Tuesday, February 15, 2011

Money and brains

I prefer not to think of people as stupid…misguided, perhaps, or misinformed—even unthinking…but not stupid. Sometimes, however, it is difficult to stick to my resolve, difficult to refrain from assigning “stupid” or even “bone-deep stupid” to a person, based on a remark or an outlandish expectation.

My brother-in-law is a nice guy…smart, too. But being nice and being smart do not protect a person from being preyed upon by the unscrupulous members of our species. He owns a three bedroom apartment in Joburg but because he lives six hours away, he engaged a property letting and management company to manage it and keep it rented for him.

Like most people, my brother-in-law believed that since he was dealing with the largest company of its kind in the country and they had signed legally binding documents, his property was in good hands, it would be kept rented, it would be taken care of. He was wrong.

Oh, they rented the property, all right, but the quality of tenants they put into the flat left a lot to be desired and, a couple of years down the road, the interior of the flat has been so badly damaged and compromised that it was not rentable any longer. So, the agency called my brother-in-law and asked for money to paint and do repairs, something he normally agreed to, but this time they asked for an unusually large sum of money and red flags went up. Since we live in the area, he asked us to take a look for him…and we did.

The first clue there was something really wrong was the agent, when we went to her office to collect the keys…there was only one key instead of a complete set, and she said the security gate was broken. Then she lied and said the flat was needing work because whenever she called the owner, my husband’s brother, to ask for funds to fix things, he said “no.”

I immediately had to wonder why she wasn’t withholding money from the tenants’ deposits to fix things damaged during their tenancy. That is what the deposit is for, after all. And what was with this one key? Shouldn’t there be more keys to the place? Lost and missing keys and even changing locks when the tenant doesn’t return security and front door keys…that’s deductible from the deposit…where are the rest of the keys?

And then we got to the flat and I understood it all…despite a written contract that mandated the agents inspect the flat several times a year (to make sure the tenant wasn’t trashing the place), despite the agency taking security/cleaning deposits from tenants that were supposed to be used to remedy damage and clean the place after exit, the flat was a wreck. Cockroaches, bold as day, ran all over the floors, carpets and countertops and infested the cabinets and kitchen stove. The stove was so filthy it was literally uncleanable. Kitchen cabinets were missing doors, their bases rotted from water damage. The melamine countertops were blistered and burned and no longer secured to the walls; vinyl tile floors had holes, stains, large paint marks (for paint colours not used in the flat!) and were curled at the corners and lifted from the floors…more water damage. The bathtub had a hole in it and the wall behind it was water damaged clear through to the adjoining room (brick walls…it had soaked through the brick!). In the living room and bedrooms the carpet bore multiple melted imprints of a hot iron…somebody had used the carpet for an ironing board in several rooms…and in the centre of the living room the carpet there was a puddle of solidified candle wax the size of a plate. That, of course, is in addition to the multiple holes and stains in the carpeting and the fact that it was harbouring an infestation of roaches sufficient to make a strong man quail.

The bathtub had a hole in it and after the tub was removed, it took days for the wet concrete floor beneath it to dry out…the flat had been empty for more than a month at this juncture, but the space beneath the tub was still damp…and beginning to smell. One of the bedroom light fixtures…the fixture itself, not the light diffuser…was broken and needed replacing and the light fixture in the kitchen and open plan living room were so encrusted with grease and dirt that they had to be taken down and soaked in degreaser to clean. The closet in one bedroom, a fitted wardrobe made of white melamine, was so damaged it had to be removed…even the bricks supporting the door hinges were damaged, huge gouges out of them. The bedroom doors have heavy steel door frames…they had been pried open on at least one occasion, damaging both the door frames (which had to be pounded back into shape like at a body shop/panel beaters) and the doors (which had to be replaced).

The damage was extensive and horrifying…and costly to remedy. And while the agent’s expectation for paint was outrageous (she was asking for enough money to paint the flat several times, and the neighbouring flats as well), she wasn’t asking near enough to fix the damage to the unit and put it back into rentable order.

And so, my brother-in-law cancelled his contract with the agency and appointed his brother and me as managers. For the last week our contractor has been in there, pounding out door frames, removing all the damaged stuff and discarding it, getting the place fumigated, and preparing to put down new floors. This past weekend we bought tiles, grout, and adhesive, new bath hardware (the old was damaged beyond repair), new doors, a ceiling fan/light to replace the broken fixture, doors, paint, and a new kitchen stove. Next week the cabinets will be finished and he will install them…and all of this is costing my brother-in-law the equivalent of eight months rental income, just to make the place habitable again.

