Bond - How may people?

[Dolby]

Hypothetical - how many people can register a bond together?
Could one have a crowd of 10 people purchase a single house?

 

[HavocXphere]

Sure. The banks would laugh though.

 

[ld13]

Sure. The banks would laugh though.

Why would they laugh?

 

[Ancalagon]

Yes you can have quite a few joint bond applicants. I know that at least 12 are possible, from having worked on bond submission software before.

 

[HavocXphere]

Why would they laugh?

Because its as if 10 people show up at McD with R2 in their hand and ask for a bigmac...to share.

If its for a business venture then things would be easier imo. i.e. the business buys the property & the 10 people sign surety.

Either way I'd be seriously jittery about it either way...the combined resources allow for larger purchases but I suspect the people will end up being jointly & severally liable if it goes sideways.

 

[Dolby]

I was thinking similar to a business - but more a once off buy land/develop.

But now I also read that building is more expensive (by 20%) than buying the equivalent house anyway. How do building developers etc actually make money then, or is that phase gone?

I mean I see a 1500sqm piece of land in Ferndale zoned for up to 3 houses at R1m. The average house in Ferndale on a 1500sqm land is R1.4m ... so I'm guessing it was simply be for customisation that someone would buy? Getting what they want?

 

[HavocXphere]

How do building developers etc actually make money then, or is that phase gone?

Very much dependent on the project rather than "phases" I'd imagine.

 

[Dolby]

Sorry - market phase

http://www.moneyweb.co.za/moneyweb-property/to-build-or-to-buy

Seems like the mid 2000s were the best times

 

[Rocket-Boy]

Its sometimes cheaper to build but that all depends on location and available land.
I personally prefer building because you get exactly what you want. Im going to be building my second house in a few months time.

 

[DJ...]

It's called a joint bond and couples often enter into these agreements, but as Havoc pointed out, each bond holder is jointly and severally liable, and the banks aren't entirely keen to lend to groups of people. They'll typically turn you down and refer you to a business banker instead. It's also in your interests to set it up as a business on many fronts...

 

[Dolby]

Thanks.

I have another question - how does one finance building afresh?

I know when buying the house the property itself is the security - but when when building there is no security as yet, barring the land that has been bought

 

[jerome000]

Banks will have many factors to look at e.g.:
Value of land,
Ability to repay,
Project timeline,
History of building projects undertaken,
Security or guarantees...

 

[HavocXphere]

You'll have to personally sign surety. i.e. If it goes sideways then it sinks you.

 

[Nerfherder]

It's called a joint bond and couples often enter into these agreements, but as Havoc pointed out, each bond holder is jointly and severally liable, and the banks aren't entirely keen to lend to groups of people. They'll typically turn you down and refer you to a business banker instead. It's also in your interests to set it up as a business on many fronts...

I know people used to buy property in a trust. Not sure if that is still a good option. I know the method was abused and they might have tightened up the laws.

 

[DJ...]

The trust tax loopholes have been closed. There's no tax benefit any longer, but that's not to say it's not suitable for some asset structures. Probably not in Dolby's case though...

 

[HavocXphere]

They changed it...trusts are no longer useful in most scenarios.