Ten ways a UAE landlord can make more money
It would seem to be a bumper time for landlords in Abu Dhabi. Private investors who bought off plan in 2008 took an initial beating as rents dropped through to 2012, but since then rents in investment areas have steadily risen, some as much as 20 per cent in 2013.
Investors who have bought property to rent are seeing better returns on their money but are they really getting the best deal for themselves? If you’re a landlord with property for rent here are 10 ways to improve your return and protect your investment.
• Think about furnishing your unit. There is a growing market for furnished units in Abu Dhabi, especially one and two-bed apartments which can command a premium of up to 20 per cent extra in rent. Yes, furniture suffers wear and tear and will need to be replaced but run the numbers and see if it would work for you.
• Consider accepting multiple cheques. Landlords who accept four, six or even 12 cheques can charge a premium on their unit as these are in high demand. Make sure you get all the cheques up front and get two months’ rent as a deposit so you will have insurance if they default, allowing you time to get another tenant and not lose any rent in the process.
• Have a viewing clause in your tenancy contract. It has been the tradition in Abu Dhabi to wait until a tenant moves out before showing units to new prospective tenants. If your unit is vacant for a month that is equal to 8 per cent of your yearly rental income. Have a clause in the tenancy contract stating that if your tenant gives notice to leave you can show new tenants around the property. This way you get a new tenant in place quickly with minimal loss of rent.
• Know the law about rent rises. You must give two months’ notice if you intend to raise the rent. If you miss this deadline you will need to keep the rent the same and your tenant has the right to stay in the property.
• Know the market. Do your research, talk to real estate brokers, work out realistically what your unit should be renting for. If you charge too much your sitting tenants will leave and your units will be empty, too little and you won’t maximise your investment.
• Be a good landlord. Good tenants are hard to find and worth their weight in gold. Treat them well, perform your maintenance, be accessible and they’ll be less likely to leave if you feel the market warrants a rent rise.
• Advertise your property. The more prospective tenants you get to see your property the faster it will rent. Make sure you take photos of it (especially marquee elements such as the view, balcony/garden, kitchen, bathrooms and any facilities in the compound/building), have the floor plan, have the square footage. Circulate this information to reputable brokers who can bring their clients, but also advertise it on free sites yourself. The more people you get to look at the unit the more likely someone will pay the asking price.
• Make the unit presentable. If you’re looking to rent an empty unit you must clean and paint it. There is a bizarre notion in Abu Dhabi that you only clean and paint after you have a tenant. A prospective tenant is more likely to rent, and will probably pay more for a spotless, well-presented unit than a dusty mess with horror bathrooms. This small investment will make a big difference.
• Perform quarterly preventative maintenance. You have an asset which is worth a large amount of money, you need to look after it. Make sure you get a reputable maintenance company to go in and check that everything is fine in your unit on a regular basis. The last thing you want is an undetected leak destroying your property and it is a year until you find out the damage it has done.
• Don’t get greedy. If you’re asking too much your unit will be empty and you’ll be losing potential rent hand over fist. Even more importantly if you have a great tenant who looks after the place, treats it like their home and pays on time then hang on to them for dear life as they are as rare as gold dust. Consider if you have to raise the rent, making it affordable for them, perhaps below market rent, talk to them about your reasons and their ability to pay. Don’t let them walk unless you absolutely have to.
Ben Crompton is a managing partner at Crompton Partners real estate agency. Contact him at email@example.com
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Updated: August 22, 2014 04:00 AM