But that eight months income is gross, not net. The flat is in what Americans think of as a “condo” complex, so there are monthly levies to pay to the company that manages the exterior of the building (landscaping, paving, painting, roofs, drains, security, etc.) as well as the monthly mortgage (bond) payment. So, when the flat is empty, he has what is called a “negative cash flow,” meaning money flows out of his pocket to support the place rather than money flowing in. So, occupied or not, the flat has to be “fed” every month.

I have already begun advertising the flat for rent. The contractor looks on track to have it finished by 1 March, and we are hoping to have a tenant for it by then, to get money flowing back into my BIL’s pocket. The ad specifically states that the flat is freshly renovated with new tiles, cabinets, counter tops, kitchen stove, shower/tub (most of these flats have tub only), satellite dish, new paint, etc. Even someone who can barely reason must appreciate that if all this is new, a lot of money has been put into the place and it doesn’t take a rocket scientist…or even an accountant…to see that with that kind of money going out, the owner surely expects a return on the investment.

And so I come to the “misguided, perhaps, or misinformed—even unthinking…but not stupid” part. I got an inquiry from a person this morning who would like to see the flat. The only catch is, he can’t move until 1 June, would I hold the flat for him until then if he pays the deposit and first month’s rent now? He doesn’t plan to pay rent for March, April, or May, though…just secure the flat by paying the deposit and June’s rent. In South Africa we have a word for people like this…”chancer.” Why would anyone in his right mind think that, after spending all that money to renovate this flat from top to bottom, end to end, we’d agree to let it stand empty for three months…with no income…just so he can have it in June?

I honestly don’t suspect the guy of intentionally wanting something for nothing, I suspect he is as naïve as most people are to the reality of rental ownership, and I further suspect he thinks I am a greedy bitch when I told him that if he pays March, April, and May’s rent, he can move in whenever he wants. The problem is, I don’t think most people understand that most landlords have a bond (mortgage) on their property and that they must pay property taxes, trash collection fees, even minimal water and electricity charges whether the property is rented or not. Owning rental property is a business, and businesses have expenses, even when there is no income! In this country, there are no fixed-rate mortgages, so when the landlord agrees to a fixed rental for a year, he may actually lose money if the interest rates rise…this actually happened to us with our Cape Town property. I have heard people complain when their landlords raise their rent at lease renewal time…I heard a neighbour complain that his rent was going up 10% and the flat wasn’t worth 10% more—but maybe his landlord’s costs have gone up? Maybe his interest rate has been increased, the amount he has to pay the Body Corporate for maintenance of the property raised…or he knows he’d better bank that increase in order to paint over the purple, turquoise and lime green walls the tenant used to cover over the neutral palette that was the original colour scheme?

So, again, I hesitate to think of people as stupid, but how much actual thinking does it take to realize that asking a landlord to keep a flat empty for you for three months is a very stupid idea that will cost the landlord money? OK, if the landlord is your mum or grandmum, maybe…but a complete and total stranger will be willing to disadvantage himself to the tune of three months rental in order to have you for a tenant? Are you really that special? Or just that unthinking?


  1. Hi SV - unbelievable. I'd be interested to hear if you're taking on the original property management co your BIL appointed? Surely they have some responsibility as to the state of the property as they clearly did not fulfill their side of the contract? cheers, Albie

  2. Hi, Albie...right now we are pretty much looking at full plates trying to get this place renovated and rented, but once that is done...

    My husband and MIL both think BIL should sue, but he seems hesitant. One of the unfortunate holdovers of apartheid in this country is that too many people who have been shat upon by others...especially more powerful others, like large corporations...are often reluctant to make a squawk; they just accept the treatment with bowed head and walk away grumbling.

    We are trying to encourage him to take on the rental company or at least turn over to us the documents necessary to do it on his behalf (the original contract, etc.). Thus far, however, he's not moving on it. If it was MY flat, they would already be talking settlement or court!!

  3. This comment has been removed by a blog administrator.

  4. Sharon-about the doggy diaper-- I tried emailing you but your ISP (sbcglobal.net) has blocked your address. Can you reply to this again with another email addy I can use? Thanks

  5. Hi SV -

    Hope your BIL sues or lets you loose on them - I'd back you on that any day :-) It would be miscarriage of justice for them to just get away with it and it might make them fulfill their responsibilities in future. All the best, Albie


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