select
|

The new way to invest in property

(By Kathy East)
 
It is a countrywide phenomena that rental properties are becoming increasingly more expensive for tenants. This situation could result in tenants deciding rather to become proud owners of possibly their first property and for property investors to increase their property portfolios, as in some areas it is becoming cheaper to own than to rent.
 
For a buyer, surely the most exciting time in their hunt for the ideal property is when they find a home that appeals to them, suits their budget and then to decide whether it is an investment buy-to-let property or whether they will live in it themselves. This decision will be based on their personal situation and circumstances.
 
Buy-to-let is always a great investment. If the property you identify already has a tenant, be careful to establish what their paying habits are like, if they have looked after the property, are they difficult etc. This could influence the success of your buy-to-let plans. “It may be unfair, but tenants generally have a reputation for not keeping homes in the best condition and thus, buy-to-let investors who might be interested in adding the property, to their portfolio often prefer to find their own tenants” says Shaun Rademeyer, CEO of BetterBond.
 
“When you decide on a buy-to-let property, you need to bear in mind what will appeal to your prospective tenants, such as the targeted age group, security, location to schools, hospitals, shopping malls, colleges, etc. These factors will definitely affect the type of tenant you can get, the rental income you can demand, which will underpin a good and solid investment” says Craig Hutchison, CEO of Engel & Völkers Southern Africa.
 
“The reason for the shortage of rental properties, and thereby the increase in rentals, is due to many factors, but possibly more so that prospective buyers may feel they are not financially qualified to buy and so therefore rather rent. To establish to what value you are eligible to buy for, our own internal EV financial team are highly competent and experienced to provide you with an accurate analysis of the purchasing bracket you will qualify for” Craig continued.
 
It is the ideal time to buy now rather than to rent, as according to John Loos, Household and Property Sector Strategist at FNB – “The March FNB House Price Index continues to reflect a solid and well-balanced residential property market, rising year-on-year by 8.6%.”  He further added that the average house price for March 2014 rose 8,6%.
 
You may find that your monthly mortgage loan account is going to be less than the rentals. With the relatively low bond interest rates currently being offered, this is the ideal time to invest in property as the increase in the value of your property is apparent. The demand for rental properties is not abating and a purchaser of a buy-to-let property is pretty much guaranteed of covering the bond plus additional rent, which can be ploughed back into the home loan. The other option is, if you are planning to upgrade to a larger home, is perhaps to consider renting out your current property and buying an additional property for your own use.
 
From PayProp, a software programme used to manage rentals, it is shown that in 2013 residential rentals rose by an average of 10,8%. This would appear to be the trend and is noticeable in 2014 rentals. If you want to make an investment while earning a second source of income, then buying property to rent out is a good option.
 
Recently, Human Settlements Minister Connie September introduced the Rental Housing Amendment Bill in the National Assembly. The legislation outlines the rights and responsibilities of both landlords and tenants. It is good to familiarise yourself with laws that are relevant to you, as there could quite often be confusion between the landlord and the tenant about who is responsible for what.
 
If you are considering the buy-to-let route, then you must ensure you have a good understanding with the tenants. Have everything in writing and do not depend on a handshake agreement. Both parties need to enter into a legal, written agreement. This is to protect both of you.   
 
Consider all aspects of the property you are renting and living in, and keep a realistic view of whether you do indeed want to own it one day.  Do this before you spend any time or effort in upgrading the property at your financial loss.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 24 Apr 2018
      The thing about the property ladder is that at some point in our lives we all have reason to want to climb a rung or two higher. Sometimes, it’s because we’ve outgrown our previous dream home, or because we want to be in a better neighbourhood that’s closer to work or to schools. Sometimes it’s because our circumstances have changed, and we’re taking care of elderly parents or relatives. Sometimes, it’s just because we want a property that reflects the financial status our hard work has won.
    • 20 Apr 2018
      Whenever changes in the political ecosystem of a traditional property market create uncertainty, smart investors begin to look elsewhere for new opportunities. Property experts at IP Global have analysed the trends and crunched the numbers to find new markets to explore in Europe and the United States.
    • 20 Apr 2018
      Energy and water self-sufficiency are increasingly important factors in home buyers’ choice of property – especially in Cape Town where the extreme drought of the past few years has made municipal supply costly as well as uncertain.
    • 19 Apr 2018
      During the last decade, rampant development has progressively transformed Cape Town’s property landscape with densification being the order of the day, but there are still one or two hidden gems like Scarborough which have retained their original character, offering an inimitable lifestyle and an attractive investment opportunity.
    • 19 Apr 2018
      The rental market is a cut-throat sector of the real estate market that waits for nobody. According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, first-time renters need to be fully prepared before they even start the process of looking for a place to rent in order to avoid the disappointment of losing out on their ideal property.
    • 19 Apr 2018
      Choosing to buy your first home instead of continuing to rent is a big decision that will usually take some time to put into action, but the sooner you can save up a sizeable deposit, the closer you will be to reaching your goal.
    • 18 Apr 2018
      Selling your home is no small task and as you will quickly find out, there are a lot of misconceptions about the process. Gerhard van der Linde, Seeff's MD in Pretoria East lists the top 5 misconceptions when you are selling your home.
    • 18 Apr 2018
      The Cape Town municipality is now installing water-management devices at properties that have been non-compliant with the new level 5 water restrictions and there are talks of fines between R5,000 and R10,000 for households that use too much water.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK