Buy to let investment

[blunomore]

The house we bought last year was built in 1979. When we were looking at new places in our price range, we couldn't even fit our bedroom set into the main bedroom. The headboard was even too wide.

And to me it seems the quality of building in the old buildings are better too.

 

[akescpt]

There are two RDP developed suburbs not too far from where we're referring to. Mfuleni and Wesbank, I think that influences the price.

Also Eerste River / Blue Downs are traditional "coloured" areas <-- and we don't like paying

shhhhhhhhh dammit. u letting out all the secrets here!

 

[Alton Turner Blackwood]

shhhhhhhhh dammit. u letting out all the secrets here!

I'm sorry

 

[akescpt]

The house we bought last year was built in 1979. When we were looking at new places in our price range, we couldn't even fit our bedroom set into the main bedroom. The headboard was even too wide.

where is this rosedale area? never heard of it...

 

[akescpt]

I'm sorry

gonne make a turn and cut your internet!!

 

[marco79]

where is this rosedale area? never heard of it...

Opposite Pick 'n Pay along Forest Drive.

 

[hj2k_x]

Interesting thread, this one. Property for under 400k in Cape Town...As high risk as the tenants might be, there should be enough people queuing up to pay rent at those low prices.

 

[Grimspoon]

Playing land lord is no fun. Been there done that. The payoff is obviously worth it, but man what a headache!

 

[marco79]

http://www.belladonnaestate.co.za/index.htm

Some feedback after some research : Although I have seen a private ad from an owner advertising a 2 bedroom apartment for R3500 per month, the developer's rental dept says the rent on the 2 bedroom apartments is only R2500 per month.

 

[blunomore]

Marco I clicked on that link and the sizes of the properties are crazy small !! The biggest is only 60sqm ! Are there no other places with better value for money ?

 

[ToxicBunny]

Some feedback after some research : Although I have seen a private ad from an owner advertising a 2 bedroom apartment for R3500 per month, the developer's rental dept says the rent on the 2 bedroom apartments is only R2500 per month.

That rental sounds MUCH more like in the ballpark of what I would expect for the price you would pay for the unit..

The Private ad is trying its luck if you ask me... and hoping someone will pay R3k for it.

 

[marco79]

Marco I clicked on that link and the sizes of the properties are crazy small !! The biggest is only 60sqm ! Are there no other places with better value for money ?

These units are selling like hot cakes. Units in Brackenfell I also researched a little are between 48-60 sqm which are being rented out at between R3300 (48sqm) to R3800 (60sqm). But I am only in the investigation part of my search. We only want to buy early next year.

Another option which we are currently discussing is buying another house to live in and renting out our current one.

 

[blunomore]

These units are selling like hot cakes. Units in Brackenfell I also researched a little are between 48-60 sqm which are being rented out at between R3300 (48sqm) to R3800 (60sqm). But I am only in the investigation part of my search. We only want to buy early next year.

Another option which we are currently discussing is buying another house to live in and renting out our current one.

Just from a practical point of view, I wonder how people fit all their stuff into a house that small?

 

[marco79]

We bought most of our furniture before buying a house, so we had to look at houses with tape measures.

 

[blunomore]

We bought most of our furniture before buying a house, so we had to look at houses with tape measures.

We moved house recently and it is only then that you realise how much you have (and a lot of it is not used or not really even needed!)

 

[Species8472]

Hi guys, what are the tax implications of renting out. Does good old SARS not grab 30%-40% of your rent as "income"?

Edit: From the Tax thread:

It's very important to know what you are entitled to deduct from your income when it comes to tax return time.

For the landlords out there renting out property:
1. Remember that you can claim financing costs as a business expense i.e. the interest portion of your bond repayment.
2. Repairs to your property are also deductible as long as its not expenses of a capital nature i.e. improvements

Don’t push this too far and make huge losses on your property or SARS will “ring-fence” the losses and the income received from that property which means you can’t subtract any of those losses from your overall income. If you read the “ring-fencing” article of the Act, you’ll see you can prevent this by showing your business will be showing a profit soon.

Also note that later you should try and balance the income you receive from the property with the interest portion of your debt. If the property is mostly paid off, the interest portion may be smaller than the income you receive resulting in the extra income being taxed at your marginal tax rate. It could be to your advantage to refinance, take money out of your bond to make sure your interest payments and income just about cancel out and reinvest the money you’ve taken out the bond elsewhere in your portfolio. Excel is your friend

For the past three years I've had to write SARS and explain to them where they've made mistakes with my yearly returns. Usually end up having to quote legislature to prove my point since they are quite used to work from rule-of-thumbs.

Been worth it though


Of course tax evasion is illegal. Tax minimization on the other hand is your right.

 

[DJ...]

Rental income is taxed at your marginal rate and must be declared by you. Failing to do so, or misrepresenting your income can result in huge fines and interest implications...

 

[Paul_S]

I think we are getting off topic here. I would like to know whether it would be a good idea to have a buy-to-let property as an investment?

I've also mulled over this topic a few times and here are my main concerns:
1. Property can turn out to be a bad investment if the economy turns very bad (think Zimbabwe).
2. Property can turn out to be a bad investment if the location is not right (squatters move in next door, factories get erected across the road, etc.)
3. Tenants can default and you lose money while you're trying to get them removed.
4. Your investment is not very liquid. If the value is dropping and no one want's to buy, you're screwed.

Historically property has been a good investment but that does not guarantee that property will deliver the same growth or rental returns in the future.
Personally I'd rather invest in something more liquid like unit trusts and skip all the tenant hassles.
I can change my investment to cash over night - that is something you can't do with property.

 

[blunomore]

4. Your investment is not very liquid. If the value is dropping and no one want's to buy, you're screwed.

We have an empty stand in Port Alfred and this is exactly how I feel about it. We cannot get it sold cos the market is not right and there it sits, costing us a lot in bond repayments and no-one wants to buy it from us. What a waste of money !!

 

[akescpt]

We have an empty stand in Port Alfred and this is exactly how I feel about it. We cannot get it sold cos the market is not right and there it sits, costing us a lot in bond repayments and no-one wants to buy it from us. What a waste of money !!

put up a nice wendy house and go stay there by the sea...