Why not pool your resources for profit?

“Quite simply, because most of them haven’t got the cash to pay the sizeable deposits the banks still require in most cases before they will approve a home loan – let alone enough to buy properties outright,” says Berry Everitt, MD of the Chas Everitt International property group.
“However, there is a way to take advantage of the current buyers’ market in which cash is king and that is to pool resources by forming an investment group with a few friends or colleagues.”

Writing in the Property Signposts newsletter, he says that with a group of 10 people, for example, you could each contribute R12 000 to make up a 20% deposit on a R600 000 home (on which there is no transfer duty) and obtain a R480 000 bond.

“The monthly repayment on this, at current interest rates, would be around R4320 a month, and your group should be able to let the property to cover at least this.

“And gearing the purchase in this way would mean that if the value went up just 3% (R18 000) in the first year, you would each stand to make a 15% ‘return’ on your initial investment of R12 000, minus your share of the municipal rates, any levies, and upkeep.”

Everitt points out that there aren’t many places where you could safely invest your money to do better than that, but says you do need to make sure to have an attorney draw up a formal agreement for the group, and to enlist the help of a knowledgeable estate agent to find suitable properties to buy.

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