Cash vs Home title deed

[Andre54]

Hi all, i hope everyone is doing well.
I have a question that i wish to post here and get some of your insighfull thoughts on what you would do.

I currently have 12 years left on my bond and the current value of the house is 1,75 mil.
The property market has not been so great and i am wondering how much it will improve.

in 12 years time would you rather have a house that is worth 2,6 Mil or have 2.3 Mil in the bank as cash.
Calculations based on : house value growth @ 3.5% per anum and investment growth @ 8 % per anum. All calculations are just estimates

I could sell the house now and rent for the next 12 years, taking my profit i make on the house and also subsidising the investment with the difference in savings because of renting.

The main reason is to stay as fluid as possible and stay in RSA for as long as possible and possibly forever, but just be ready for that "oh %$it" moment and have to leave in short notice. Also to play a bit of a "wait and see" game. If all goes well after 12 years then i will buy a property again with the cash that has been saved.

Thank you

 

[Sepeng]

Look as always with these things, it depends on a few factors.
So the place you'd be renting, would it be an equivalent space or much smaller?
How much cheaper would the rent be, and how much would it go up every year? You might find your rent quickly exceeds your current bond amount.
What type of place are you in currently? Would it make sense to keep it and perhaps rent it out, or maybe even better, sell it and buy a proper rental type unit or two (bearing in mind potential fees this would incur)?

Personally, given that time frame (12 years is a long time), I wouldn't rent for that long; I might scale down if need be, or try knock a good few years off that 12 remaining if possible.

 

[lexor]

Look as always with these things, it depends on a few factors.
So the place you'd be renting, would it be an equivalent space or much smaller?
How much cheaper would the rent be, and how much would it go up every year? You might find your rent quickly exceeds your current bond amount.
What type of place are you in currently? Would it make sense to keep it and perhaps rent it out, or maybe even better, sell it and buy a proper rental type unit or two (bearing in mind potential fees this would incur)?

Personally, given that time frame (12 years is a long time), I wouldn't rent for that long; I might scale down if need be, or try knock a good few years off that 12 remaining if possible.

Good Advice.

I cannot even rent a 2 bedroom flat with the monthly payment on my bond.
Currently living in a 4 bedroom house in good area and renting it would cost double my bond amount.

Still a personal choice based on your plans.

 

[Scooby_Doo]

Good Advice.

I cannot even rent a 2 bedroom flat with the monthly payment on my bond.
Currently living in a 4 bedroom house in good area and renting it would cost double my bond amount.

Still a personal choice based on your plans.

That's very unusual for rent to be so much less than an equivalent bond.

In CPT, I would have to pay more than double my rent to own the same space.

 

[Priapus]

That's very unusual for rent to be so much less than an equivalent bond.

In CPT, I would have to pay more than double my rent to own the same space.

The place I own, would be rented for a lot more than my bond amount for sure. My bond now is around what I was paying to rent a place that was significantly smaller, in Dec 2019.

 

[Scooby_Doo]

The place I own, would be rented for a lot more than my bond amount for sure. My bond now is around what I was paying to rent a place that was significantly smaller, in Dec 2019.

Ohhh, you are comparing your bond that you took out a few years ago to what you could rent today. I thought you meant if you took out a bond now it would be less than renting.

 

[koeksGHT]

Sell house, place all on GME

profit?

 

[AchmatK]

That's very unusual for rent to be so much less than an equivalent bond.

In CPT, I would have to pay more than double my rent to own the same space.

In Somerset West. Current bond is R8.5k. Rental for similar 4 bedroom freestanding house is R15k. Bond if I must buy today would be R20k.

Still have 11 years on the bond left.

 

[Priapus]

Ohhh, you are comparing your bond that you took out a few years ago to what you could rent today. I thought you meant if you took out a bond now it would be less than renting.

That's a valid point, to be fair.

 

[AchmatK]

Ohhh, you are comparing your bond that you took out a few years ago to what you could rent today. I thought you meant if you took out a bond now it would be less than renting.

You cannot look at a bond taken out today if you are already living and paying a bond.

Taking a bond today would in most instances be more than renting the same property.

 

[TEXTILE GUY]

I had this same discussion two years ago with myself.

Today I have a property and own a small piece of the earth.
I have to live somewhere eventually.

The trick is that our house has a flat for income.

Works for me.

 

[Scooby_Doo]

In Somerset West. Current bond is R8.5k. Rental for similar 4 bedroom freestanding house is R15k. Bond if I must buy today would be R20k.

Still have 11 years on the bond left.

