Investing in a developing Estate

[S1ght]

Hey all,

I'll start off by saying I'm a complete finance noob :wtf:

Now that that's out of the way. What is your guys opinion on investing in an Estate that is still busy being built? My basic situation is I'm 23; almost finished my first year of work; paid off all my debt (car) and I have about 100k in savings. I have been renting with 2 friends for this year and I'm thinking about buying a 2 bedroom apartment next year and renting out 1 of the rooms to a friend.

So now I've just been looking around to get a gauge on the pricing and possible areas. I found a really nice looking Estate that's still busy being built which offer some nice modern 2 bedroom, 2 bathroom apartments. Would it be a good idea to look into this? Aren't they normally cheaper in these early building phases? Or do you think it'd be better to just keep renting/saving for another year?

Thanks in advance
S1ght

 

[Bern]

Do some homework by calling some agents and getting prices for similar type of estates in the area, if the prices look good then speak to a lawyer to confirm the developers are on the up and up (you don't want to get screwed because they run out of money and can't finish the development). If all of that is OK then do it, getting in early normally gets you the bargain prices, but make sure you have done your homework to reduce the risks of the developers stuffing up. Also make sure there are solid clauses covering you in the event of late delivery of your apartment and in regards to issues around build quality. I know a few estates that later had issues with water and cracks due to being badly built.

In general it is a buyers market, but also realise the recession is not over and we are still going to see more kak due to the EU and China not hitting bottom yet. Make sure you can cover your bond in the event of rises in the interest rates as they are really low right now and leave some room for fixing the place up etc.

 

[chrisc]

What are the surrounding suburbs and developments like? Are ALL services catered for? Is the ground not subject to any land claims? Is there no history of flooding/subsidence/landfill useage?

Can the house easily be extended to have 3 bedrooms? Its much easier to sell a 3 bedroomed house later.

Have house prices in the immediate area increased since 2008, or have they been static?

Are you being offered a better financial deal than would be provided by a bank?

Don't spend the entire R100k on the house. Its expensive setting up shop, even if you buy things second-hand.

 

[S1ght]

Do some homework by calling some agents and getting prices for similar type of estates in the area, if the prices look good then speak to a lawyer to confirm the developers are on the up and up (you don't want to get screwed because they run out of money and can't finish the development). If all of that is OK then do it, getting in early normally gets you the bargain prices, but make sure you have done your homework to reduce the risks of the developers stuffing up. Also make sure there are solid clauses covering you in the event of late delivery of your apartment and in regards to issues around build quality. I know a few estates that later had issues with water and cracks due to being badly built.

In general it is a buyers market, but also realise the recession is not over and we are still going to see more kak due to the EU and China not hitting bottom yet. Make sure you can cover your bond in the event of rises in the interest rates as they are really low right now and leave some room for fixing the place up etc.

The apartments themselves look like they're almost finished but the actual development of the whole estate has actually been going on for a while now from what I've heard. Will definitely have to bring in a lawyer to add in clauses that you've mentioned. Thanks would not have thought about those

What are the surrounding suburbs and developments like? Are ALL services catered for? Is the ground not subject to any land claims? Is there no history of flooding/subsidence/landfill useage?

Can the house easily be extended to have 3 bedrooms? Its much easier to sell a 3 bedroomed house later.

Have house prices in the immediate area increased since 2008, or have they been static?

Are you being offered a better financial deal than would be provided by a bank?

Don't spend the entire R100k on the house. Its expensive setting up shop, even if you buy things second-hand.

The area is pretty decent, right next door to the area I grew up in so the surrounding areas are also good.

Have no idea about any of the other things you said there, not entirely sure where'd I find that information either? How would I go about finding the value of the houses in the area over a period? Is this information something that's freely available?

I had thought about the initial capital I'd need, obviously furniture and what not aren't going to be cheap. At the moment all I own are the basics you'd have in a bedroom. I was hoping that if I started looking between now and the end of the year I could save up a little more for the deposit and also start putting money aside for the essentials. So fridge, washing machine, iron, kettle and then I'd just live minimalism for the first few months while I slowly start to buy the other more non essential luxuries. Either that or dedicate my year end bonus to start up capital