Property investment

[Big_Bang]

Hi guys,

I have decided to buy my first property for investment purposes after 2 years of working. I was doing some research and I stumbled upon this place in Midrand (called Midriver Estate) and it sounds too good to be true. Essentially I just have to put down R20k deposit and for a 2 bedroom place I won't have to pay levies, rates & taxes and management fees for the next 2 years, and there is already a tenant in place so rental can cover my bond repayment fully. And from what the agent said, getting a bond is guaranteed!? (what if my credit rating is poor?). I've attached what the agent sent me.

Is this a scam?
If not, is there a catch of some kind? What must I look out for?

 

[F1 Fan]

Does not sound like a scam, but that offer has a few IF's. That is if the tenant is willing to pay 4k a month and if the bank is willing to give you a loan at 8.5%.

 

[supersunbird]

Well, technically it seems to be in Kempton Park by my standards (closer to R21 than N3).

As to anything else you asked, I just dont know but have seen such marketing for new developments.

 

[Big_Bang]

Thank F1 Fan for your response.

With regards to the rent, there is already a contract in place so R4k rent is guaranteed till lease expires.

Bank is a different story though Will view the unit first then go from there.

 

[biena]

With regards to the rent, there is already a contract in place so R4k rent is guaranteed till lease expires.

Tenant can give a months notice or just vanish, dangerous to count on that income as guaranteed.

 

[Big_Bang]

You're right supersunbird. Didn't even realise that it's more Kempton Park than Midrand. I'm willing to buy a place in Midrand as it is starting to develop but not so sure about Kempton Park. Have to check the place and its surrounding area out

 

[Big_Bang]

Tenant can give a months notice or just vanish, dangerous to count on that income as guaranteed.

Good point.

I'm not familiar with that area, anyone know what the rental demand is like there. The place is in Terenure area

 

[ebendl]

I've been told a number of times that you have to have viewed at least 20 - 40 properties before you're ready to buy one. So perhaps get out there and view a couple of places (as well) - then decide if it is a good deal?

ALso trust your gut - if the area / place doesn't feel right, there's probably something wrong with it.

 

[TJ99]

Too good to be true. There's no way you'd get an interest rate that ridiculously low with a deposit that small.

 

[Rahl]

The rates and taxes look a little low and doesnt change between a single and double room unit. I dont know where they are getting the 24months of fees that you dont have to pay but I dont see the municipality just ignoring monies owed to them. So the question is who pays for the clubhouse and landscaped walkways?

I know you can deduct those expences from your income for tax purposes but something sounds fishy here.

 

[ToxicBunny]

Sounds very very fishy...

Levies maybe can be waived, but rates and taxes cannot...