Karen Wheller

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Electricity price increases need a solution to protect landlords from even greater arrears

It is no secret that I preach about Pre-Paid Electricity Meters since I started using them. They are efficient and effective for managing the usage of electricity for tenants and avoiding arrears.

For this purpose they have been great, but I never thought the day will arrive when I will look more at risk management of arrears than the rest of the benefits that pre-paid electricity meters provide.

Well, the time is here. The arrears I dealt with in the past were small, the cost of a meter only R699 call it R700 to make a round figure.

This amount plus the installation of around R500 will bring the investment to R1,200. In many small properties where the electricity consumption is only R200 rands per month more or less, it would take arrears of 6 months to avoid to cover the investment, but in my process no tenant makes it for 6 months in the property if they don’t pay what they are legally obligated to pay, but I still installed the meters due to other hidden benefits. And also..... as they say rather be safe than sorry.

Now, with the electricity increase in price, I am no longer thinking twice to install meters everywhere. It is just no longer worth the debate. Electricity seems to grow in price that R1,200 rands investment to protect from arrears will seem shortly like a joke quite frankly.

What I find though sad is that some investors, don’t take this seriously until they hit arrears. Before that, they just look at the investment cost; they don't look at risk management at all. And yes, risk management does cost money.

I don’t know about you, but me, I look at avoiding risking, simply because of the hassles and I really don’t feel like making any attorney rich on the back of my own mistakes. That’s the way I think.

If you are a property investor, you should start thinking at avoiding arrears costs in electricity as they are about to get potentially 60% more expensive and I didn't include the legal costs to get your money back. Pre-paid electricity meters always do the job as at least your electricity is pre-paid and maybe in the near future we will have water pre-paid also, I am looking forward to that.





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Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved.

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