Investing

C

CJ@1

Member
Joined
Apr 11, 2013
Messages
15
Reaction score
0
Good day folks

my wife and I are looking at buying a 1 bed 43m2 flat in Parow Valley(middle class area) and managed to negotiate the price to R255k cost inclusive. Rental potential is R3-R3300 pm while bond, levies and insurance will come to about R2400. We also are thinking about renting out our primary residence to enhace cash flow and sell both properties in 2-3 years to buy another. If we rent out our primary res we will stay in a granny flat on one of my dad's properties. The two bonds will effectively be covered with the rental from our primary residence which means any income from the flat would be pure income(meaning SARS will kill me?) What are your takes on this situation with regard to selling? also about R500pm will also be invested in unit trusts.
 
Are you sure that the rental potential is accurate for that area?

I wouldn't exactly call it middle class.
 
Thanks for responding, what would you think is rental potential? I actually called a rental agency that does rentals there and they told me that is the price. If not middle class what then?
 
Well I'm no rental agent, just asking if you did your homework so if they are saying that's what you can get then I guess that's more than enough.

Considering Parow itself is lower-middleclass I would have said Parow Valley is firmly in the lower class. It doesn't matter if there is rental potential, I just wanted to make sure your expectations aren't way off.
 
I hear you, and in terms of re-sell value I guess you can't expect too much appreciation in value in 2 years. I guess we have to re consider our options.
 
You'd be hard pressed to find a good, behiving, decent nigerian to rent the place from you :D

Seriously, 90 percent of the guys staying in that entire street is nigerians. Drugs and prostitution is very bad there. Just saying (I got the street by using my l33t detective skillz)
 
@YingYang its fine you can name the street. Its the exact reason I came onto a forum like this, to gain info and take advice from guys that are renting out places etc. Thanx for the reply
 
I doubt you'll get much return in 2 years time with the property market being what it is currently and what it's been like for the past 6 - 7 years or so. Location is always extremely important if you looking to get a good return on your investment and I have to agree with what everyone else has said, Parow Valley definitely falls within lower class section.
 
Hi

I can get the 200k bond @ 8.4%, strange that the letting agent would tell me that then hmmm.
 
Always remember you have a much higher risk of rent defaulters and the need to spend alot of money to get them evicted in lower value areas. You will also stuggle to sell the property when you decide to sell.
 
Purply said:
I doubt you'll get much return in 2 years time with the property market being what it is currently and what it's been like for the past 6 - 7 years or so. Location is always extremely important if you looking to get a good return on your investment and I have to agree with what everyone else has said, Parow Valley definitely falls within lower class section.
Click to expand...

Unfortunately it is starting to fall under lower class. Never used to be that way, and there are still some very nice houses. But with the influx of foreigners, the area has started to degrade.
 
If you get R3000+ a month rent for a R255k flat, it is a great investment on paper.... you'll gain an asset without paying a cent. That said, if its not the right area and not the right flat you'll battle with getting desirable tenants, and with reselling should you wish to in the future.
 
To be tax efficient look at yours and your wife's income. It may be better to put one property in your wife's name.
 
smallearth said:
If you get R3000+ a month rent for a R255k flat, it is a great investment on paper.... you'll gain an asset without paying a cent. That said, if its not the right area and not the right flat you'll battle with getting desirable tenants, and with reselling should you wish to in the future.
Click to expand...
That's the thing, I don't want to sit with something that can't sell but like you saying if I get tenants at r3k a month I'll be making a profit every month(if they pay every month) but my plan is to buy and sell after 2-3 years. If it doesn't sell and you have good tenants is it really so bad?
 
just on the side in terms of cost remeber that you are the land lord of the property so if something breaks it will be your problem not the tenants. E.g geyser needs replacement there goes your months rent.
May i ask why you already plan on selling both in 2-3 years?
My strategy would be to rent out your primary residence. You said you would earn more rental than the cost of your bond repayment. Put the excess rent amount and any additional additional cash you have lying around into a investment vehicle such as a unit trust and keep it for your 2-3 year period. At the end you will have a nice little nest egg in your investment and you will own more capital in your primary residence so when you sell it more money will go to you and less to the bank.
 
matt_za said:
just on the side in terms of cost remeber that you are the land lord of the property so if something breaks it will be your problem not the tenants. E.g geyser needs replacement there goes your months rent.
May i ask why you already plan on selling both in 2-3 years?
My strategy would be to rent out your primary residence. You said you would earn more rental than the cost of your bond repayment. Put the excess rent amount and any additional additional cash you have lying around into a investment vehicle such as a unit trust and keep it for your 2-3 year period. At the end you will have a nice little nest egg in your investment and you will own more capital in your primary residence so when you sell it more money will go to you and less to the bank.
Click to expand...
Sir, we are going to still rent out our primary yes but I just thought it would be wise to invest in flat. I will now push the extra money into a unit trust.
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X