property investment

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Arrival

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Hi, i'm new to the investment market and looking for advice on buying property. Budget not more than R1mil, want to buy and rent it out, please advise on suitable areas and if this is a good idea?
 
Renting out is risky in my opinion. Why not invest in unit trusts or something like that?

Personally I'll never rent out property again.
 
Looking to buy property in Cape Town, currently staying with the folks and have cash to spend on property which I would like to use in the future. Was thinking that by renting it out, it could help payoff the bond.
 
OK well where is OP? He says he is new to investment so am I correct in assuming he has never bought property before? Renting?

Personally I prefer the stock market. Buy ETFs, get a solid "base" going and once that is going then maybe I'll look at property.

Property = a lot of debt up front unless you are lucky enough to pay cash. So because of that you want to pay back your monthly bond payment + 50% to reduce the interest you'll eventually pay.

Also keep in mind that our interest rates will most likely be increasing.
 
Arrival said:
Hi, i'm new to the investment market and looking for advice on buying property. Budget not more than R1mil, want to buy and rent it out, please advise on suitable areas and if this is a good idea?
Click to expand...

If you can get a flat in the CBD for under a bar then I would say grab it, I wouldn't consider other areas.
 
Ok, im from the southern suburbs Cape Town, I am able to pay the installment plus a 50% with the rent income. I am a first time buyer and dont really know go about buying property. The aim is to buy, rent out and move into it in the future. Im looking a house rather than flat..Oh yes, i have a 10% deposit to put down on the bond
 
I'm not sure how much of a benefit "first time buyer" status is, but keep in mind you only have it once.
 
The only benefit of being a first time buyer is that you will probably be granted a 100% loan. I'd opt for that, and use the money you would've for the deposit to pay for transfer fees. Put what's left in your flexi account and use that to supplement your monthly shortfall
 
Arrival said:
Ok, im from the southern suburbs Cape Town, I am able to pay the installment plus a 50% with the rent income. I am a first time buyer and dont really know go about buying property. The aim is to buy, rent out and move into it in the future. Im looking a house rather than flat..Oh yes, i have a 10% deposit to put down on the bond
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a house is not a good option to rent out, just too many things can go wrong when compared to a sectional title unit and as a first time buyer I don't think you will be able to cope.


rather look into something other than property
 
My 10c and I'm not an educated financial guy...

Buy.. do you homework on area and buy... the sooner you're in the better.. I've got an investment property, the rent now covers all the costs.. It blows my mind that everyday my tenant get up goes to work to pay my bond.. After two years the property has already appreciated by 15%...

I put a metro prepaid electricity meter in, so I'm not involved in the electricity at all (lower risk).
While transfer was taking place I negotiated free occupation, during this time I totally gutter the place new bathrooms with geberit toilet and hansgrohe taps.. New kitchen with granite tops... My thinking was, 1. Hopefully little or no maintenance, 2. Property rental demand (because its all new)

So far it's working for me...
 
http://www.myshares.co.za/basic/blogs_view.php?p=3


Property - Location, Location, Lo...Costs?

Everyone always says property is the way to go, we get this indoctrinated into us.
Often its best to question generally accepted ideas, as most of the time,
even when they are not wrong, it turns out theres a lot more to the detail before the saying is actually true.
The discussion deals with residential property, as commercial property is quite a different matter.
....
 
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bchip said:
http://www.myshares.co.za/basic/blogs_view.php?p=3


Property - Location, Location, Lo...Costs?

Everyone always says property is the way to go, we get this indoctrinated into us.
Often its best to question generally accepted ideas, as most of the time,
even when they are not wrong, it turns out theres a lot more to the detail before the saying is actually true.
The discussion deals with residential property, as commercial property is quite a different matter.
....
Click to expand...

Everyone needs a place to live and the last time I checked you can't live in shares.

Had I not purchased the property I'm currently living in, I would have to pay a rental of R8500pm excluding electricity and internet charges- every year it will go up another 10%.

Instead I am effectively paying R2700pm in terms of levies, which includes the cost of electricity and my internet charges and the levy increase for the past four and half years that I've been living here have been around 5%.

Not to mention that the property I'm living in has doubled in value, a different asset class portfolio could have more than doubled in value, but you still won't be able to live in it.

So yes you can argue that other asset classes gives you better returns, but that doesn't address where you are going to live and how you are going to finance those living expenses.
 
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saturnz said:
Everyone needs a place to live and the last time I checked you can't live in shares.

Had I not purchased the property I'm currently living in, I would have to pay a rental of R8500pm excluding electricity and internet charges- every year it will go up another 10%.

Instead I am effectively paying R2700pm in terms of levies, which includes the cost of electricity and my internet charges and the levy increase for the past four and half years that I've been living here have been around 5%.

Not to mention that the property I'm living in has doubled in value, a different asset class portfolio could have more than doubled in value, but you still won't be able to live in it.

So yes you can argue that other asset classes gives you better returns, but that doesn't address where you are going to live and how you are going to finance those living expenses.
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Not following you. If you invest in shares and don't buy property you rent. If you live in JHB (North at least) it is cheaper to rent than buy the same place.

Had I purchased the place I stay in now I would've had to pay almost 70% more per month - and I'll be in debt. So instead of using that extra money to pay of a debt (because over 20 years tat house will cost you almost double if you don't pay extra every month) I invest it and have debt free growth.

It really is two very different ways of going about it. That said though, if you are "dumb" or emotional with money or don't have self control, buying a house is probably a very good idea because it will force you to invest.
 
Hamster said:
Not following you. If you invest in shares and don't buy property you rent. If you live in JHB (North at least) it is cheaper to rent than buy the same place.

Had I purchased the place I stay in now I would've had to pay almost 70% more per month - and I'll be in debt. So instead of using that extra money to pay of a debt (because over 20 years tat house will cost you almost double if you don't pay extra every month) I invest it and have debt free growth.

It really is two very different ways of going about it. That said though, if you are "dumb" or emotional with money or don't have self control, buying a house is probably a very good idea because it will force you to invest.
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and in 20 years time, how much do rent do you think you will be paying? and how much rent would you have paid
 
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saturnz said:
and in 20 years time, how much do rent do you think you will be paying? and how much rent would you have paid
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Relatively speaking, not a whole lot more since my disposable income increases way more than my rent is. And the amount I save every year becomes more as well.

I'll most likely buy property in the coming years to diversify, but I won't stop pushing my other investments for it's sake.
 
well, the interest component would have decreased significantly after 20 years, infact he would own the property after 20 years, after 20 years of paying rent, you would maybe have a few references from landlords.

you can purchase shares after your first house, but the longer you take to purchase a property, the more its going to hurt in the future.

and this guy lives in Cape Town, the property market is significantly more different than that of JHB.
 
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