Why property managers advertise incomplete houses
Before paying a commitment fee for an incomplete building, make sure to get proof of ownership from the owner and keep reciepts for accountability. Photo by Shabibah Nakirigya
What you need to know:
It is not uncommon to see incomplete houses bearing the ‘For rent/ sale’ sign. Property managers are now advertising and looking for tenants for houses that are still under construction. It might seem ridiculous, but there are actually a couple of valid reasons.
Jafari Sekamwa, a property manager, says because there is a lot of competition in the housing business, industry players have to be streetwise.
To get good tenants
Sekamwa says finding good tenants is difficult that is why it is advisable to start looking as soon as possible.
“We advertise unfinished houses to get good clients so that immediately after construction, we have good people who are ready to move in,” he says.
Sekamwa says these tenants pay commitment fee to show that they will move into the house when it is completed.
He adds that when you get clients before construction is complete, you can have the luxury of screening them well enough before they sign the tenancy agreement and move in.
“While screening, you get to know their renting history specifically if they are rent defaulters because some people usually keep on moving from one place to another without paying rent,” he says
Adnan Mpuuga, a property manager from East Lands Agency, says when you advertise early, you will not be in a rush to say yes to the first tenant that comes along.
This way, there is a better chance to have all your preset conditions met. For example, if your preference is to have a client who is willing to pay a year in advance, you will not settle for less since time is an ally at that point.
It is only when you look for tenants after construction is done that you take whoever comes.
To get clients on time
Mpuuga says advertising early means as soon as construction is complete, you will have tenants ready to move in.
“Ideally, as soon as construction is complete, money from tenants should start trickling in. The longer the houses stay vacant, the more losses you incur,” Mpuuga says.
Financial constraints
Sekamwa reveals that when property managers are running low on funds to complete a house, getting tenants might work in their favour. The commitment fee collected from the latter can be used as a boost to complete construction.
“You can set a percentage for commitment fee which clients who are interested will pay as booking fee,” he says.
However, Sekamwa adds, convincing a tenant to part with their hard earned money in form of commitment fee for an unfinished building is not easy.
“Make sure you provide accountability, proof of ownership of the building and expenses to show that it is not a fake deal,” he stresses.