That makes more sense.

 

[Scooby_Doo]

You cannot look at a bond taken out today if you are already living and paying a bond.

Taking a bond today would in most instances be more than renting the same property.

Yes, that is why I was confused.

 

[The Darkness]

Hi all, i hope everyone is doing well.
I have a question that i wish to post here and get some of your insighfull thoughts on what you would do.

I currently have 12 years left on my bond and the current value of the house is 1,75 mil.
The property market has not been so great and i am wondering how much it will improve.

in 12 years time would you rather have a house that is worth 2,6 Mil or have 2.3 Mil in the bank as cash.
Calculations based on : house value growth @ 3.5% per anum and investment growth @ 8 % per anum. All calculations are just estimates

I could sell the house now and rent for the next 12 years, taking my profit i make on the house and also subsidising the investment with the difference in savings because of renting.

The main reason is to stay as fluid as possible and stay in RSA for as long as possible and possibly forever, but just be ready for that "oh %$it" moment and have to leave in short notice. Also to play a bit of a "wait and see" game. If all goes well after 12 years then i will buy a property again with the cash that has been saved.

Thank you

I made this move some years back. I realised that after I cashed out my properties all I'd really done was break even after CGT etc etc. Now I invest, and I let my landlord worry about fixing things. I decided to be cashed out and ready to leave SA at any point, and with this EWC bill that's going through, I fail to see how one can 'invest' in this dump for long term with property.

 

[Sepeng]

Today I have a property and own a small piece of the earth.

You know what, this might seem like a small thing but it was such a big deal for the wife and me before we bought our first place together - the concept of owning a piece of this earth. And not just a space in a building (we'd owned flats before), but actual earth, grass, worms and weeds and all.
Dunno, might be trivial to others, but still a big deal to us I reckon.

 

[deweyzeph]

The reality is that the cost of renting property tends to go up with time, and your bond repayments tend to go down with time (if you take inflation into account).

 

[Corelli]

I have a lot of crypto coins but also a safe with gold coins, diamonds and us dollars to protect me from if anything changes. Personally your property is best for investment unless you're outside of Cape Town, then honestly its not.

I would pay the extra amount into the bond. You must also look at how much money you will save on monthly interest, not only on bond payments. 8% interest in the current climate, well you would be lucky. Also the rand can tank and thats the end of your bank account, and remember with banks, you are effectively lending them money by depositing money with them. If the bank goes down the drain, so does your money (many dont notice that). Also it's easily to pirate your bank account but not your property.

Pay off your bond and then invest in some fluid cash as a backup. If you invest in a fund, make sure its guaranteed from negative bonuses(ie it will see a drop in the value). My pension fund lost 10% when covid started due to negative bonuses, and if the government keeps on their path, it may loose more. So i moved it into a guaranteed fund. It ended up loosing another 10% after I had left (so saved my on that one.)

 

[deweyzeph]

I have a lot of crypto coins but also a safe with gold coins, diamonds and us dollars to protect me from if anything changes. Personally your property is best for investment unless you're outside of Cape Town, then honestly its not.

I would pay the extra amount into the bond. You must also look at how much money you will save on monthly interest, not only on bond payments. 8% interest in the current climate, well you would be lucky. Also the rand can tank and thats the end of your bank account, and remember with banks, you are effectively lending them money by depositing money with them. If the bank goes down the drain, so does your money (many dont notice that). Also it's easily to pirate your bank account but not your property.

Pay off your bond and then invest in some fluid cash as a backup. If you invest in a fund, make sure its guaranteed from negative bonuses(ie it will see a drop in the value). My pension fund lost 10% when covid started due to negative bonuses, and if the government keeps on their path, it may loose more. So i moved it into a guaranteed fund. It ended up loosing another 10% after I had left (so saved my on that one.)

It's also a good idea to open up an offshore bank account and store your cash in foreign currency. I don't understand why more people don't do this when it's so easy to do. Any South African who values their savings should be storing it in an offshore bank account.

 

[Scooby_Doo]

It's also a good idea to open up an offshore bank account and store your cash in foreign currency. I don't understand why more people don't do this when it's so easy to do. Any South African who values their savings should be storing it in an offshore bank account.

Agree,

Hedge your bets fokes.

 

[heartbroken]

The reality is that the cost of renting property tends to go up with time, and your bond repayments tend to go down with time (if you take inflation into account).

This. My bond on a 5 bedroom house is now down to 6 500 per month after last years interest rates. In this area, a 2 bedroom townhouse can easily rent for 10 000 per month