The most sought after elite tenant is becoming very elusive and traditional landlords find themselves stranded with empty houses. One of the primary reasons is the growing popularity of the non-traditional letting services such as property and online agencies. The other obvious reason is the availability of better planned estates with plush, modern decorative finishes. According to Arthur Buyondo, the manager of Pentagon Management Services, the real estate market is doing so badly that he estimates 50 per cent vacant spaces in most properties currently. And he feels that if only property owners could entrust professional services, maybe things would improve.
“A property owner thinks they are better off saving the agency fees and handling their properties on their own and end up with empty properties, yet a management agency would do much better because for them, it is a fulltime job,” Buyondo says.
Agencies usually charge 10-20 percent commission for their services depending on the services they are giving to the contract.
However, the range of services offered depends on how much the client is willing to pay. Stephen Kasirye, of Walisa Property Agency, says they usually charge one month’s worth of rent for maintenance and repairs in addition to 10 per cent of the total amount of the rental collection for their services. “Alternatively, the client can do their repairs and maintenance and just pay the 10 per cent for other services,” Kasirye adds. In addition to the above services Kasirye and some other management services can give the landlord an advance payment against the expected rent as and when it is needed.
When to hire
Crescent Muheki, a property developer, says he was forced to seek out a management service after getting tired of dealing with tenants himself. “I tried to use my brother to help me run the estate but I ended up losing more than half of the tenants who claimed he was rude. The obvious thing to do was look for a professional management service which has relieved me of the stress of dealing with tenants,” Muheki explains.
For a 10 per cent commission, Muheki’s service helps him deal with emergency repairs, general maintenance, payment of utilities and rent collection. “Unlike my brother, these people always make sure that all the rent is on my account on time. I do not know how they do it, but I am happy and my tenants are happy with their services,” Muheki says.
Apart from dealing with tenants, the management service also takes over responsibilities of dealing with local authorities, keeping up to date with sanitation and security regulations.
“Personally I think a good property manager should be friendly and trustworthy. They should also be knowledgeable about the locality they are working in, since he is the one who has to deal with the local community,” Buyondo says.
With his good knowledge of the area, your manager will be able to always have tenants and thus reduce the vacant periods.
Muheki says he asked a number of relatives and friends to recommend property managers. “There are so many property agencies in Uganda; the humble ones, the flashy ones and those in between. But what I wanted was an agency that could deliver what it promised. This I feel is a very important quality to look out for in a service provider,” he adds. A good recommendation can go a long way.
Kasirye advises property owners to first understand the terms and conditions of the service before taking it up. “We are always willing to negotiate with the client to reach middle ground. it is important that we are able to provide the exact service the client wants at a cost he can afford,” he tips.
Property management services come at a price. Typically, they charge a set-up fee and between 5 per cent and 15 per cent of the rental income. Make sure you understand what services you are getting for your money. If there are any problems, such as evicting a tenant, it will mean extra administration, paperwork and possibly cost.
If the letting agents arrange repair work on your behalf, you may be charged an arranging fee, on top of the actual repair costs.
Generally, property management agencies provide the following services:
• Advertising and marketing your property to potential
• Sourcing and screening potential tenants
• Managing your financial accounts
• Completing inspections on a consistent basis
• Property repairs and maintenance
• Preparing the tenancy agreement
• Rent collection from the tenant
• Inspecting the property periodically and feeding back any comments to you
• Providing tenants with notice at the end of the tenancy
• Re-letting the property as quickly as possible and minimising any ‘down-time’
• Dealing with legal aspects of the tenancy and property, including evictions, non-payment and harassment.