the rental treadmill

Virtually everyone wants to climb the ladder in some way or another, be it from employee to director, waitron to manager, or tenant to landlord. The status of a tenant, in the general sense, is right at the bottom of the rental hierarchy. Many battle just to scrape the rent together every month and keep the roof over their heads and from their perspective, it would be great to be the landlord who just collects the rent and makes a profit on someone else's hard-earned cash.

And although most landlords will be quick to explain that there's a great deal more to owning and managing rental properties than meets the eye, they are generally in a better position than the tenants, says Dr Piet Botha, chairman of the Nationlink estate agency group.

"This is why so many former tenants have taken advantage of the low interest rates over the past few years to become homeowners - and why so many are looking to use the new transfer duty threshold now to take the next step and become landlords in their own right.

"One of the easiest ways to do this - and one we are seeing used more and more often - is for the tenant or first-time homeowner to upgrade to a bigger property than they actually need, and then let out part of it, such as a granny flat or garden cottage or even a whole floor of a double storey house, in order to subsidise their bond."

The trend, he notes, is being fuelled now by the fact that there is no transfer duty on pre-owned properties priced at up to R500 000, enabling more people to afford larger properties that will comfortably accommodate an owner and a tenant.

"Some positive aspects of this are that it promotes good use of existing infrastructure, and that it may save a growing family from having to make another move later on, as they just take over the space that was once rented

"However, deciding on what home to purchase is not as simple as finding a home with multiple rooms or dual accommodation facilities - the area is equally if not more important and this is where it helps to seek advice from an experienced local agent who can also tell you if there's a demand for rental accommodation in the area and what rent you should realistically be charging," says Botha.

Another difficulty to overcome is selecting the right tenant, especially if they are to live in part of your home. It may seem like a good idea to get into the swing of letting by renting out the unit to a friend or family member. This could however easily end in tears as having a personal relationship with the tenant may make you feel obliged to 'carry' them when they are late with the rent.

"You need to keep things on a businesslike footing, no matter who your tenant is, and again this is much easier to do if you seek the help of an estate agent - who can check the creditworthiness of your tenant without seeming nosey, check on the maintenance of the unit for you and, most important, make sure the rent is paid on time every month."