property investment

[RogueTr00per]

Well, in CPT, it may be significantly cheaper to rent than to buy, but then apparently we do have a rental stock shortage going on here so there is that uncertainty if you need a roof over your head.

OP must buy in an area that show good potential (if he wants it cheaper) or if it is already solid then he will pay a premium. Since he said he wants to live in it later on then he'd better pick an area where he (and other young professionals) would want to live.

 

[saturnz]

Well, in CPT, it may be significantly cheaper to rent than to buy, but then apparently we do have a rental stock shortage going on here so there is that uncertainty if you need a roof over your head.

OP must buy in an area that show good potential (if he wants it cheaper) or if it is already solid then he will pay a premium. Since he said he wants to live in it later on then he'd better pick an area where he (and other young professionals) would want to live.

I'm currently renting out my house in the suburbs, R11 000pm.

If I were to rent out my flat in the CBD, R8500pm, next year it will be closer to R10 000pm. If I still had a bond on the flat, my payments would be R6700pm.

 

[RogueTr00per]

I'm currently renting out my house in the suburbs, R11 000pm.

If I were to rent out my flat in the CBD, R8500pm, next year it will be closer to R10 000pm. If I still had a bond on the flat, my payments would be R6700pm.

Thanks, but we can't tell anything from that unless we know what you paid and what they are worth now.

 

[saturnz]

Thanks, but we can't tell anything from that unless we know what you paid and what they are worth now.

I paid R780k spot price including transfer costs in March 2011 for my flat.

In 2011 I could rent my flat out for R5500pm and my bond payment was around R6700, today the rental I can get is R8500pm and the market value is conservatively around R1.2m, although a flat five floors below me (with no view) and 7 square metres smaller sold for R1.2m three months ago.

 

[RogueTr00per]

I paid R780k spot price including transfer costs in March 2011 for my flat.

In 2011 I could rent my flat out for R5500pm and my bond payment was around R6700, today the rental I can get is R8500pm and the market value is conservatively around R1.2m, although a flat five floors below me (with no view) and 7 square metres smaller sold for R1.2m three months ago.

CBD property has been booming. I doubt the capital gains can continue at the same rate but I suppose the rentals fetched will continue to increase at 10% p.a. You bought at a good time, obviously.

 

[saturnz]

CBD property has been booming. I doubt the capital gains can continue at the same rate but I suppose the rentals fetched will continue to increase at 10% p.a. You bought at a good time, obviously.

Its been booming because of simple demand and supply, lots of demand, limited supply in the way of new developments.

 

[RogueTr00per]

Its been booming because of simple demand and supply, lots of demand, limited supply in the way of new developments.

Which part of town did you buy in, if I may ask?

 

[saturnz]

Which part of town did you buy in, if I may ask?

I'm on Church Square, on the corner of Wale and Adderley street.


http://www.fin24.com/Companies/Prop...rtment-development-for-Cape-Town-CBD-20150531

Yes its a PR article but all the units in that development are sold now, note the cheapest is 1.6m

As long as the gentrification process continues, property in and around the City will continue to be in demand.

I predict Maitland/Brooklyn to be the next target.

 

[Nokkie]

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.

What happened?

 

[bchip]

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

A home is essential for all of us, we all need to live somewhere, and in doing so we have costs that we will incur.

http://www.myshares.co.za/basic/blogs_view.php?p=3

I dont think you read the article. I suggest you do.

Yes everybody needs to live somewhere, thats the superficial look at things.
You need to determine the detail of each decision to determine if it was a smart idea or not.

For example in your case

I paid R780k spot price including transfer costs in March 2011 for my flat.

In 2011 I could rent my flat out for R5500pm and my bond payment was around R6700, today the rental I can get is R8500pm and the market value is conservatively around R1.2m, although a flat five floors below me (with no view) and 7 square metres smaller sold for R1.2m three months ago.

How many months did you skip looking for a rentee?
What are the levies, the tax property, the W&E payments, agent comission?
How much did these fees add up to?
When you sell it how much of the profit disappears?
If you add these things up what you think you made suddenly drops significantly.

I can already tell you your return on rent is around 6% at best after tax...
I have bonds with no risk and no effort that do better than that.
I also dont have to worry about anyone messing up the house either (I can tell you some gruesome stories with paint...)

 

[saturnz]

http://www.myshares.co.za/basic/blogs_view.php?p=3

I dont think you read the article. I suggest you do.

Yes everybody needs to live somewhere, thats the superficial look at things.
You need to determine the detail of each decision to determine if it was a smart idea or not.

