In the realm of residential real estate investing, the quality of tenants is as crucial as the location of the property. Having a high ratio of good standing tenants — those who pay rent on time, maintain the property well, and adhere to lease terms — can significantly impact the profitability and management ease of an investment. The Bolton enjoys the high good standing ratio of the Rosebank node, standing at just over 89%. Through the meticulous management of our body corporate and building management, we ensure tenants look after the property and maintain the condition of our apartments. Here’s what it means for an apartment building to have a high ratio of good standing tenants for owners and the building alike:
Definition of good standing tenants
Before delving into the implications, it’s important to clarify what qualifies as a good standing tenant:
Timely rent payments: They consistently pay their rent on time.
Property care: They keep the property in good condition, avoiding excessive wear and tear.
Rule adherence: They follow the rules set out in the rental agreement, including noise regulations and restrictions on property modifications.
Long-term occupancy: They often choose to renew their leases, leading to lower tenant turnover rates.
The Rosebank difference: Exceptional tenant quality
Recent data from January to November 2023 shows that a substantial majority of Rosebank tenants pay their rent promptly each month. Over the past year, Rosebank has reported an impressive good standing ratio of 89%, outperforming the national average by 6% and surpassing the entire Gauteng region by 7%. This consistent adherence to payment schedules and diligent care of rented properties shows the commitment of tenants in Rosebank to living within the node and maintaining their lifestyle within close proximity to Rosebank amenities. Such exemplary behaviour not only showcases the high calibre of tenants in Rosebank but also emphasises the investment appeal of regions with robust good standing ratios.
Financial stability and predictability
For investors, one of the most immediate benefits of having good standing tenants is financial stability. Reliable rent collection ensures a steady cash flow, a fundamental aspect of successful real estate investment. This predictability in income supports better financial planning and can improve the ability to manage property-related expenses such as maintenance, property management fees, and mortgage payments.
Lower operational costs
Tenants who care for their apartments and abide by the lease terms reduce the likelihood of damage and the need for frequent repairs, which can be costly. A lower turnover rate decreases the costs associated with finding new tenants — such as advertising, tenant screening, and the loss of rent during vacancy periods. Good standing tenants, therefore, help in maintaining lower operational costs, enhancing the overall profitability of the investment.
Enhanced property value
Properties that are well-maintained by responsible tenants tend to retain or even increase their value over time. This is particularly important in competitive real estate markets, where property condition significantly influences resale value. Investors looking to sell their properties in the future will find that a well-maintained building attracts more prospective buyers and potentially commands a higher market price.
Easier property management
Managing a property with good standing tenants simplifies numerous aspects of property management. Fewer conflicts require resolution, and there is less need for legal proceedings to handle tenant issues such as evictions or severe property damage. This reduces stress and administrative burdens and also cuts down on potential legal costs and time spent dealing with tenant-related problems. Our building and tenant management partner, IGrow, has vast experience managing buildings within Gauteng. Their prowess in sourcing, vetting, and managing tenants, gives our investors peace of mind.
Attracting investment and financing opportunities
Investors with properties known to have a high ratio of good standing tenants may find it easier to attract additional investment or favourable financing terms from banks. Reliable tenant bases are often seen as lower risk, which can be appealing to both private investors and financial institutions.
Building a positive reputation
A property’s reputation can be significantly bolstered by having responsible tenants. Satisfied tenants are more likely to provide positive reviews and referrals, which can be crucial for property managers and owners in attracting new tenants. A good reputation increases a property’s desirability, ensuring that vacancies are filled more quickly and possibly allowing for higher rental rates.
The advantages of having a high ratio of good standing tenants, particularly at The Bolton, extends beyond financial benefits. They encompass easier property management, lower operational costs, enhanced asset value, and a better overall investment reputation. For investors, prioritising tenant quality is not just about selecting the right tenants; it’s about fostering a positive leasing environment that encourages tenants to maintain their good standing status. This approach ultimately secures the long-term success and sustainability of the residential investment.
