Is your rental property actually making you money? Here's what landlords should know - EWN

Owning a rental property might seem like a good investment, but are you actually making money from it?

In order to work out if you're reaping the rewards of a rental property, you need to look beyond the money you collect from your tenant each month.

That's according to PayProp South Africa's Commercial Director, Michelle Dickens.

PayProp is a cloud-based rental payment and trust accounting platform for residential property managers and letting agents.

Speaking to Africa Melane on 702/CapeTalk, Dickens said that while the Western Cape generally attracts higher rentals, properties also cost more to buy.

"So your capital yield or your rental yield is very much dependent on not only what the rent is that you achieve, but what was the price that you had to purchase the property for or the value that you could sell the property for."

To ensure the best yield for your property, the first thing is making sure that it is fit for purpose, said Dickens.

"Is it for long-term rental? Is it for short-term rental? Student accommodation? There are different models that you can apply to your property to maximise the effective rent that you can get, and that's dependent on the type of property that you have."

Also, pricing your property at the right rental amount is crucial, she said.

"If you overprice your property, you run the risk of a vacancy."

Dickens warned that empty properties and tenants who don't pay rent can quickly wipe out potential profits.