For example in your case


How many months did you skip looking for a rentee?
What are the levies, the tax property, the W&E payments, agent comission?
How much did these fees add up to?
When you sell it how much of the profit disappears?
If you add these things up what you think you made suddenly drops significantly.

I can already tell you your return on rent is around 6% at best after tax...
I have bonds with no risk and no effort that do better than that.
I also dont have to worry about anyone messing up the house either (I can tell you some gruesome stories with paint...)

where are you living, what is your living expenses?

you are not reading what I have done, I didn't even bother renting out my investment property, I decided to live in it and rent out my primary residence, for the four years I've been renting out my primary residence, it has never been vacant.

but lets assume I do rent out my investment property

How many months did you skip looking for a rentee?

Its the middle of the CBD, my building is fully occupied, it will take me less than two weeks to find a suitable vetted tenant.

What are the levies, the tax property, the W&E payments, agent comission?

Levies, R1700 (tax deductible), no agent commission, no maintenance, rates R450 (tax deductible)

How much did these fees add up to?

Which fees?

When you sell it how much of the profit disappears?

My property has doubled in value over a four year period.

If you add these things up what you think you made suddenly drops significantly.

Nope it doesn't.


If shares are so wonderful, can you use your own personal experience in purchasing shares, how many stocks have you purchased and what has the return been to date.

And note we are not speaking in the general sense, we are speaking about an investment property in Cape Town because this topic deals with investment property in Cape Town.

 

[saturnz]

another dynamic to consider with investment property in Cape Town CBD is short term rentals.

I am situated between two units that are short term rentals on airbnb, sort of like uber for short term rentals.

Both units are occupied for atleast 15 days in the month, the one unit asks R950pd and the other R1300pd.

The one unit is owned by a guy living in Pretoria (he owns another airbnb unit in this building as well) and he manages it himself.

In summer these rates increase significantly.

 

[bchip]

If shares are so wonderful, can you use your own personal experience in purchasing shares, how many stocks have you purchased and what has the return been to date.

I think you may have missed the boat completely...I never punted shares in the first place,
nowhere in the article does it even mention shares.

What I focus on are the unseen costs in owning property, and how these costs significantly
affect your profit. Even in the example that I show there was a gain for that scenario, the gain
is just much less than what you expected.

I dont punt property and I dont punt shares, I talk about making a good investment decision based
on doing a full analysis on costs by making sure you know all the costs.

Its the middle of the CBD, my building is fully occupied,
it will take me less than two weeks to find a suitable vetted tenant.

If this property panned out for you great!
I just wouldnt be as arrogant as you thinking there are no risk with property.
Tenants defaulting and not moving out, Not getting tenants, body corp orates stealing money are realities.
But like most Im sure you believe only that this wont happen to you ever.

 

[saturnz]

I think you may have missed the boat completely...I never punted shares in the first place,
nowhere in the article does it even mention shares.

What I focus on are the unseen costs in owning property, and how these costs significantly
affect your profit. Even in the example that I show there was a gain for that scenario, the gain
is just much less than what you expected.

I dont punt property and I dont punt shares, I talk about making a good investment decision based
on doing a full analysis on costs by making sure you know all the costs.



If this property panned out for you great!
I just wouldnt be as arrogant as you thinking there are no risk with property.
Tenants defaulting and not moving out, Not getting tenants, body corp orates stealing money are realities.
But like most Im sure you believe only that this wont happen to you ever.

as much as I didn't read your article, you are not reading what I have to say

I am not punting property either, I am punting property in Cape Town CBD which this person has the opportunity to consider at this stage if he wants an investment property.

I have lived in my flat for four years, maintenance costs have been zero, levies reasonable compared to other BCs.

Tenants defaulting and not moving out are as a result of poor vetting processes, bodies corporate stealing money a result of poor management - I am a trustee in my building so I see exactly what is going on.

You have to manage your risk, if you put your head into the ground you should expect the worst to happen.

 

[saturnz]

BTW, Senator Park in Cape Town CBD went south very quickly. The BC was bankrupt and the building was filled with drug dealers and prostitutes.

The owners eventually managed to evict the tenants and started renovating 4 years ago. Two years ago properties started popping up in that building for around R500k. Now they are going around R1m.

 

[mountainboy]

BTW, Senator Park in Cape Town CBD went south very quickly. The BC was bankrupt and the building was filled with drug dealers and prostitutes.

The owners eventually managed to evict the tenants and started renovating 4 years ago. Two years ago properties started popping up in that building for around R500k. Now they are going around R1m.

had the opportunity to purchase 2 units for approx R400k each few years back. But declined since the risks were a tad to high at the time. Hind sight is a bitch that make you wanna puke at lost opportunities. But you win some and you lose some - property is a business just like any other